Not too long ago, the American opera stage was dominated by commanding figures like Luciano Pavarotti and Beverly Sills. Nowadays, when people think about opera, it's Peter Gelb who comes to mind. Since he took over as general manager of the Metropolitan Opera in August 2006, Mr. Gelb has done more to revive and enlarge audiences for opera than anyone since the Three Tenors.
With his initiatives to simulcast Met operas into movie theaters, schools, Times Square and Lincoln Center Plaza; to stream them live on the Internet and distribute them in every digital media imaginable, including an opera channel on Sirius satellite radio; to start "family entertainment" programs; to vastly increase the Met's marketing; and to re-emphasize the theatricality of opera in new productions, Mr. Gelb has managed to enchant both the masses and the elites. Using film and theater directors, he has invigorated the Met's offerings without introducing sadomasochism and other freakish "updates" common in Europe. When the current season ends in mid-May, the Met expects to have sold 87.5% of available tickets, up from 76.8% two years ago, and box office revenues will likely reach $93 million, up from $82.7 million.
"All of the things he has done have been quite dazzling," says Robert W. Wilson, a not easily dazzled financier and philanthropist who sits on the Met's board.
A 'Marketing Man'?
All of the things he has done have also been quite costly. The Met's budget has grown more than 21% in two years, to a projected $268.3 million in the fiscal year ending July 31 from $221.7 million in fiscal 2006. Its deficit -- despite energetic fund raising -- is likely to widen to somewhere between $6 million and $10 million this fiscal year, compared with a deficit of $4.5 million two years ago.
Which is why there are doubts about Mr. Gelb's strategy, even among his supporters. Some fear that his Falstaffian model is unsustainable, that he is creating a bubble of interest that will inevitably deflate, leaving the Met overextended and mired in the red. Others, says Brian Dickie, general director of the Chicago Opera Theater, admire Mr. Gelb but regard him as "a marketing man who loves opera" -- overly reliant on gimmicks and buzz whose power will fade.
Certainly, jealousy is motivating some of the gossip. But whether Mr. Gelb -- who says he's a producer, not a marketer -- succeeds or fails is important because, as he brags, "we're being copied by other companies, and we're the inspiration for other arts organizations as well." He volunteers that he was invited recently to speak about his strategy at Harvard's Hauser Center for Nonprofit Organizations -- stopping a beat before adding that his cousin, Christopher Stone, runs the Hauser Center. If Mr. Gelb is leading others astray, there will be blood elsewhere in the cultural world.
Mr. Gelb, who joined the Met after stints as president of Sony Classical Music, Vladimir Horowitz's manager and a television producer, says every move has had "an artistic purpose and a business raison d'etre." He says his plan anticipated losses the first three years but that he's ahead of plan. "This isn't easy," he says. "And we're not out of the woods yet."
Shortly after courting Mr. Gelb in late 2004, the Met had responded to shrinking ticket sales and the prospect of a $4 million-plus deficit by cutting expenses and a round of layoffs. With that as a backdrop, Mr. Gelb gave the trustees three options. Two -- continuing on the same path, ultimately shrinking to "obsolescence," or retreating artistically to the point where the Met had only a regional reputation and audience -- were obviously unacceptable. That left his current plan to maintain the Met as a world-class institution -- to "move boldly forward," as Mr. Gelb put it.
"It was a simple choice," he says. Mr. Gelb sat down with a committee of trustees and put flesh on the bones of his boldness strategy. "It was all carefully discussed and adopted," he says. Still, according to one foundation donor, at that point some board members thought that Mr. Gelb's strategy had a less than 50% chance of succeeding. And it definitely required more money.
Opera is always an expensive proposition, and more so at the Met, given the elaborate sets, costumes and year-round orchestra it employs. Yet, for its size, the Met has a puny endowment: $336.2 million (as of July 31, 2007), or about $200 million short of the rule of thumb recommending one that's at least two times the annual budget, and much smaller in scale than the endowments of New York's other elite cultural institutions.
The Met Opera is drawing down 6% to 6.5% of its endowment a year, a bit above the industry-wide standard of 5%, and still gets less than $22 million; the rest of its budget must be earned or coaxed from donors. Since every percentage-point increase in the box office is worth about $1 million -- which doesn't go far at the Met -- the development office must raise more if Mr. Gelb is going to execute his strategy (long-term debt is already a hefty $35 million). "People are worried," says a source close to the board. "That's why they started the campaign to cover the current deficit." To make ends meet over the next five years, the Met has to raise north of $150 million, all told, above what it had to pull in before Mr. Gelb took over. Funding a deficit is always a tricky proposition, veteran fund-raisers say. "This is an investment in him," says one.
Mr. Gelb's strategy aims to widen the audience and therefore increase ticket sales. But that's obviously not the end game. No opera can live on ticket sales. The idea is to make tickets so hot that people become members, buy season subscriptions to gain access to tickets before the rest of the public, and then donate even larger sums to get the best tickets. "The dream is to sell out, because then people think the only way to get tickets is to be a donor," says a retired board member. (Recently, the New York Times reported that the Met had angered Wagner fans by making them buy subscriptions to the regular season, rather than tickets solely to the "Ring" cycle as in the past, to gain access to advance tickets.)
In the 1990s, the Met would regularly take in more than 90% of the total potential box-office receipts -- a level considered minimum for use as leverage in fund raising -- and some two to three percentage points above the Met's current rate.
Other indicators show some, but not enough, improvement. The Met projects 119 sold-out performances, or 54% of the total, in the current year, compared with 22 sell-outs, or 9.6% of the total, in 2005-06. Subscribers, meanwhile, have grown to 14,580 from 12,941 in the same period -- but still a far cry from 17,562 in 2000.
