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Granville Symphony Orchestra
Author(s):
Anthony, Robert N.
Young, David W.
Functional Area(s):
   Finance/Financial Management
   Financial Accounting
Setting(s):
   Nonprofit
Difficulty Level: Beginner
Pages: 6
Teaching Note: Available. 
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First Page and the Assignment Questions:
If it weren’t for the special fund drive in conjunction with our 100th Anniversary, this would have been our fifth year in a row with a deficit. Even with the fund drive, the total deficit for the last five years has totaled well over $4 million, which we’ve had to withdraw from capital funds. If we continue this way, our capital funds will soon be exhausted.

The speaker was William Johnson, Chair of the Board of Trustees of the Granville Symphony Orchestra (GSO). He continued:

We’ve got to stop the hemorrhaging. Our plan is to put in place a series of measures that will both help us out on the revenue side and keep our expenses in check. We’ve outlined that plan in our most recent annual report, and I’m sure the board and staff are committed to it, but I’m not completely convinced that it’s attainable.

BACKGROUND

GSO owned two properties. One was Concert Hall in Granville. The orchestra performed there, except in the summer and when it performed in other cities. When Concert Hall was not needed for performances, rehearsals, or recording sessions, it often was rented to other organizations.

The other property was Greenwood, a large complex in the Beaumont Hills, about 130 miles from Granville. The orchestra performed there for nine weeks in the summer. Several hundred students participated in training programs at Greenwood each summer. (The principal buildings at Greenwood were not winterized and could be used only in the summer.) In the summer of 2004, attendance at Greenwood totaled 308,000.

In 2003-04, in addition to Greenwood, the orchestra gave 107 concerts, of which 13 were in foreign countries and 14 in other American cities. The Granville Players Orchestra, formed from symphony orchestra players, gave 63 concerts in Concert Hall and 7 free concerts at an outdoor concert shell in Granville, known as the Terrace. Nearly all orchestra and Players performances were sold out.

Management estimated that Concert Hall was used on 165 evenings a year, of which 130 were for GSO concerts and rehearsals, and 35 were for rentals to outside groups. In the afternoons there were 22 symphony orchestra concerts and approximately 25 rentals to outside groups. The orchestra used the hall on 125 to 150 afternoons annually for rehearsals, recording, or television sessions.

Assignment

  1. What is the strategy of the GSO? Please be as specific as you can in identifying both the GSO’s environmental constraints, and how it differs both from other symphony orchestras, and from a professional sports team, which has many similar constraints and objectives? Why do these differences exist?
  2. Reconstruct Exhibit 1 into a more traditional operating statement. What does this tell you about how well the GSO is achieving the strategy you identified in Question 1? What additional financial information would you like to have in making this assessment?
  3. How has the GSO managed its financial affairs over the past five years? What criteria did you use in making this assessment?
  4. Do the plans for 2005-12 seem attainable? If so, why? If not, what changes would you propose?