Team: Zev Greenfield '05
Project: Nonprofit (orchestra) management, financial forecasting, and strategic planning
Supervisor: Associate Dean and Adjunct Professor Ed Henry, Independent Study
Founded in 1842, the New York Philharmonic is America's premier orchestra and one of New York's finest cultural institutions. Under Music Director Lorin Maazel (pictured), the 106 virtuosos of the Philharmonic play close to 170 concerts for audiences of almost one million people every year. Renowned for its performance of the classical symphonic repertoire, the orchestra is praised for a visionary commissioning program and its presentation of the finest guest conductors and artists in the world. Highlights of every season include a subscription season from September through June at Avery Fisher Hall, free summer Concerts in the Parks, Young People's Concerts®, Rush Hour programs, Saturday Matinees, and a series of special holiday concerts each winter.
However, North American orchestras are increasingly facing financial difficulties due to lower ticket sales resulting in smaller audiences, an increasingly older demographic, and competition from numerous alternate forms of entertainment. Through the support of Paul Guenther ’64, the Chairman of the New York Philharmonic, a study was developed with both the General Manager of the Orchestra, Bill Thomas, and the Director of Finance, Pamela Katz. Greenfield worked with them to prepare and analyze the annual budget to assess financial issues and identify strategic improvement opportunities – both cost drivers and alternate revenue generators – for the organization.
Conducting a financial assessment
Greenfield interviewed orchestral staff, including members of functional areas such as Marketing, Education, Production, Tours, and Artistic Administration, and developed financial models driven by data from seasonal program grids, to understand key revenue and cost drivers and the sensitivity of finances to changes in programming decisions. Recommendations and a preliminary budget were presented to the General Manager and the Finance group. As a result of the feedback provided, additional financial analysis was completed and a complete draft of the budget was presented to the Finance committee. The budget emphasized strategic issues facing the organization and formed the basis for the Director of Finance to undertake the budgeting process with greater detail and flexibility in analysis. In addition, it allowed the General Manager to highlight the shortfall to the Board and Finance Committee’s attention and potential solutions to cover the shortfall.
Identifying operational and revenue improvements
A number of options were identified throughout the budgetary process, ranging from process improvements to large-scale strategic opportunities. The organization is currently investigating ticket pricing alternatives, and season alterations through program profitability analyses and retailing opportunities. “I’ve always been passionate about music and interested in the operations and structure of nonprofits and this project gave me a detailed understanding of the linkage between strategic operational planning, cash flow, and capital requirements of a premier orchestra,” says Greenfield. “It developed and broadened my knowledge base both within the fields of business and arts management.”