The Minnesota Orchestra on Tuesday reported the largest annual deficit in the organization's 109-year history.
The shortfall came to $2.9 million on a budget of $30.4 million, for the year ended Aug. 31, breaking a streak of four years of balanced budgets.
It is far from alone among U.S. orchestras facing financial troubles. The Philadelphia Orchestra filed for bankruptcy in April, citing a structural deficit of $14.5 million. Detroit's Symphony Orchestra posted an $8.8 million shortfall in fiscal 2010, and news reports from the Dallas Symphony Orchestra mention a $6 million deficit for 2010-11. Dozens of others are in the same boat.
The Minnesota Orchestra plans to balance its budget in 2013 by attracting new audiences, reducing the number of concerts and making major expense cuts while increasing earned and contributed income, said Michael Henson, president and CEO.
"Excellence is not enough," Henson said at the company's annual meeting Tuesday. "We have to find another way to work."
Minnesota has operated in the red for all but a half-dozen of the past 25 years, but the shortfalls usually have been less than $1 million. Though this year's deficit is the largest dollar amount, a $2.5 million shortfall in 1992 was a bigger share of the orchestra's then-smaller budget.
A key factor in the deficit was that the orchestra chose to rely less on endowment funds to close the financial gap, drawing down $1.8 million less than last year. Henson and outgoing board chairman Richard Davis said Tuesday morning that was a strategic decision.
"We need to grow revenue and cut expenses outside the amount we draw from investments," said Davis. "We need to show a structural deficit because these draws on the endowment are not sustainable. We are beginning the trip toward discipline."