Summary

The Greater Orlando metro market does not — and will not during the foreseeable future — have sufficient market demand to support two large performing arts halls, and this inescapable reality will have substantial negative financial consequences for the community if two halls exist.

Building a single new large concert hall with only 1,800 to 2,200 seats will result in the eventual loss to Greater Orlando of world-class visiting artist performances and Broadway series productions.

Note:  This report addresses concerns about the downtown Orlando performing arts center project proposed in 1999. That project was never built. A different project was proposed in 2006 and approved by elected city and county officials in 2007. Its first phase opened in 2014. That project is briefly discussed in the Postscript to this paper.

Contents

Introduction
Specific problems with OPAEC planning assumptions

• Market demand
• A specific Florida market comparison
• The numbers don’t seem to add up
• The average attendance fallacy
• The queuing problem

Factors affecting hall seating capacity

• Acoustics
• Operating revenue
• Construction cost
• Audience diversity
• Success perception

$20 million endowment or 700 extra seats?

A fictional scenario for one possible future

Recent Florida performing arts center projects

Appendix:
Author’s response to project consultants’ comments about this paper

• Background
• Acoustics
• Operating revenue
• Hall size
• The carpetbagger argument
• Bob Carr Performing Arts Centre
• Conclusion

Postscript

About the author

Introduction

A consortium has been formed, led by the City of Orlando and the University of Central Florida, to develop the “Orlando Performing Arts and Education Center” (OPAEC) in downtown Orlando. This is certainly a very worthwhile project; the Bob Carr Performing Arts Centre’s deficiencies are well known.

This document does not address concerns about the Orlando metro market’s ability to finance the proposed facility. Rather, this document addresses specific concerns with respect to the planned seating capacity for the OPAEC main concert hall and questions certain planning assumptions.

Currently available information suggests that planners are doggedly sticking to a maximum concert hall capacity of 1,800 seats. Further, OPAEC planners appear to be operating under the following assumptions:

The OPAEC will not replace, but will supplement the Bob Carr Performing Arts Centre, which will remain in operation for the Orlando Broadway Series, the Festival of Orchestras, and perhaps other touring attractions. Planners believe there will be more than enough market demand for both facilities.

The OPAEC will be primarily a rental facility — in which the facility earns a fixed rental fee — and not a sponsor-presenter facility (in which the facility books touring attractions at a fixed artist fee and has the chance to benefit financially from strong attendance). Principal tenants will be Orlando Opera, Southern Ballet Theatre and the Orlando Philharmonic Orchestra.

Income from a planned $20 million endowment would absorb projected operating deficits for the OPAEC facility. Assuming a typical conservative return on the endowment, planners would seem to be projecting annual OPAEC deficits of just under $1 million.

The central problem with the above assumptions is that there is not currently, and will not be during the foreseeable future, sufficient performing arts market demand to support both Bob Carr Performing Arts Centre and the proposed OPAEC, and as a result, one or both facilities will incur large operational deficits once both are competing for finite demand.

If, in fact, there is not and will not be sufficient market demand for both facilities, common sense dictates that the Bob Carr Performing Arts Centre will eventually have to be demolished or repurposed to another use, the best intentions of OPAEC planners to the contrary notwithstanding. And if, in fact, this is a strong probability, then the proposed OPAEC main concert hall must have a seating capacity of at least 2,500 seats if today’s Bob Car Performing Arts Centre tenants are to remain economically viable in an OPAEC-only future.

 

“You’re entitled to your own opinion, but you’re not entitled to your own facts.”

— Daniel Patrick Moynihan

Specific problems with OPAEC planning assumptions

Market demand

There is not now, nor is there likely to be in the foreseeable future, sufficient market demand in the Orlando metro market to support two competing 1,500-3,000 seat performance halls.

