Pacific Northwest Ballet Faces Financial Challenges Ahead

 The other day, my wife and I took our lives in our hands and went to a live performance of the Seattle-based Pacific Northwest Ballet (PNB) for the first time in a couple of years. In times past we had been subscribers and I had been a contributor.

Well, that's an exaggeration of course: we wore masks, had seats where we were unlikely to be breathing much of anyone else's air (there was a decent crowd present, but the large auditorium was far from full) and avoided doing things we used to enjoy -- drinks and some food in the foyer, a post-show Q&A with one of the dancers. 

As live performances of one sort or another have returned, there have been no reports in Seattle of Covid outbreaks at such venues. While we were at the ballet, the Dave Matthews Band was playing in a sold-out arena nearby with no reports of any problems.  But, as a couple of our fully vaccinated family members can attest, Covid remains a significant threat and one senses it is still wise to carefully ration occasions when one is not going to be socially distant, keeping one's priorities straight (family and close friends first) in the process.

The good news: the quality level of PNB's performances remains very high despite a couple of very difficult years including a lengthy stretch of no live performances because of Covid. PNB is one of the few ballet companies in the U.S. with a full orchestra (plus a highly rated school). If the live music ever goes, also-ran status could lie ahead. 

We saw a mixed rep called "The Seasons' Canon" that was a bit of a smorgasbord as mixed reps frequently are: an opening number that served to advertise the company's commitment -- first and foremost it seems these days -- to diversity; then a classic Balanchine offering for the traditionalists, and finally an extravaganza (54 dancers on stage -- how many U.S. ballet companies can do that?) for those who enjoy spectacle -- and "something new" -- first and foremost. The last was a big hit with audiences according to a couple of home-town reviews, neither of which had a single critical word to say about anything.

In my humble opinion, while visually compelling and attractively danced to a version of Vivaldi's "The Four Seasons," what the final piece had to do with "ballet" was far less noticeable than what it didn't. 

I mention all of this because as a contributor in past years, I became curious about how the company was doing financially, prompted in part because of an email I received from PNB's director of development (fund raising) after I purchased my tickets. The email contained a letter from PNB's Artistic Director, Peter Boal, a distinguished former dancer with the New York City Ballet who has now headed PNB for almost a couple of decades -- generally to great critical acclaim.

The letter began: "We have a very exciting rep in store for you. This is one you will want to see more than once and one you’ll want to recommend to friends, acquaintances, strangers ... everyone!"

Well -- I did see it more than once, the second time digitally for a modest $35. (Because of union-related issues, the digital version was available for only five days after a week or so of live performances ended, which is unfortunate because PNB's digital-only offerings during the height of the Covid lockdowns attracted viewers from around the U.S. and various foreign countries.)

In any event, I'm sure you got the message from Mr. Boal's letter: PNB badly needs more ticket sales.

To understand what's happening, one has to go back to the last time PNB released an annual report (separate from its annual, required financial statement as a tax-exempt entity). That was before the pandemic, for the company's fiscal year ending June 2019.

"This past year was challenging financially. All of us know art can only exist in concert with wise
financial stewardship. We understand the need to present excellence in all we do, but only with
the practicality of our limited resources. When necessary, we make the hard decisions,
evaluating numbers of staff or dancers, adjusting programs, and seeking your help to build
revenue and enthusiasm."  So said Mr. Boal, observing that his role was more than just that of an artistic director. "At times, I'm the best person to find a strategic expense reduction," he said.

More in the way of explanation was provided by Ellen Walker, who had just finished her fifth year as PNB's Executive Director -- in essence, the company's business manager. 

Looking back over the past year, she noted that various external economic and political events had thrown "a disruptive, negative halo over The Nutcracker sales." (More on the critical importance of The Nutcracker later.)  "Sleeping Beauty" sales were on track to earn back a significant measure of that loss when Seattle's February snowstorms brought the region to a halt."  While that elaborate, expensive, somewhat out-of-date, three-act production (thereafter retired from PNB's repertoire) went on as scheduled, "our expected upside upside from ticket sales evaporated with the weather."

