Washington National Opera finds financial shelter with Kennedy Center

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The financially ailing Washington National Opera opens its new season Saturday following a timely rescue from further decline by the John F. Kennedy Center for the Performing Arts and its president, Michael Kaiser.

Under an agreement signed this summer, the WNO became an affiliate of the Kennedy Center, effectively creating a financial comfort zone for the opera company, which had a persistently climbing deficit that had reached about $11.6 million.

Both sides insist on not calling the new arrangement a merger. “We now share a set of financial books, fundraising, marketing and legal operations, and at the end of the day we have one combined audit,” was how Mr. Kaiser defined it to The Washington Times last week. But he pointed out that the WNO “retains its own independent board” and plans its own seasonal programs — which, however, will require Mr. Kaiser’s approval.

Whatever it’s called, the deal with the WNO reinforces Mr. Kaiser’s position as surely the most powerful performing-arts manager in America. As president of the Kennedy Center since 2001, he controls — besides the complex of theaters itself — a leading symphony orchestra (the National Symphony Orchestra), a ballet company (the Suzanne Farrell Ballet), VSA (the international organization on arts and disability), the De Vos Institute of Arts Management, several educational programs and now an opera company.

Kenneth Feinberg, who was president of the WNO at the time the yearlong negotiations with Mr. Kaiser began, said seeking shelter under the Kennedy Center umbrella “became an option that was too inviting to pass up.”

In reality, the attraction was not so much the institution itself as Mr. Kaiser’s reputation as something of a survival guru for troubled performing-arts organizations.

Mr. Kaiser, 58, is widely credited with restoring financial stability to London’s Covent Garden Opera, which had a $30 million deficit. He also helped erase the debts of a number of other groups, including the Alvin Ailey Dance Foundation and the American Ballet Theatre. Last year, he toured all 50 states and spoke to groups of arts managers and board members on how to stay afloat in a time of global financial crisis, stressing the need for structure, marketing and attention to the bottom line.

WNO trustees hope Mr. Kaiser can arrest the company’s downward slide following the departure this summer of supertenor Placido Domingo, who became its artistic director in 1996 and subsequently its general director.

Mr. Domingo’s tenure started off as golden years for the WNO. Star-studded major productions boosted its prestige in the opera world. Suddenly, the WNO’s programs were an exciting blend of old favorites such as Verdi’s “Un Ballo in Maschera” and American contemporary works such as William Bolcom’s “A View From the Bridge.”

But excitement alone doesn’t run an opera company. “We needed a fiscal discipline that frankly we had trouble developing,” recalled John J. Pohanka, a member of the board of trustees since 1989 and author of a recent book, “Wagner the Mystic.” “Somebody needed to be doing [cost] analysis, and nobody was.”

Spiraling production costs became a major problem. Mr. Domingo’s numerous musical commitments around the world led to frequent absences from Washington, making him something of an absentee landlord and — among other disappointments — leaving him little time for fundraising.

The current economic slowdown was a further challenge, and the company had to cut its 2010-11 repertoire to five productions, down from seven in 2008-09.

“We were reducing our budget each season,” said Mr. Feinberg, well-known for mediating compensation claims for the relatives of 9/11 victims and administering the fund established to pay claims arising from the BP oil spill in the Gulf of Mexico. “The issue was whether we could continue to perform at the height set by Placido Domingo.”

The WNO’s agreement with the Kennedy Center “is about long-term financing, not short-term Band-Aids,” he said.

As a federally mandated institution, the Kennedy Center received $40 million in financial aid from Congress, the Department of Education and other government sources this year, including $22 million for building upkeep and maintenance. Its other sources of income are ticket sales and a vigorous fund raising program. Mr. Kaiser, who was described by one WNO board member as “a genius as a fundraiser,” said that under the new arrangement the WNO would share in the Kennedy Center’s fundraising activities.

Two main obstacles that stood in the way of an accord were Mr. Kaiser’s condition that the Washington Opera would have to first clear its deficit (part of which was rent owed to the Kennedy Center for the Opera House) and the objections of some WNO board members to their perceived loss of independence.

It’s been widely reported that Betty Brown Casey, one of the company’s leading benefactors, had warned that if the WNO merged with the Kennedy Center she would transfer her financial support, including the $31 million endowment she had set up for the company, to the Metropolitan Opera. But board members said the debt was cleared when Mrs. Casey, who is life chairman of the WNO, agreed to allow the trustees a one-time withdrawal from the endowment, which was matched by contributions from “a combination of people who had given in the past, and some who hadn’t,” Mr. Pohanka said. The opera company previously had only been allowed to spend the earnings from the endowment.

At the same time, the Kennedy Center forgave the opera the unpaid rent, which Mr. Feinberg said was “a fair amount of money.”

Mrs. Casey declined to be interviewed for this story but sent along a one-sentence statement: “I love the opera and always will love the opera.”

When it was suggested to Mr. Kaiser that some WNO board members might be wondering what fiduciary and stewardship responsibilities they still have in the new arrangement, he replied, “I suppose.” The opera board, he said, “has the power to hire, fire and compensate staff. Basically, the opera staff creates the program; I approve it.”

Mr. Kaiser runs a tight ship, and some say his management style lives up to his name, which is German for emperor. On the contrary, he said, “I don’t impose my artistic views any more than I do with the National Symphony. I have my personal favorites, but it’s their decision.”

Because opera companies make their plans years in advance, the new season, which opens with “Tosca,” conducted by none other than Mr. Domingo, was determined prior to the WNO’s new affiliation. Exactly when the WNO will return to staging seven operas in one season will depend on the five-year plan currently being prepared by the company, Mr. Kaiser said.

Ironically, Mr. Kaiser is not likely to be in his present position when the real impact of the affiliation begins to be felt. His contract as president runs out in 2014.

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