The table below details significant sources of future “large hall” market demand, and assumes optimistic levels of attendance for the performing arts groups in question. The figures include an allowance for the ballet and opera to conduct one full-dress rehearsal before each unique production:

Hall	Uses	Attendance
Broadway Orlando	90	162,000
Orlando Philharmonic (1)	25	36,200
Southern Ballet Theatre	33	47,200
Orlando Opera	16	21,600
Festival of Orchestras	8	20,000
Florida Youth Orchestra	2	2,400
Holidays (Handel’s Messiah)	2	3,600
Sponsor-presenter attractions	50	90,000
TOTALS (2)	226	383,000

And how optimistic are the above figures? The table below lists the actual attendance for Bob Carr Performing Arts Centre during the 1996–1997 season, the latest season for which the author has data:

Hall	Uses	Attendance
Broadway Orlando	86	138,912
Orlando Philharmonic	3	2,442
Southern Ballet Theatre	33	24,129
Orlando Opera	15	15,920
Festival of Orchestras	5	10,196
Florida Youth Orchestra	1	1,255
Holidays (Handel’s Messiah)	1	2,000
Touring attraction rentals (3)	22	47,889
TOTALS	166	242,743

(1) The 25 hall uses indicated for the Orlando Philharmonic, in the first table above, represent 100% absorption of Greater Orlando MSA market demand. This level would require a $5 million annual budget orchestra — about $1 million more than the old FSO’s budget at its demise — including more than $2 million in unearned income. (Such an orchestra’s business model would also require 16 extra concerts in Melbourne, Ocala, Vero Beach and Daytona Beach.) By comparison, the Orlando Philharmonic’s current annual budget is less than $1 million.

(2) Orlando Opera, Southern Ballet Theatre and Orlando Philharmonic performances for Orange County Public Schools students are not included in the figures above. The school concerts take place during school hours and thus do not conflict with other uses; also, these performances are subsidized by Orange County and thus represent additional cost to local government and not revenue.

(3) These are touring attractions that typically appear in a 1,500 to 3,000-seat hall. Examples appropriate to the metro Orlando market include David Copperfield, George Carlin, and The Temptations.

A specific Florida market comparison

Carol Morsani Hall in the Tampa Bay Performing Arts Center (2,500 seats) had 1998 attendance of 414,984 for 216 events. 389,041 of the total was attributable to the Broadway Series, including an unusually long engagement for The Phantom of the Opera./q/

Standard Rate & Data Service (SRDS) produces an annual socio-demographic research study called SRDS Lifestyle Analyst. Among other measures, the study estimates the number of households within each television DMA:Nielsen Designated Market Area market for the socio-demographic category “Attend Cultural/Arts Events.” The 1998 study estimated 169,930 such households in the Orlando-Daytona Beach-Melbourne market and 225,593 for the Tampa-St. Petersburg-Sarasota market.

If we assume, in comparing the Tampa and Orlando markets, that market demand absorbed by large halls in Clearwater and Sarasota is roughly proportional to the market demand absorbed by the large halls in Daytona Beach and Melbourne, then we might expect today’s market demand attendance for large halls in Greater Orlando to be 169,930 households divided by 225,593 households x 414,984 = 312,591.

Of course, the calculation above is a very simplistic analysis, but the reality is likely even worse when one factors in median age. Performing arts attendance tends to rise with age, and the Orlando market is significantly younger than the Tampa market — 34.4 years for the Orlando television DMA market versus 40.0 for the Tampa television DMA market.

Compare these research-based “guestimates” with the tables in the preceding section and you can begin to see that the upper limits on market demand are very real.

The numbers don’t seem to add up

Morsani Hall in the Tampa Bay Performing Arts Center presented 216 events during 1998. Dreyfoos Hall in the Kravis Center for the Performing Arts, in demographically perfect — for a performing arts center — Palm Beach County, presented about 300 events last year.

If we assume, as OPAEC planners do, that Broadway Orlando and the Festival of Orchestras are going to remain in Bob Carr Performing Arts Centre, are we really going to build a new large hall for, at most, 128 uses per year? And leave 98 uses per year in Bob Carr?

