CHAIR AND MEMBERS BOARD OF CONTROL MEETING ON JANUARY 13,2010 V. A. COTE GENERAL MANAGER OF FINANCE AND CORPORATE SERVICES AND ACTING CITY TREASURER

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1 Agenda Item # Page # TO: FROM: SUBJECT: CHAIR AND MEMBERS BOARD OF CONTROL MEETING ON JANUARY 13,2010 V. A. COTE GENERAL MANAGER OF FINANCE AND CORPORATE SERVICES AND ACTING CITY TREASURER ORCHESTRA LONDON PREVIOUS REPORTS PERTINENT TO THIS MATTER Municipal Council Resolution concerning the approval of a Loan Guarantee for Orchestra London (December 15,2008) Orchestra London Update 2009 Update, Board of Control, January 14, 2009 I BACKGROUND At its meeting on January 19, 2009, Council approved that operating funding be provided to Orchestra London in 2009 in the amount of $482,688; it being noted that this amount is equal to the amount that Orchestra London could have qualified for under the CAlP Category #I Program in It was further noted that Orchestra London will not be eligible to apply to the CAlP - Category #1 Program for a number of years and this funding will likely be required for the period of the Loan Guarantee. Attached is a report from Orchestra London outlining their Plan for a Sustainable Future. The Orchestra is projecting a bottom line improvement through 2010 of about $80,000. The draw on the line of credit in January is expected to be $476,000. This is expected to closer to $400,000 in January of While progress has been made in reducing expenditures, revenues have also decreased Budget Funding for Orchestra London has been included in the proposed 2010 budget. RECOMMENDED BY;/ - - c - Vic Cote General Manager of Finance and Corporate Services and Acting City Treasurer

2 ORCHESTRA LONDON Dear Mayor DeCicco-Best and London City Councillors, At the centre of Orchestra London s Plan for a Sustainable Future are the following: a closely monitored and Board-approved cash budget from January 1,2010 to December 31,2010; a balanced fiscal year budget from July 1,2009 to March 1,2010; and a debt correction plan that creates a financially sound organization. This plan has been designed by the Orchestra London management team with the assistance of the appointed civic leaders on the Oversight Committee and the Board of Directors. Project Bravo is a process that is inclusive of all stakeholders, including staff, musicians, volunteers, music directors, and guest artists. Project Bravo, under the guidance of Doug Alexander, is now developing a strategic plan for 2010 through 2013 based on four Pillars of Success. The Pillars are: 1) Build a financially stable, well managed organization 2) Provide an exceptional experience to our audiences 3) Provide an inspiring and challenging Orchestra for musicians 4) Be respected as a leader in the community We appreciate the confidence of City Council and request your continued support for our annual grant in the amount of $497,168 (current rate of $482,688 plus 3% inflation cost, includes rent increase at Centennial Hall) and the continuation of the approved loan guarantee. The Board, Administration, and stakeholders have successfully implemented a road map to sustainability. With your support Orchestra London will continue to be one of London most important and vibrant cultural assets within the Creative City. A ncerely, / oe Swan Managing Director Orchestra London Soq Wellington Sacct, %don ON N6A 3R6 Admhishafim: Box Office: Fax: aww.orchcshalondon.ca

3 Orchestra London Project Bravo: Plan for a Sustainable Future A Best-Practices Approach to Organizational Stewardship for Excellence - Innovation - Access - Fiscal Responsibility - Sustainability Project Bravo Highlights Orchestra London s Plan for a Sustainable Future initiates a best-practices approach to organizational stewardship while focusing on Excellence, Innovation, Access, Fiscal Responsibility and Sustainability. Recovery Plan Components Dispelling the assumptions: reversing the business as usual model Implementing best-practices Developing a clear, three-year road map to sustainable fiscal responsibility 0 Reviewing, revising, and renewing the sustainability plan to meet goals Executing a holistic problem-solving approach Communicating to internal and external constituents for renewed community confidence Attracting new and growing concert audiences Expanding community outreach efforts Revitalizing music educational programming Since October 2008, Orchestra London has made great progress within the following structural areas: Board Governance Artistic & Production Marketing & Development Administrative Management The Project Bravo Plan for a Sustainable Future builds on these adjustments in each of these areas for long-term success. Board Governance During the initial crisis in December 2008, the Board empowered President Brent Kelman to lead the Project Bravo team and to recruit a new Managing Director (Joe Swan). Their task was to act swiftly to restore financial stability and build patron support. Project Bravo was created as a stakeholder-based working group of Orchestra London s Board of Directors with the mandate to develop a sustainable organizational structure within a best-practices model.

