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Optimistic Florida Orchestra braces for more pain

Florida Orchestra chief executive Michael Pastreich, left, and board chairman Jay B. Starkey Jr. plan to do some serious fundraising. The goal: $30-million to pay debt and build the endowment.

WILLIE J. ALLEN JR. | Times

Florida Orchestra chief executive Michael Pastreich, left, and board chairman Jay B. Starkey Jr. plan to do some serious fundraising. The goal: $30-million to pay debt and build the endowment.

ST. PETERSBURG

You might expect the Florida Orchestra to be celebrating its fortunes. Unofficially — figures are yet to be audited — the orchestra finished the fiscal year that ended June 30 with a $400,000 surplus in its $10-million budget.

This is good news, considering that the orchestra was close to going out of business a year ago.

"We had a phenomenal year,'' said Michael Pastreich, who became chief executive of the orchestra in October, succeeding Leonard Stone, who retired. In a remarkable effort, the orchestra raised $11-million in what it is calling a "sustainability campaign.'' It also slashed the budget by more than $1-million, including a salary cut for musicians, among the lowest-paid orchestra players in the nation, and layoffs in administrative staff.

But the pain is far from over. "Next season will be tougher than this past one,'' Pastreich said. "Relief is not around the corner.''

To illustrate the problems, Pastreich held out the possibility that during a cash flow crunch that typically occurs in the middle of the season, the orchestra may have to choose between paying concert hall rent or making a full payroll.

Still, it is a year not just for cutting, but also for building, said Pastreich and the new chairman of the board, Pasco County land developer Jay B. Starkey Jr.

"The orchestra is in a watershed year,'' Starkey said. "I think we have a feasible but difficult path ahead of us to bring us out of the old cycle of indebtedness and loss of credibility in the business community.

"We have a good chance to see if the leaders of Tampa Bay really want an orchestra or not. I think it's going to boil down to that. They've got to see that the money is well-used and serves the needs of this area.''

Hoping for $30-million

The orchestra, starting its 41st season in October, has had watershed years before in its troubled history. But this time the turnaround seems more far-reaching. For one thing, the organization has a handsome new home in St. Petersburg, with offices on the downtown campus of St. Petersburg College replacing its longtime quarters in a Tampa office park.

Pastreich and former board chairman James Gillespie, a St. Petersburg lawyer, conceived an ambitious plan for the orchestra to raise $30-million in the five-year sustainability campaign (with the $11-million already raised, much of it in pledges, counting toward the total). The money will pay off debt and build up the endowment.

The orchestra has to raise about $5-million a year over the next four years to keep that campaign on track — plus $5-million a year for day-to-day expenses. That adds up to a "mind-boggling'' amount, Pastreich has said in weekly updates he e-mails to board members, advisers, musicians and staff.

How mind-boggling? The incoming chairman left the board in May, apparently over concern that the fundraising goals were unrealistic. St. Petersburg businessman William D. Haueisen didn't return a phone message seeking comment.

Starkey, 72, was recruited to be chairman even though he just rejoined the board after several years off it. He is a descendant of one of Pinellas County's pioneer families, growing up on a hog farm near what is now Starkey Road, named for his father. His two sons are developing a "town center'' community planned ultimately to have 4,000 residences on part of what was the family's 16,000-acre cattle ranch in Pasco County.

In Starkey, the orchestra has a chairman who sets an example for giving. He and his wife, Marsha, gave $500,000 to the sustainability campaign. In 2005, they gave $1-million to the orchestra's endowment. Starkey is a musician who sings with the Master Chorale and plays soprano sax in the Bay Area Saxophone Quartet.

He agreed to be chairman for a year and expects to make a lot of fundraising calls. "As long as we're up front with people, I'm optimistic we can pull this off. The money's there,'' he said, citing the $31-million that the Tampa Museum of Art has raised for its new building. But usually, raising money for sparkling new buildings is easier than it is for paying off old bills.

Sponsors tighten up

Will a community hit by recession have money to give the Florida Orchestra?

"I have no idea how this economy will play out,'' said Pastreich, previously chief executive officer of the Elgin Symphony in Illinois.

"The one area I know where a recession has an impact is corporate sponsorship. That will take a massive hit and it's going to be painful. I would imagine that lower-end giving goes down in a recession. Upper-end giving, gifts of over $5,000, I think will in the worst case be flat.''

Pastreich said ticket sales are another unknowable. He expects the orchestra to retain its subscription base for masterworks, pops and coffee concerts. The three series had a total of 5,380 subscribers in 2007-08. Paid attendance at masterworks concerts was up over the previous season, while pops and coffee concert attendance was down.

The orchestra's slate of free park and school concerts and special nonsubscription performances (such as a popular Lord of the Rings concert in 2006-07) were significantly reduced because of the budget cuts. Attendance for all performances last season was 141,658, compared with 156,017 the year before. Most of that decline came because of free and special concerts that were eliminated.

Paying rent vs. payroll

This summer, the orchestra used its surplus and other funds to pay off $800,000 in debt to Liberty Bank. That sent a message to the orchestra's creditors and vendors, including Mahaffey Theater, Ruth Eckerd Hall and Tampa Bay Performing Arts Center, the orchestra's principal venues, who sometimes haven't received rent on time. That has undoubtedly contributed to the orchestra's inability to get the hall dates it wants, which is at the heart of its predicament.

Even Mahaffey, which used to be a regular Saturday night date for orchestragoers in St. Petersburg, has become unreliable, with the addition of a Broadway series there.

But those performances have drawn far smaller crowds than the orchestra did. And Mahaffey won't announce its 2008-09 Broadway season until October, months after other halls in the area announced programming and geared up their marketing.

So the orchestra is working to pay its rent and hopes for better dates in the future. "Our strategy is to figure out how to become as valuable to the halls as we possibly can,'' Pastreich said. "The halls this past year were a high priority on our pay list. They have been moved up significantly for next year.''

Robert Freedman, chief executive of Ruth Eckerd Hall, doesn't have big problems with the orchestra when it comes to rent. "There have been times the orchestra has been a little slow, but we're pleased with the relationship,'' he said. "I think the main thing now is that the level of communication is better.''

The orchestra is considering making hall rent more important than payroll.

"We will hit a period from November to February when cash flow will be very tight for us,'' Pastreich said. "In past years we haven't paid the halls in that time period. We'd wait till the cash flow crunch ended. We're having a debate right now — an internal debate — on whether hall rent is more important than payroll. We don't know the answer to that. But we want to make very clear to the halls that we want to be valuable to them, and it's quite possible we'll make a decision to delay payroll in order to make the rent.''

Bass trombonist and musicians spokesman Harold Van Schaik said the idea was of dubious legality. "It would be a big problem for musicians,'' he said. "Many of us are living on the edge because of cuts we've taken.''

In his weekly updates on orchestra business, Pastreich often includes inspirational references from history and literature. In July he cited Winston Churchill during World War II to put last season's balanced budget into perspective.

"Now this is not the end,'' Pastreich wrote, quoting Churchill after a decisive victory in 1942. "It is not even the beginning of the end. But it is, perhaps, the end of the beginning.''

John Fleming can be reached at fleming@sptimes.com or (727) 893-8716.

Optimistic Florida Orchestra braces for more pain 08/09/08 [Last modified: Monday, August 11, 2008 8:21pm]
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