Mr. Gelb thinks he will do better with the new, more theatrical productions, which he describes as "tent-poles" that create excitement and provide support for older productions. In the current season, the Met is mounting seven of them, including "Lucia di Lammermoor" and "Satyagraha," up from four in 2005-06. Next season, there'll be six new productions, and Mr. Gelb is busy lining up more for the future.
He disputes rumors that the Met's new-production costs are rising dramatically because of his penchant for hiring film and theater directors, who are used to bigger budgets. This year's new productions cost $9 million, all told -- not trifling but not Hollywood-size, either. He also says he's controlling production costs -- saving money, even -- by mounting more co-productions with other opera companies.
Mr. Gelb's highest-profile initiative is the high-definition opera simulcasts, which also feed his plans to "bring more people into the house" eventually. This season they are drawing about 815,000 people into theaters in 17 countries at a price of about $22 a head, shared with the theater owners at a rate neither Mr. Gelb nor they will disclose. The simulcasts cost the Met about $1 million each and -- Mr. Gelb says -- they were expected to lose money for a while.
It's true that to obtain rights for the simulcasts, Mr. Gelb reached agreements with the Met's unions that will, essentially, add an escalating amount of money -- $1,000 in the first year, $2,000 in the second and so on to year five -- to the payments each musician or chorus member had received in the past for live radio broadcasts, aired once. They also get a share of any profits. Mr. Gelb explains this as a bargain -- yes, the Met is paying more, but in return it can use the transmissions anytime in all media, now and forever, plus freely use the Met's archive of 100 television and more than 1,500 radio broadcasts, without any additional payments. "The actual cost to the Met is $300,000 in the first year, rising to $1.2 million in year five," he says. "It's beyond a great deal for everyone."
Mr. Gelb figures that the simulcasts will break even ahead of schedule, probably next year, when 11 productions will go into an increasing number of theaters. And, he says, "One side-benefit of the HD transmissions is that we got 4,000 additional national members of the Met who pay $150 a year to obtain advance ticket sales for them." Eventually, Mr. Gelb wants to raise prices for the simulcasts.
In December, however, the Met got competition: Milan's La Scala began transmitting to theaters. Last month, the San Francisco Opera joined the fray, with six post-produced -- not live -- offerings set for this year. Mr. Gelb is not afraid: "What sets the Met apart is fantastic productions with the best cast and the best orchestra." And he adds that the live nature of the Met's transmissions gives him an edge over the SFO. "It's interesting," he says, that the Met's encore presentations don't sell out while the live ones do.
Could it be that the number of people who want to see opera is tapped by one performance? Taken aback, Mr. Gelb won't countenance that, but he does admit that "the difficulty is if we are all doing the same repertory."
That's a prospect made worse by those co-productions. Last November, the SFO put on Puccini's "La Rondine," directed by Nicolas Joel for the Royal Opera House, Covent Garden, and starring Angela Gheorghiu, which is the same production the Met will present next December. "I was concerned when I saw it had been taped," Mr. Gelb concedes. "If the SFO does transmit it" -- which has been announced -- "we might think twice about it. Angela is starring in 'Elixir of Love' next year and we might go with that."
And there'll be more competition ahead. Last May, Elaine Padmore, Covent Garden's director of opera, told the Associated Press, "This is the area we're all moving into in a very, very big way."
Mr. Gelb has forged ahead with other media plans: deals to sell DVDs, to offer on-demand performances online via Rhapsody and RealNetworks, and with broadcast television not just in the U.S. but in Britain, Canada and Japan. The foreign locales -- including new simulcasts in France and on cruise lines -- are supposed to be a window to international donors who will jet over for live performances, too.
Mr. Gelb knows that none of these measures is a huge money-raiser now, but he recoils at the notion that they're long-term investments. "They are paying off in the short-term, not long-term," he insists. "They are necessary activities to strengthen and revive the art form, and they're working."
Opera's Life Blood
Still, as Keith Cerny, an executive recruiter at Russell Reynolds who until last year was executive director of the San Francisco Opera, says, "What keeps opera companies in business is expensive seats and big donors -- generally, the older audiences. The life blood is a relatively small group of really big donors, and then the patrons who buy expensive seats and give."
From them, the Met now has to raise, each year, at least $125 million, up from about $90 million or so each year pre-Gelb, just to break even. To that end, each "managing director" trustee is supposed to "get or give" $250,000 a year and, one member says, a few people have stepped down as the pressure to do so has increased. The Met has added five people to its development staff, raising the department to 41 people (by contrast, the Metropolitan Museum has 42, the Museum of Modern Art has 55, and the American Museum of Natural History has 36, Mr. Gelb says). As the Met's vice chairman, Mercedes Bass -- who with her husband, Sid, pledged $25 million to the Met in 2006 -- is said to be entertaining and wooing many potential donors.
That annual sum, however, is daunting -- possibly the largest among cultural institutions -- and with a potential recession looming, donors may be tighter fisted. A few years ago, Toll Brothers, the luxury homebuilder, made a year-to-year commitment to supply more than half the necessary $6 million to support the Met's public-TV broadcasts. Recently, soon after the company announced support for the 2008-09 season, it also said that it posted a loss last quarter for the first time in years. The last time the Met needed such a sponsor -- when Texaco was swallowed up and dropped out -- it took more than three years to find Toll Brothers.
The need to raise year-to-year funds also delays the much-needed endowment campaign. "We need an endowment of $1 billion," Mr. Gelb says. That, plus a better box office and annual fund-raising, would finally put the Met on solid ground. But it's at least a few years away, probably after, in Mr. Gelb's plan, he manages to break even, after fund-raising, in 2009-10. And that will occur if, and only if, current trends continue. "That," agrees Mr. Gelb, "is always a question."