Are we really going to pay the overhead, salaries and maintenance for two buildings when we could easily get by with one?

Now, the truth is that the cost of running Bob Carr Performing Arts Centre is only about $1 million per year, and the facility has produced a slight surplus every year for the last four years.

But … Bob Carr Performing Arts Centre shares administrative and management overhead, security, maintenance and box office operations with other Centroplex facilities. Also, it has no in-house education programs and does no sponsor-presenting of touring attractions, eliminating the need for any marketing, production, or fundraising expenditures and the associated staffing.

By comparison, the Tampa Bay Performing Arts Centre has a staff of 107 people. 1998 general and administrative costs alone were $1.39 million. The total for all costs and expenses except production (the direct costs associated with performances) was $6.6 million. For 1997, which did not include the extended “Phantom of the Opera” run, the total for all costs and expenses except production was still $5.3 million.

The Kravis Center for the Performing Arts in West Palm Beach manages to operate with a far greater number of volunteers and thus has a staff of “only” 58 people. On the other hand, the Kravis Center’s total for all costs and expenses except production and special events was $3.98 million, almost four times the total cost to run the Bob Carr Performing Arts Centre.

Which raises a question.

• If Broadway Orlando represents the bulk of rental income for the Bob Carr Performing Arts Centre …
• And if total 1998 Bob Car rental income was only $455,987 …
• And if OPAEC planners intend to keep Broadway Orlando at the Bob Carr Performing Arts Centre …
• And if other vibrant educational and sponsor-presenting facilities in Florida cost $3 million to $5 million a year to operate …

Where is the income going to come from?

It would certainly seem that at a minimum, Broadway Orlando has to be part of the OPAEC, and that the facility has to become a successful fundraiser and sponsor-presenter as well.

Orlando does need a new performing arts center. But it doesn’t need two. Which brings us to the question of seating capacity.

The average attendance fallacy

Proponents of an 1,800-seat OPAEC main hall capacity argue that even if the Orlando Broadway Series did move into the OPAEC facility there would be plenty of seats because Broadway Series attendance averages only 1,600 seats per performance. Actual historical data illustrate the fallacy of this argument.

Orlando Broadway Series attendance for the 1996–97 season was 138,912 for 86 performances, or an average of 1,615 seats per performance. But here’s the problem: Of the 86 total performances in this example, 25 had attendance greater than 1,800 seats. The actual total “excess” attendance for the 1996–97 season was 6,963 seats (which is calculated by summing the total attendance for the 25 performances that exceeded 1,800 and subtracting 25 × 1,800). At an average ticket price of $35, the Broadway Series’ lost income for this season, in an 1,800-seat hall, would have been $35 × 6,963 = $243,705.

This is an estimate. Frankly, though, using an average ticket price in this calculation is also a fallacy, as the cheapest seats in the house usually sell first. Thus, the last seats to sell would typically be more expensive than the average price. The real loss would be greater.

The queuing problem

A close relative of the average attendance fallacy is the queuing problem. An everyday queuing problem is the question of how many checkout cashiers are needed at any given time in a grocery store. For performing arts facilities, the queuing problem revolves around the fact that certain performance days and times are more attractive to consumers than others.

A central OPAEC planning assumption is that local performing arts groups such as Orlando Opera and Southern Ballet Theatre will make their home at OPAEC.

An 1,800-seat main hall capacity could have potentially disastrous consequences for these groups. Both groups have sold out, and are even more likely to sell out in the future, such preferred attendance times as Sunday afternoon (elderly patrons prefer not to stay out late or drive at night) and Friday night (which is customarily “date night” for many younger patrons) in the Bob Carr Performing Arts Centre.

There is, of course, a finite supply and Friday nights and Sunday afternoons, and it is a fallacy to believe that market demand will simply migrate to other less desirable days and times. It just doesn’t work that way. The loss of 600 or more seats worth of earned income per prime time performance would place new pressures on the earned income of local performing arts organizations, forcing them to bring in more unearned income in the form of contributions.