About six months after that fiscal year ended, the Covid pandemic arrived. 

In fiscal 2019, PNB Nutcracker ticket sales were just short of $5.7 million, down about 11% from $6.4 million the previous year.  Why is that such a blow?  Total ticket sales for the year (including Sleeping Beauty) were $11.58 million, meaning The Nutcracker alone accounted for just short of 50% of the total. In the preceding year, they had been slightly over 50%.

In the most recent fiscal year, ended June 2022 (the first year in which the company got back to live performances), Nutcracker ticket sales totaled just under $4.9 million (thanks in part by my two granddaughters attending for the first time, in their cute dresses and face masks), or about 49% of total sales.

While PNB and other ballet companies talk a lot about new productions -- and rightly so (what would choreographers and dancers do without them even if they are often not as memorable as one would hope), PNB might be more accurately called The Pacific Northwest Nutcracker Company. Same goes for many other ballet companies, I am sure. 

In contrast to $11.58 million in total ticker sales in the year ended June 2019, expenses for the company and its performances totaled just under $18.4 million. In other words, ticket sales covered just 63%. If administrative expenses of $2.2 million and fund-raising costs of $1.2 million were thrown in, ticker sales covered only 53% of costs.

Now, let's be fair: by the time fiscal 2019 had rolled around, the company had been in operation for about 48 years, and I suspect the ratios for many of those years were even more challenging. Contributions, by far the most important of which (before government support during the pandemic -- more on that soon) were from individuals. Corporate support -- despite the presence of corporate names everywhere -- have been pathetic, and especially so given Seattle's significant number of hugely profitable companies.

Well, if the last fiscal year before the pandemic appeared to be signaling the need for belt tightening, audience building (PNB with the aid of a significant grant has been trying, but it is clearly and uphill effort [thank goodness for all those little girls with ballerina dreams dancing in their heads]) and a search for additional contributions, the current outlook is perhaps even more dauting. 

Where is Makenzie Scott (the former wife of Jeff Bezos, of Amazon fame) when PNB needs her?  Hopefully waiting in the wings as she continues to rapidly dispose of her divorce-settlement billions. In quasi-Marxian terms, "her" billions are simply the surplus profits Amazon scooped up from American consumers, in large part, one can argue, by eliminating much of its competition through predatory pricing in its early years. Not so much now: the company routinely advises customers products on its website can often be obtained at lower cost elsewhere, but then there is often Amazon's "free" shipping. In other words, customers have been getting "taken" (to use a polite term) both coming and going.

Why does the appearance of an "angel" donor matter more for PNB now than in the past?

Let's take a look at the most recent fiscal year.

PNB got a whopping (relative to its size) $12 million in support from the federal government, little if any of which is likely to be repeated absent new government initiatives. Of the total $8 million constituted an award from the Shuttered Venue Operators Grant (SVOG) fund, a federal Covid relief effort that ceased accepting new applications in Aug. 2021. 

Fortunately, thanks in part to other federal aid, PNB needed only about $3 million of that to help cover fiscal 2022 expenses and the remainder was set aside to help cover expected shortfalls during the next three years or so. 

The other aid was just over $3 million in Paycheck Protection (another Covid relief program) loan forgiveness and just over $1 million in federal tax credits. Tax credits for an entity that pays no federal tax? It's explained somewhere in the financial report, available online, if anyone is really interested.

All of which leaves one wondering -- at a time when Covid still calls for caution. There are huge billboard ads for The Nutcracker in Seattle at present and hopefully the weather and the pandemic will cooperate. In the first half of 2023, the company is again scheduled to perform it's excellent version of "Gisele" and I'm looking forward to seeing it and especially if I can catch my current favorite ballerina -- Angelica Generosa -- in the title role. 

That's it for now, but I may have one or more posts on the company's recent mixed rep, mentioned above.