Madison Ballet almost back from the financial brink

’Tis the season of The Nutcracker, a time when ballet companies nationwide celebrate the joys — and the spike in revenues — that Tchaikovsky’s timeless work offers.

However, troupes that fail to pay attention to the financial realities of their industry during the rest of the year may find themselves dancing in the dark — no matter how many little sugarplums fill the holiday stages.

The Madison Ballet was headed along that path late last year. The 35-year-old dance company in February pulled the plug on the remainder of its 2015–16 season, which should have ended in June.

The bold move — coupled with a revised operational strategy and a potential strategic alliance within the arts community — helped stabilize Madison Ballet. This fall, the ballet and its dancers returned to the boards with a less ambitious but no less esthetically pleasing schedule.

“I will preface any comments by saying that we are not yet fully back financially,” says W. Earle Smith, the ballet’s artistic director. “But given the marketplace, we knew we had to be proactive and couldn’t wait for the bottom to fall out.”

The problem was a simple one: Ticket sales, donations and corporate and foundation support were insufficient to fund the ballet’s $1.2 million annual budget. Early this year, ballet management and board members determined that development efforts had seriously underperformed, Smith says.

“Due to staffing changes, we found ourselves short on resources in the development area,” says Smith. “We could not — and did not — raise the money we needed to support the full season.”

Debt as red flag

Madison Ballet’s board of directors, half of whom work in some aspect of financial services, realized the dance company’s schedule was financially risky business. Immediate changes were necessary to protect the long-term viability of the company, Smith says.

How large was the risk? Earlier this year, Madison Ballet’s long-term debt equaled nearly $250,000, a figure that could have risen as high as $425,000 if the company had continued on its current course, Smith says. The strain from such an increase in long-term debt raised red flags.

Madison Ballet was not the only company facing such struggles.

The Los Angeles Ballet and the Sacramento Ballet canceled portions of their seasons due to revenue declines. Also, the 30-year-old Silicon Valley Ballet, a $5.5 million San Jose, California, dance company, shuttered its doors largely due to “donor fatigue,” according to a report in the Mercury News.

The Madison troupe canceled the balance of its season to save money and to develop new strategies.

“We needed to work on strategic planning that would bolster development activities and fundraising and put mechanisms in place to assure financial health of the organization,” Smith says.

Dance and finance

Smith’s dance and business backgrounds put him in good position to head the redevelopment efforts.

He’s a “Navy brat” and native of Kailua on the Hawaiian island of Oahu, and spent 20 years dancing with what is now the Texas Ballet Theater in Richardson, Texas. At that point, his career took a turn and he spent three years as a financial and business analyst and consultant for various nonprofit organizations.

But Smith missed the dance world, and returned to spend his final four years as a dancer in New York City, and as a professional “guest artist” with various companies nationwide.

In 1998, when the Madison Ballet advertised for an artistic director, he saw how his experiences in dance and finance made the position a perfect fit. He’s has been in the Capital City ever since.

Cutting costs while maintaining full season

After having to suspend the last season, Smith aimed for sustainability in the 2016–17 season. In the end, developing an alternative performance schedule turned out to be a simple task.

Repertoire performances, which the ballet always held at the smaller, more intimate — and less costly — Bartell Theatre, can be staged for as little as $20,000. Conversely, fully-staged productions, always scheduled for the Overture Hall stage in Madison’s Overture Center for the Arts, can trend upward of $120,000 per show.

In the past, typical seasons included two of each type of performance.

This year, though, Smith eliminated one fully-staged opera and replaced it with an additional repertoire performance.

“It looks like a full season, but it’s not comprised of the same component parts,” Smith says. “There are the same number of shows, but they’re lower-cost shows.”

‘The Nutcracker’ phenomenon

Needless to say, The Nutcracker stayed. The annual holiday crowd pleaser — scheduled for Dec. 10–26 at Overture Hall — is the ballet’s biggest moneymaker, the value of which cannot be overlooked in times of fiscal crisis, Smith says.

“Forty-seven percent of our revenues come from tickets sales, and 80 percent to 90 percent of our ticket sales come from Nutcracker,” Smith says. “The Nutcracker supports so much of our overall operations.”

Tchaikovsky’s classic also proves an effective barometer of how the remaining ballet season will go. Compared to last year’s production, the most financially successful in Madison Ballet’s history, this year’s Nutcracker ticket sales are down by 15 percent. However, Smith is not worried.

“We started out well, but sales began to drop off during the week of the presidential election,” Smith says. “Most sales occur during the Thanksgiving weekend and after, but it would help if we had a really good snowfall to get everyone into the holiday spirit.”

New hire, new partner

The company’s cost-saving measures and greater fiscal responsibility are complemented by the hiring of a new development director to boost Madison’s Ballet’s financial stability. In addition, Smith says the troupe has paid down by $50,000 one of its bank notes, reducing long-term debt while keeping short-term debt stable.

But Madison Ballet has one strategic maneuver up its sleeve that could result in even greater savings while helping create a stronger arts community in Madison.

In May, Madison Ballet and the Wisconsin Chamber Orchestra — known for the wildly popular summertime Concerts on the Square — jointly received a $30,000 grant from the Madison Community Foundation to explore whether combining administrative functions would help both organizations grow.

“The goal of the study is to look for ways to partner that leverage each organization’s assets,” says Smith.

Smith likens the potential partnership to the very successful Dayton Performing Arts Alliance, through which the Ohio city’s ballet, opera and symphony orchestra have found ways to leverage each other’s administrative resources to increase productivity while saving money.

The study is moving forward, but the synergy has not yet been achieved.

“For me, the timeframe to complete the project is sooner rather than later, but we’re both looking to make recommendations by January,” Smith says. “My sense is that both organizations are looking at this positively and in good faith, and we’re moving forward. I feel very positive about it.”

On Stage

Madison Ballet’s production of Tchaikovsky’s The Nutcracker runs for nine performances Dec. 10–26 at Overture Center for the Arts, 201 State St., Madison. For tickets, call 608-258-4141 or go online to overture.org.