Incidentally, the explanation above does not really adequately convey just how severe this problem would impact Orlando Opera and Southern Ballet Theatre. A ballet company’s business model displays a seasonality pattern similar to the retail industry: 50% or more of annual earned income comes in during the holiday period between Thanksgiving and Christmas (from programs targeted at families; usually extended runs of “The Nutcracker”). And Orlando Opera typically stages three major opera productions per season, with each comprising three to four public performances arrayed around a single weekend. Thus, the supply of optimal (i.e. potential sellout) event times for these two groups is extremely limited.

Factors affecting hall seating capacity

Six major issues must be considered in any discussion of concert hall seating capacity. These are:

• intended use
• acoustics
• operating revenue potential
• construction cost
• audience diversity
• success perceptions

This paper does not address intended use; the author presumes that the hall will be sized and designed for a relatively broad range of musical performance, including opera, ballet, symphonic music, Broadway-style musical theater and other touring attractions.

Acoustics

The definitive reference work on concert and opera hall acoustics is How They Sound: Concert and Opera Halls, by Dr. Leo Beranek of Harvard and MIT. While there is no question that the additional volume required by extra seats can challenge large hall acoustics, the hall ranked second best in the world by Dr. Beranek, Boston’s Symphony Hall, has 2,625 seats. Carnegie Hall, which is ranked “excellent,” has a seating capacity of 2,804. The median seating capacity of halls ranked “fair to good” and “good” by Dr. Beranek is 2,729.

Other factors being equal, an 1,800-seat hall can have better acoustics than, say, a 2,500-seat hall. But acoustic ideals must take a back seat to economics. The acoustically best large halls combat increased volume by building upward instead of back from the stage to accommodate extra seats. Bigger halls simply have more balcony levels. This method shortens the distance from stage to back wall and puts the greatest portion of the audience closer to the stage.

The OPAEC board retained ARTEC Consultants to provide acoustic design and engineering services for this project. While the origin of the 1,800-seat idea is not known, it is very well known within the performing arts field that Russell Johnson, ARTEC’s founder, is an evangelist for smaller concert halls. For better or worse, his clients get a heavy dose of lobbying for sub-2,000 seat halls.

On the other hand, Mr. Johnson is not known as an evangelist for economic viability. In three of the cities where he has recently been engaged — Miami, West Palm Beach and Philadelphia — his views were countered in varying degrees by economic pragmatism.

Operating revenue

This issue has already been discussed in the sections on the average attendance fallacy and the queuing problem, but another example will illustrate the big hall advantage.

During its fourth (1995–96) season, the Kravis Center — the smallest of the new Florida main concert halls with 2,193 seats — operated at a $506,318 deficit on revenues of $11.6 million and 300 total events. 147 of the events were “touring” events brought by Kravis as sponsor-presenter. In other words, Kravis paid a fixed artist fee and any net additional ticket revenue accrued to the benefit of the concert hall.

It is safe to assume that not all 147 touring attractions in the main hall could have sold 2,500 or more seats, but quite possible that with competent marketing, 45–50 performances could have. Well, some simple math: With a main hall capacity of 2,500 instead of 2,193, the 307 extra seats sold at an average of $35 each for approximately 47 of the 147 touring events presented by the Kravis Center would have yielded the hall $506,000 in net additional ticket revenue.

Construction cost

One argument put forward by smaller hall proponents is that fewer seats means lower construction costs. This is true. On the other hand, though, incremental hall construction costs per seat tend to fall as seating capacity increases. This is partly because of the nature of performance halls: Hall designers add seating capacity vertically — by adding balcony levels — in order to keep the audience as close to the stage as possible. The orchestra section in either case has about 1,000 seats. The bigger hall simply has more balcony levels.

