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BusinessHit Hard by Pandemic, Philadelphia Orchestra and Kimmel Center...

Hit Hard by Pandemic, Philadelphia Orchestra and Kimmel Center to Merge

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The pandemic forced many American arts organizations to resort to mass layoffs and deep pay cuts as ticket sales vanished for more than a year.

Now one of the nation’s most prominent ensembles, the Philadelphia Orchestra, is trying another tack as it seeks to recover from the crisis: It announced plans Thursday to merge with its landlord, the Kimmel Center for the Performing Arts.

“We knew we needed a big move,” said Matías Tarnopolsky, the president and chief executive of the orchestra, who is set to lead the new organization, which will be called the Philadelphia Orchestra and the Kimmel Center, Inc. “The only way forward is collaboration.”

Facing severe shortfalls, cultural groups across the country are looking for ways to streamline operations and establish new sources of revenue. American orchestras, including Philadelphia’s, are particularly vulnerable after years of rising costs.

The orchestra and the Kimmel Center are betting that by pooling resources, they can better navigate the financial and artistic challenges of the post-pandemic era.

The orchestra has won accolades for its artistry under the music director Yannick Nézet-Séguin, who also serves in that role at the Metropolitan Opera, but it has long struggled financially. After a year of mostly streaming concerts, the orchestra will begin a new season in October with a performance by the cellist Yo-Yo Ma.

The merger will give the orchestra, which has tried for years to rebuild after declaring bankruptcy a decade ago, a leading spot at one of the country’s largest performing arts centers, and allow it to save on rent. (When the orchestra filed for bankruptcy in 2011, it cited the high cost of rent at the Kimmel Center, which then totaled $2.5 million a year, as contributing to its woes; it subsequently got a rent reduction.)

The arrangement will allow the Kimmel Center, which is almost entirely dependent on ticket sales, the added support of the orchestra’s $266 million endowment. That endowment, which was bolstered by a $50 million gift in 2019, is now among the largest for an American orchestra.

Both institutions have made painful cuts as they seek to recover from the pandemic. The orchestra lost about $26 million in ticket sales and performance fees after canceling more than 200 concerts. The orchestra’s leaders took pay cuts and its musicians agreed to reduce compensation temporarily by 25 percent.

The Kimmel Center, which depends heavily on touring artists, Broadway shows and appearances by authors and public intellectuals, canceled more than 1,100 events and lost more than $42 million in ticket revenue. The center furloughed many of its 126 employees and led an emergency campaign to raise $10 million.

The pandemic accelerated conversations about a possible merger, said Anne Ewers, the president and chief executive of the Kimmel Center, who initiated talks with Tarnopolsky last fall.

“When the pandemic hit, every single earned revenue line was gone,” Ewers said. “I realized that our philanthropic base was not as deep and as broad as it needed to be.”

The orchestra has called Verizon Hall, one of three venues at the Kimmel Center, its home since the center’s opening in 2001, playing more than 100 concerts a year there.

But behind the scenes, the orchestra and the Kimmel Center sometimes clashed over schedules and programming choices, Tarnopolsky said.

By merging with the Kimmel Center, he said, the orchestra would be able to expand its offerings, hosting classical music festivals, collaborating with Broadway performers and jazz artists, and taking part in outreach events and other live offerings.

“It’s about seizing those opportunities rather than watching them go by,” Tarnopolsky said.

The orchestra has balanced its budget in recent years as it has worked to recover from a financial crisis that drove it into bankruptcy in 2011. Despite cutting its expenses in bankruptcy, rebuilding has not been easy: In 2016, its musicians held a brief strike that began on the night of the orchestra’s season-opening gala.

The pandemic has led many arts organizations to reconsider questions of structure and management, and some have come to see benefits in joining together during a time of uncertainty. The San Francisco Conservatory of Music last fall acquired Opus 3 Artists, a leading agency that was struggling with steep losses as venues around the world shut down.

Ewers said she hoped the merger in Philadelphia would serve as a model for other institutions facing economic pressures.

“Many people tell us there needs to be more of this kind of collaborative effort,” she said. “I’m hoping that we inspire that.”



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