THE BLOG
07/09/2010 12:26 pm ET | Updated May 25, 2011

How Do You Lose $5,960,000 on an Opera?

On July 2, 2010, the Los Angeles Times reported that the Los Angeles Opera's production of Richard Wagner's Der Ring des Nibelungen lost $5,960,000. A deficit this stunning could only have happened as a result of world-class incompetence. Mere provincial incompetence cannot explain it.

According to Los Angeles Opera chief operating officer Stephen Rountree, who by rights ought to be wearing a large red nose and a clown suit, $4,000,000 (or roughly two thirds of the deficit) was the result of ticket sales failing to meet projections. The nicest thing that can be said of this is that the Los Angeles Opera was engaged in a multi-year exercise in Faith Based Financial Planning, better known as "God will provide." It is a management failure without parallel in American opera history.

When the economy is chugging along, most Ring tickets are sold to folks who will buy the four opera cycle, pay full ticket price and add a "voluntary contribution" ("voluntary" in the sense that responding to a subpoena is "voluntary"). What's left gets sold as full cycle packages, at full price but without the sweetener for the house. The remaining tickets get sold to single ticket buyers. By the application of this formula, long before the curtain goes up the company knows where it stands in terms of ticket sales.

Astonishingly, by late March of 2010 the Los Angeles Opera had sold less than 50% of the full cycle tickets for the three Ring cycles presented May 29 through June 26. That number, apparently, includes individual tickets sold at full price and not merely those that were sold for the full cycles. In the world of Wagner performance -- that is beyond extraordinary; it is unprecedented.

The math is both stark and stunning. A sell out house at the Dorothy Chandler Pavilion is just over 3,000 per performance. Three Ring cycles comprise twelve operas, so capacity houses for the three complete cycles should have been roughly 36,500 tickets. But the Los Angles Opera did not sell 36,500 tickets, it sold only 27,000 tickets. And of those 27,000 tickets, 12,000 were sold at discounts of 50% or more. Holy Gibichungs!

If, as the Los Angeles Times reported, the average ticket price for a full cycle was $1,089, that should have meant ticket revenues of just under $10,000,000 for three sold-out cycles. But the LA Opera only budgeted for 80% houses, or about $8,000,000 in ticket sales. They fell short of that modest goal by 50%. Not to put too fine an edge on it, everyone associated with this disaster from Los Angeles Opera General Director Placido Domingo to the ninny who drafted the budget projections should be summarily sacked.

Nothing about this operatic Dunkirk makes the least bit of sense. The Los Angeles Opera was literally banking on 40% of the Ring cycle tickets to be taken by Wagnerians from out of town, which is a number in line with the Seattle Opera's experience in recent years. But the Seattle Opera presents the Ring over six nights (Rheingold on the first night, Walkure on the second, Siegfried on the fourth and Gotterdammerung on the sixth). Los Angeles decided to spread it over nine nights, increasing hotel, meal and related travel costs by 50% for the out of towners. It is impossible for me to believe that the wizards at the Los Angeles Opera actually asked anyone with experience if this was realistic, since the answer would have been a unanimous and resounding "No, it is impossible if you have any hope of selling tickets to the 'Ring nuts' from out of town." So hubris likely played a part.

The Los Angeles Opera has no history of Wagner performance, and it is not known as a "Wagner House." The status as a "Wagner House" does not magically appear overnight -- the Metropolitan Opera worked on it since the days when Wagner's scores were still wet and it took Seattle decades to achieve it. Chicago and San Francisco, for example, have produced The Ring, but they had ample experience in cultivating Wagner audiences long before they attempted it. Apparently, someone in Los Angeles forgot that Field of Dreams was a movie, and that "If you build it they will come" is not a business plan.

Prudence would have suggested that if you are going to attempt a Ring production in virgin territory, you do so with a relentless eye toward the production budget. Instead of doing something prudent -- like renting a Ring production or doing a modest one of their own -- the Los Angeles Opera went out and spent a jaw-dropping $30,000,000 on Achim Freyer's new production. But prudence is apparently a word absent from Placido Domingo's vocabulary, as the presumptuously named Washington National Opera, of which he is also the General Director, recently tried to produce Francesca Zambello's "American Ring" and ran out of money before the end of it. Domingo is a stupendous tenor, but as a fiscal steward of an opera company he has failed on two coasts. Perhaps if he had kept his eye on the production budget instead of learning the title role in Simon Boccanegra this would not have happened.

Of course, suggesting that Domingo is completely out of his depth as an opera administrator is considered to be in poor taste. He is a very great tenor, you know. But as the opera world is bending itself into a pretzel being courteous to a great artist, two opera companies are teetering on financial collapse because of his inexperience, managerial ineptitude and seeming inability to read a balance sheet.

When the economy collapsed, the folks in the executive offices of the Los Angeles Opera must have taken the position that once the initial performances of the Achim Freyer Ring operas opened in February of 2009 the buzz would spur an increase in ticket sales for the 2010 Ring cycles. Alas, the word of mouth was poison rather than a boon. Critics largely detested it, audiences could not figure what to make of it, and the photographs of the production were strange enough to cause anyone considering a trip to Los Angeles for The Ring to take a pass. $30,000,000 should buy you more than a Wagner comic book larger than life. Hell, $30,000,000 ought to buy you three first-class new Ring productions. So, by no later than the summer of 2009, it should have been clear that this was a disaster well on its way to happening and that some radical thinking on the fly was called for. "Radical" -- as in scale back, postpone, cancel, collapse the nine day cycles into six days, bring in some proven box office "star power," create a scandal, go all Cecil B. DeMille in the marketing. No one seems to have rung the alarm bells, and by the time the Los Angeles Opera woke up the only option was to hit and hold the panic button. The catastrophe was by then inevitable.

The obvious question is "What were they thinking?" The obvious answer is that they were not thinking, they were foolhardy. When I spent the summer of 1978 studying for the Connecticut Bar Examination, I was told that there are three rules that must be followed when taking it: Do not fall in love, do not hate, wishing does not make it so. The Los Angeles Opera probably forgot the first and assuredly forgot the third of those rules, and the future of that company is in peril as a result. Failing grandly is, in the last analysis, still failure.