The building footprint for an 1,800-seat hall is roughly the same as that of a 2,500-seat hall, but construction costs per seat are lower for the larger hall. This is because the size and cost of various building amenities and equipment do not increase in proportion to increases in seating capacity (nor, incidentally, do operating costs).

We can be specific. Using the OPAEC planners’ own cost and square footage allowance assumptions (Source: cost budget dated March 31, 1997 by Donnell Consultants Incorporated), adding 700 seats to the OPAEC main concert hall would require an extra 18,145 gross square feet for additional public lobby and circulation areas, additional balcony floor area and extra restroom facilities, at $354 per square foot (raw construction costs plus general conditions, contractor profit and cost escalation factor), plus $210,000 for the extra 700 seats, for a total additional cost of approximately $6.63 million.

Adjusting the OPAEC main concert hall cost budget for 1,800 seats — the original cost budget assumed 2,000 seats — the estimated construction bid cost (in 1999 dollars) drops to $52.1 million. The $6.63 million cost associated with adding 700 extra seats is about 12.7% of $52.1 million. A 12.7% increase in construction costs increases seating capacity by more than 38%.

On the other hand, OPAEC planners and decision-makers have said the main concert hall size must be kept as small as possible because the community “simply can’t afford to make it bigger.”

Well, maybe.

But hopefully, the points raised in this paper will paint the prospect of building an 1,800-seat main concert hall in the same light as the purchase of a dining room table with only three legs …

It doesn’t matter how much you spend if what you end up with doesn’t get the job done.

Form must follow function.

And frankly, the cost of adding 700 seats pales in comparison to the potential for cost overruns inherent in any design that uses complex angles and architecturally marvelous curved facades, instead of more simple and cost-effective straight lines. The world-famous Sydney Opera House, for example, was 1,000 percent over budget when finished. In fact, the original design was impossible to build.

The OPAEC main concert hall budget is about $400 per gross square foot (the additional costs per square foot are primarily for non-variable administrative items). The New Jersey Performing Arts Center, by comparison, a complex building design completed about a year ago, ended up costing about $720 per gross square foot. Now, construction costs are higher in the New York-New Jersey market than in Florida, but not 80% higher! The real difference lies in the NJPAC’s enormous construction complexity … and one wonders whether or not current OPAEC cost budget estimates accurately reflect virtuoso architect Moshe Safdie’s brilliant, but not exactly rectangular, design.

Audience diversity

The smaller a concert hall’s seating capacity, the less able it is to make a given performance available at reasonable prices. In other words, reducing hall size tends to foster development of an elitist audience and to shut out people who simply can’t afford more expensive seats. The idea of being able to offer “cheap seats” is far more doable in a hall with 2,500 or more seats than it is in a hall with 1,800 seats. And this could become a particularly thorny issue if the hall is to be constructed with public funds.

Success perception

There is no question that a perception of success tends to create ticket scarcity in the performing arts. People want to buy “hot” tickets and naturally draw negative conclusions from half-empty houses. So there is a strong incentive to have the hall look full during performances.

It is, therefore, possible that some local performing arts organizations are concerned about the specter of a half empty “bigger” concert hall, and haven’t really thought through the attendance fallacies discussed earlier in this paper. They believe smaller halls are better because, for example, an event with between 1,200 and 1,500 attendance will look more successful in an 1,800-seat hall than it might in a 2,500-seat hall. This is wrong-headed thinking, for these reasons:

• It is defeatist.  We should not even be thinking about a major new performing arts center if the arts group stakeholders do not have confidence in their ability to grow and be successful.
• It is steady-state thinking.  The Central Florida DMA:Nielsen Designated Market Area market adds something like 100,000 new residents each year. Central Florida’s arts audience will likely remain a more or less constant percentage of total population, so it can be expected to grow substantially during the next 20 years.
• It is unnecessary.  Because the (lower) orchestra section in a concert hall typically seats about 1,000 people, regardless of whether the total capacity is 1,800 or 2,500, the audience should “look full” once there are at least 1,500 or so people in attendance.

