Geffen Gone: Can a Performing Arts Facility Be Too Big to Fund?

Geffen

Going...going...Geffen.

The Oct. 3, 2017 headline in The New York Times — “Lincoln Center Scraps a $500 Million Geffen Hall Renovation” — was both surprising and shocking. There have been a lot of very smart and talented people working on this effort for many years, and now to have it come to a screeching halt is a major blow.

For those not familiar with the project, the renovation of what was Avery Fisher Hall, the home of the New York Philharmonic, has been coming for at least 20 years. In 1999, the Philharmonic spoke of an urgent need to improve its home. There were a series of studies, including one that I conducted on the possibility of having the Philharmonic take over Avery Fisher Hall in order to exert more control over operations and future plans. Then there was that brief flirtation with Carnegie Hall that added a whole new level of tension within the Lincoln Center papacy.

Story continues below.




But things did come together in recent years. Katherine Farley, chairperson of Lincoln Center, led the effort to persuade the heirs of Avery Fisher to relinquish perpetual naming rights on the building (at a cost of $15 million to the family), and then persuaded David Geffen to gift the project $100 million in return for his name to appear on the building instead. Other commitments were made more quietly: a design team was selected (Heatherwick Studio and Diamond Schmitt Architects), and the Philharmonic began considering where to perform for the period of time that the hall would be under renovation.

Neither I nor anyone in my firm have any inside information, yet we can knowledgeably speculate on a few of the possible reasons why the current version of the project has been scrapped.

A number of people, notably Geffen himself, blame this on a lack of generosity from the NYC funding community, attacking their “shameful” record of not supporting projects like this. Conversely, Lincoln Center leadership has suggested that the main fundraising push had yet to begin and that the “change in direction on the project was not a failure of financial support for the project.”

As costs escalate, potential fundraising also escalates.

A second, related theory is that the $100 million naming gift from Geffen was, in fact, too small, representing only 20% of the project’s $500 million estimated cost. Non-profit sages, such as Michael Kaiser, suggest that Geffen’s sweet deal essentially prevented other major donors from stepping forward, as there wouldn’t be enough of an inducement left to offer them. This is a good point, but the fact is that several large-scale, cultural building projects had lead gifts representing 20% or less of the total cost. For example, the Adrienne Arsht Center for the Performing Arts in Miami had a lead gift of $30 million on a project budget of $470 million.

Story continues below.




A third theory is that the costs to renovate the hall are now too high. As mentioned above, Lincoln Center is still using $500 million as the budget, but some believe the costs will actually be much higher. Yes, it is crazy how expensive these projects get; construction cost-escalation is close to the 3% annual growth rate in the consumer price index — inflation. As those costs escalate, so do potential fundraising proceeds. With increasing income and wealth inequality, there is probably more wealth concentrated among the very few individuals who might consider large naming gifts.

Deborah Borda, president and CEO of The New York Philharmonic, suggested that the real problem was the recent discovery that the renovation might push the Phil out of its home for not just two but three seasons. As she told the Times, “the issue of being out of the hall for three years was simply profound.” Being displaced for three years would be a big deal, but other groups have gone through such a thing. Venice’s fabulous opera house, Teatro La Fenice, was closed for seven years after a 1996 fire.

My point is that all of these reasons to stop the project are reasonable, but none are sufficient on their own to explain the decision. I would take the position that this same combination of factors may not have stopped the project 20 (or even 10) years ago because of two important factors, neither of which are popular talking points for philanthropists like Geffen, or for cultural leaders.

Story continues below.




First is the continuing trend of declining orchestra audiences. The 2012 Survey of Public Participation in the Arts reaffirmed that the classical music audience is declining. Between 2002 and 2012, the percentage of US adults who attended a classical music performance declined from 11.6% to 8.8%. It’s a low number to begin with, but that is a significant decline over just 10 years.

Second, add in the problem known as Baumol’s cost disease, meaning there are no productivity gains to be had in the way that certain types of art are created and shared: It takes the same time and energy to rehearse and perform the Brahms Requiem today as when it first premiered in 1862. This is bad news because we live in a world of increasing costs that are mitigated in other sectors by productivity gains. Without those gains, producers of art fall further and further behind, which essentially forces more and more fundraising every year just to stay even.

It seems prudent to scale back.

This trend in the world of classical music has now been further documented. Robert Flanagan’s 2012 book, The Perilous Life of Symphony Orchestras, includes an excellent graph that shows the average cost of putting on a concert by the largest 50 orchestras in the country rising by more than 300% between 1987 and 2005. During that same period of time, the producer price index grew by 40%. That shocking 260% difference is largely a function of productivity gains. What that says about the future of the sector is frightening.

So maybe Lincoln Center’s decision to scrap the renovation of Geffen Hall is a good one. With declining audiences and increasing sustainability challenges, it seems prudent to scale back the project and the broader ambitions of the organization. The future for the Philharmonic and other orchestras may be about providing a more exclusive experience in a more intimate setting. It will still depend on large gifts and still be driven by strong education and outreach programs, but there will no longer be this idea that a city’s orchestra, and their fabulous hall, should symbolize their importance on the world stage.

CATEGORIES: Featured, Management, Music

You May Also Like