09/02/2014 08:13 am ET Updated Nov 02, 2014

Settling at the Met


The biggest news in the arts world over the past month was the settlement the Metropolitan Opera reached with its many unions. The management of the company had stated that without significant cost reductions, the institution could not remain viable. The problems at the Metropolitan have been evident for years. Ticket sales have not increased yet expenses have grown significantly. This placed increasing, and seemingly unrealistic, pressure on the organization's fund-raising efforts. While the institution would report modest operating surpluses from time to time, the sophisticated observer could see these surpluses were earned only after huge draws on the Met's endowment. Prudent institutions 'take' 4-6 percent of their endowments each year as income, leaving the remainder to support future endeavors. The Met was forced to take double this amount, more than the endowment was earning, to achieve an acceptable bottom line. In other words, the Met was spending its endowment so quickly it was watching it evaporate.

The unions rightly argued that the only costs mentioned for reduction were personnel costs. Not surprisingly, the unions were up in arms. They wanted to know why other costs were not being reduced. They pointed to extravagant sets and costumes and numerous new productions. (The poppy field in Prince Igor was singled out time and again as a major waste of money.) Ultimately, the agreement calls for cuts to workers' salaries and other substantial cuts to the budget.

Anyone who cares about the arts must be happy that this great institution will open its new season this month. But did the remarkable firestorm surrounding these negotiations do enough to stabilize the Metropolitan Opera?

It seems that the proposed cuts will reduce the Met's budget by some 5-7 percent a year. This is a substantial reduction and should give the organization a bit of breathing room.

But it will not cure the problems of this institution; saving one's way to health in the arts simply is not a long-term solution. Will additional cuts be required each and every year? When does the cutting stop?

So what is a longer-term solution? Finding new sources of revenue -- both earned and contributed.

The Met must create the programming that will attract larger audiences, must reconfigure its pricing strategy to maximize revenue and must do the sophisticated programmatic and institutional marketing required these days to build audiences.

It seems the organization also has a real opportunity to ratchet up its income through its highly successful movie theater broadcasts -- not simply through ticket revenue but through increased contributions from people who enjoy these performances. These broadcasts are now available in 67 countries and across the United States. They have been well-received and well-reviewed.

Yet the fundraising results of the Metropolitan Opera do not indicate that these broadcasts have had a noticeable impact. With so many more people across the globe 'attending' Met performances, the institution should be able to increase its fundraising by offering benefits to those who wish to be members of this great institution. They could offer online access to exclusive interviews, historic videos and and other content. Some of these new members can and should be cultivated for major gifts. Just as the Louvre Museum holds a glamorous event for international patrons and the Kennedy Center has an active international committee, the Met could host occasional events outside New York City for those who wish to become more involved.

If the institution were able to take advantage of its national and global reach, if contributed income was growing as viewership expands, if the Metropolitan Opera truly became an international institution, no one would complain about the cost of a poppy field and salaries would not have to be reduced to balance the budget.