$20 million endowment or 700 extra seats?

Using OPAEC planners’ own construction cost assumptions, adding 700 extra seats to the current plan, for 2,500 total, would increase the project cost by $6.63 million.

OPAEC planners say the community can’t afford a bigger concert hall, yet the current OPAEC vision calls for a $20 million endowment to cover deficits projected by the planners.

A 4% tax-free return on a $20 million endowment should generate long-term average annual endowment income of about $800,000; however, if the endowment is invested so as to preserve the real value of the corpus over time, the actual cash flow available for OPAEC operations could be considerably less.

By comparison, let’s say that $6.63 million is invested in 700 extra seats and related facility spaces. And let’s assume that one extra seat can generate $35 per sponsor-presenter performance in theater admission and $1.50 in extra net concession revenue. On this basis, selling 700 extra seats to a single sponsor-presenter performance generates about $25,550 in incremental net income. 31 sold-out sponsor-presenter performances would generate about $800,000 in incremental net income from the 700 extra seats.

Selling out 31 sponsor-presenter events is very achievable. Also, it is important to understand that these calculations assume variable costs for artist fees and event-specific marketing are already covered by the sale of the first 1,800 seats sold.

Incremental revenue would also be earned from increased hall rental fees and increased concession revenue during rental events with more than 1,800 attendance. Analysis of other halls suggests that we might reasonably expect $5.00 in annual theater rental income and concession revenue for each additional annual attendance unit.

If the sum total of unique event 1,800+ attendance is just 5% of total attendance (this is consistent with Broadway Orlando’s actual experience) and total season attendance for the new hall is 300,000, the additional attendance would be 5% × 300,000 = 15,000. The additional theater rental income and rental event concession revenue would be 15,000 × $5.00 = $75,000. With 400,000 total season attendance, the additional income from theater rental and rental event concession sales would rise to $100,000.

Of course, the actual basis for charging additional theater rent would be greater seating capacity. Attendance is simply a convenient basis upon which to extrapolate from other halls.

Thus, the above scenarios suggest that with annual attendance of about 300,000 in a 2,500-seat hall, including at least 28 sold-out touring attractions presented by the hall, a $6.63 million investment in 700 extra seats would generate about the same incremental annual net income as a $20 million endowment.

Which is the more affordable way to earn $800,000 … a $20 million endowment or $6.63 million worth of extra seats?

Incidentally, the above scenarios should also suggest to the astute observer that, like every other new performing arts center in Florida, the proposed OPAEC facility must be a significant sponsor-presenter and not just a rental theater like the Bob Carr Performing Arts Centre.

A fictional scenario for one possible future

Orlando, a metro market that by even the most conservative population growth projections will, within a few short years, resemble the Atlanta metro market of today in total population, finds a way to finance and build a new performing arts center. The main concert hall of the new Orlando Performing Arts and Education Center has 1,800 seats.

Broadway Orlando and the Festival of Orchestras each calculate that, at an average ticket price of $35, they stand to lose (2,400 − 1,800) × $35 = $21,000 in net ticket revenue for each performance in OPAEC that they could have sold out in the Bob Carr Performing Arts Centre, if they move into the new facility.

(Incidentally, the calculation above is valid regardless of the number of complimentary or subsidized tickets issued to students, VIPs, etc.)

For the Festival of Orchestras, this is a potential loss of more than $100,000 over the course of a five-concert season — roughly 25% of the Festival’s 1998–99 ticket revenue. In the case of Broadway Orlando, the potential loss will be more than $250,000.

Both organizations elect to remain in the Bob Carr Performing Arts Center, as OPAEC planners originally intended.

Local non-profit performing arts organizations are thrilled to finally have a home; however, the heavily discounted rental income the concert hall earns from their performances does not contribute significantly to annual revenues.