4 Significant Adjustments: The Board of Directors, the new Strategic Oversight Committee, the Independent Financial Monitor, and Orchestra London have all redesigned the governance model. The organization will govern itself with an Executive Committee, a Finance Committee, a Governance Committee, a Fund Development Committee, a Sales and Marketing Committee, and an Artistic Program Committee. The Fund Development Committee, one of the most vital within the organization, is being comprehensively reconfigured to include individual, corporate, foundation, government, endowment, planned giving, special events, and friend-raising initiatives. Additionally, the Governance Committee is active and will expand the responsibilities of a nominating committee to identify, support, monitor, and counsel all new and returning Board members, resulting in extensive engagement of each. New Board members will meet the following criteria: demonstrate a genuine interest in the goals of Orchestra London and the Arts; represent an area that complements Orchestra London s geographic concentration within the region; possess a broad and deep network of professional, community and/or personal peers and is willing to engage that network in all Orchestra London offers; and complement a diverse Board of Directors that Orchestra London strives to balance with age, race, gender, ethnic, geographic, and socioeconomic demographics. As part of the holistic success of the Project Bravo Plan, the Board of Directors voted to recommit to their critical role as stewards, legal guardians, and ambassadors of Orchestra London. In doing so, they will work in tandem with the management team to rebuild Orchestra London into an excellent, innovative, accessible, fiscally responsible and sustainable organization - which is essential to the success of the Creative City and cultural life of the entire community. Artistic & Production In February 2009, Orchestra London reprogrammed its repertoire to ensure a successful balance between artistic excellence, marketing cache, and fiscal responsibility. Since then, a new cost structure has been applied to all current and future artistic and production expenses to emulate a best-practices approach within the orchestral industry. Significant Adjustments: Programming that is artistically satisfying, significantly marketable, and fiscally responsible. This includes repertoire choices, guest artists and composition of

5 orchestral forces. The overall labour costs of staff and musicians and other stakeholders was been reduced by 16.8%. Production costs have been readjusted downward to appropriate amounts within the annual budget. This represents a savings of 33%. Additionally, the planned opera production for 2010 was put on hold pending a sustainable operating budget and local partnerships being developed. The Education & Community Music program has not been operating at full capacity due to a lack of planning and communication with education institutions. Revenue growth in this area is planned for Annually, Orchestra London would commit to programs that were not completely funded at the time contractual commitments were made. Moving forward, the organization will only produce programs that are completely funded and there are plans to restructure funding to allow for a multiyear budget planning process. Audience Marketing & Development In previous years, Orchestra London followed an artistic growth model that did not have sustainable revenues attached to specific programming. While artistically a success, sustainability and affordability assessments were weak. Ticket revenue in the arts generally covers less than 40% of the costs of production. New programs lacked sponsorships, donors and government support. The absence of sufficient marketing and fund development initiatives also contributed to significant financial hardship and deficits. Significant Adjustments:. Repositioning Orchestra London as a vibrant community asset that fosters community partnerships and community education programs; this will restore community goodwill and thus capitalize on the brand s loyalty from the past 50 years. A new marketing plan has been developed to drive subscription and single ticket sales. The new program brochure format combined with increased emphasis on web and social marketing will reduce overall marketing costs by 24%. Rescaling the Orchestra London pricing strategy is underway. Pricing plans are to develop a more flexible pricing structure with multiple entry points. Rescaling of venue seating allows the orchestra to benefit from highly desired seat locations while multiple entry points and lower prices for group sales will enable a 10% increase in total per-concert gross earning potential.

6 Restructuring of the Orchestra London Education & Community Music Program will also allow for revenue growth-including expansion of the sold services portfolioresulting in a reasonable potential ticket revenue of 25% for the annual music education concert season Ticketing packages are being developed and include special Family and Youth offers: o chtldren under 17 years are only $15 with an adult full-price purchase; o full-time students can purchase a card for $SO that will allow them access to all Orchestra London concerts. A comprehensive approach to Fund Development contributions and a redefined allocation of funds to avoid any multiple line-item accounting have been implemented. In addition to a proactive development plan, Orchestra London has many options to create funding levels for individuals, corporations, and foundations to contribute to the annual fund through both philanthropic and sponsorship opportunities. The Budget reflects a combined contributed income increase of 15%. Orchestra London has instituted a new mantra for all fundraising and friend-raising events as well as all marketing initiatives: low Risk (both in human and financial) and High Net Profit (return on investment). In today s economy, large marketing budgets and financially risky galas are impractical for Orchestra London. The organization has therefore started to create a new community model that brings our musicians and our audiences closer together to support important community initiatives. We recently shared in a fundraising initiative (which raised $25,000) to assist with the Relief of Homelessness and in the annual Business Cares food drive. These new directions will expand new audiences, build community goodwill, and afford the Orchestra new marketing and fundraising opportunities. Administrative Management Some of the most significant changes since the organizational crisis of October 2008 have been implemented in the Administrative Management department of Orchestra London. After the announcement of financial turmoil, Orchestra London recruited a new manager. The new management leader has been instrumental in the turnaround process. Utilizing a participatory management style and a team-based approach he has helped the Board of Directors create a financially sound organization. Significant Adjustments: Since October 2008, the administrative personnel cost were reduced by over 30%, In February 2009, the administrative staff was completely restructured, both organizationally and financially, to better serve the organization within a bestpractices, fiscally appropriate and sustainable approach.

7 In addition to the income items listed above, every expense has been methodically scrutinized and readjusted to produce a balanced fiscal year budget. This eliminated the need to launch a crisis fundraising SOS campaign, and represents an overall expense savings of 25%. A financial plan has been designed to keep accounts payable current and there are no past-due accounts. Project Bravo ORCHESTRA LONDON Board Representatives Brent Kelman, President, Board of Directors Dr. Joseph Gilbert, Vice-president, Board of Directors David Luckock, Chair Finance Committee Administrative Staff Representatives Joe Swan, Managing Director Eadie Micks, Chief Operating Officer, Director of Finance Cory Legue, Director of Artistic Operations Terri Anne Moses, Marketing & Communications Manager Musician Representatives Joseph Lanza Spencer Phillips Shawn Spicer Marie Johnson Jeff Garrett Thea Boyd IATSE Representative AI Fowler

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