The new concert hall’s management discovers after the first two seasons of operation that the vast majority of for-profit entertainment attractions that fill the annual calendar and “pay the bills” at Florida’s other big performing arts centers — perennial favorites such as Steve Lawrence and Eydie Gorme, Paul Anka, Robert Klein — don’t draw very well in downtown Orlando because of demographics.

Metro Orlando’s (Orange, Seminole, Osceola and Lake Counties) median age is around 32, the youngest of any major metro market in the state. Many Orlando area retirees already travel to Peabody Auditorium in Daytona Beach or the King Center in Melbourne to see these entertainers. The median age in the latter two metro markets, incidentally, is over 40.

The Orlando Sentinel wonders in an editorial why no one considered, during the OPAEC planning process, the fact that all these sorts of entertainers were not frequent headliners at the Bob Carr Performing Arts Centre.

“Hot” touring attractions such as Ice Capades, Céline Dion, Jimmy Buffet and Garth Brooks, attractions that appeal to a broad segment of the population and can sell over 15,000 tickets to a single show, stick to the Orlando Arena.

After two or three seasons, the new performing arts center is awash in red ink. Its governing board begins to actively look for solutions. One solution is obvious and enticing: The city is paying the operating and maintenance costs for two competing performing arts facilities. Why not knock down the Bob Carr Performing Arts Centre?

Three advantages of demolishing the Bob Carr Centre are put forward:

• The city’s concert hall operating and maintenance costs will be reduced by about $1 million per year and an extremely valuable piece of real estate will become available for sale by the city.
• Additional space may become available for parking at the Centroplex.
• Both Broadway Orlando and Festival of Orchestras will have no choice but to move their series to the new facility, adding substantially to the new center’s revenue base.

A consensus for tearing down Bob Carr builds rapidly among Orlando community leaders. Past promises that “Bob Carr will stand forever” are easily shed by city officials as having been well intentioned but unrealistic.

Broadway Orlando and Festival of Orchestras are forced to find a new home. The Festival could perhaps move its series into the Orlando Orange County Convention Center’s Chapin Theater, but cannot obtain dates because conventions have first priority. Reluctantly, the Festival of Orchestras moves into the OPAEC. The Festival experiences a 25% drop in earned income during its first season in the new center because of the loss in seat inventory. The money cannot be replaced but, as a half measure, the Festival drops its fifth grade essay contest, a merit-based program that by this time is providing over 600 sponsor-subsidized tickets to school children each season.

The Orlando Broadway series is faced with more difficult choices. Unlike the Festival, they could simply add performances to meet their revenue goals. But this is not as simple as it seems, for two reasons:

• Adding dates to compensate for the smaller, 1,800 seat hall removes potential dates in other cities with bigger halls; in other words, it is a diminishing revenue proposition; and
• Adding dates exacerbates the problem that local arts organizations always experienced in the Bob Carr Performing Arts Centre: the Broadway series gobbling up many of the prime dates during the fall and winter months.

The Broadway series has a long-term contract with the city for the use of the Bob Carr Centre, executed back in the late 90s, but by this time it will soon expire. The Broadway series decides to add performances in Tampa and to pull bigger productions out of Orlando. There is a public and media backlash.

A generous local corporation underwrites a $50,000 study by a New York consulting firm to examine the problem and recommend possible solutions. A planning commission reviews the study and ultimately decides to tear the roof off the main concert hall of the new OPAEC facility and add two additional balcony levels, increasing capacity from 1,800 to 2,500 seats. The renovation turns out to be three times as expensive as it would have cost to add the additional 700 seats during the original construction.

Recent Florida performing arts center projects

Within the last decade, a number of new performing arts centers have been completed in major Florida metro markets. Typical configuration is one large hall and two adjoining smaller spaces. The numbers below in parenthesis are the seating capacities of each main concert hall in each facility:

• Kravis Center (2,193) in West Palm Beach cost $63 million — the original facility cost $55 million; an $8 million outdoor amphitheater was recently added to the complex.
• Broward Center (2,700) in Fort Lauderdale cost $55 million
• Tampa Bay Performing Arts Center (2,500) in Tampa cost less than $50 million to build in 1987.
• The new Times Union Center (3,000) in Jacksonville is a $35 million renovation of an existing auditorium.

Last but by no means least, the proposed Dade County Performing Arts Center project, an ARTEC assignment, includes a 2,200-seat symphony hall and a 2,480-seat opera house. Incidentally, two symphony orchestras, the Florida Philharmonic and the New World Symphony, will occupy the symphony hall. Projected construction cost for the 2,200-seat symphony hall is currently $58 million.

2006 Update:  The actual completed cost of Miami-Dade County’s new Carnival Center for the Performing Arts was $461 million, roughly eight times the original cost estimate. Oh, and incidentally, according to the United States Census Bureau, Miami-Fort Lauderdale-Miami Beach metro market population at July 1, 2005 was estimated at 5,422,200 (6th largest U.S. metro market). The comparable figure for the Orlando-Kissimmee market was 1,933,255 (28th largest U.S. metro market).

Appendix

Author’s response to project consultants’ comments about this paper

Background

This paper was subjected to critical review and comment by three OPAEC project consultants: Richard Pilbrow and David Taylor of Theatre Projects Consultants (memo dated May 19, 1999) and Bob Wolff of ARTEC Consultants (memo dated May 21, 1999).

This Appendix responds to the project consultants’ major criticisms. The Theatre Projects Consultants memo, incidentally, is somewhat more balanced than the ARTEC memo. It does advocate the renovation of the Bob Carr Performing Arts Centre, and it does concede some of the points made by this paper.

Comments attributable to Messrs. Pilbrow and Taylor are preceded by TPC and comments attributable to Mr. Wolff are preceded by AC. Their comments are shown in bold, and in some instances are paraphrased for brevity.

Acoustics

TPC:  Information about hall acoustics in the ArtStrategy paper is outdated.

Messrs. Pilbrow and Taylor observe in their memo that while Professor Beranek’s book is indeed the definitive reference work on concert hall acoustics, the rankings contained within its pages are outdated. They argue that some newer halls (built since the book was written) are acoustically better.

To argue that newer halls are better than, say, Carnegie Hall, is to make a specious argument. What does it matter how much better newer halls are if the older (and bigger) halls are still excellent?

The author does not wish to sound like a Luddite, but the simple fact is that brilliant new smaller hall designs that can’t pay their operating costs, because of market demand realities, aren’t worth very much.

AC:  Americans have created and paid for great symphony orchestras in our communities. Why shouldn’t we get to hear these ensembles under quality conditions?

The author confesses to being stumped by this epiphany. Newer halls aside, is Boston’s Symphony Hall, at 2,625 seats, really not one of the greatest halls in the world?

Does Carnegie Hall, at 2,804 seats, really not have excellent acoustics? Is the survey of opinions of acoustics experts around the world, reported by Dr. Leo Beranek in How They Sound: Concert and Opera Halls, to be discounted?

Is respected classical music critic Alex Ross crazy — or outdated — when he writes in The New Yorker, “Carnegie Hall is one of the finest orchestral showplaces on the planet?”¹

AC:  A performance in Carnegie Hall will pale in comparison to the same performance in Vienna’s (1,300-seat) Musikvereinsaal.

Perhaps. But Mr. Wolff fails to point out, in his tribute to the 1,300-seat Goldener Saal, Wiener Musikverein (which, loosely translated, means “Golden Hall, Vienna Music Association”), that tickets to a Vienna Philharmonic Orchestra performance in this greatest hall in the world run upwards of $150 apiece. Now, the Vienna Philharmonic Orchestra provides a unique and extraordinary entertainment experience, but that’s about twice the price for very, very good seats at a major North American symphony orchestra concert.

Built under the auspices of an emperor and funded by a circle of barons, this hall is the world’s most elite music club. The Musikvereinsaal exists only because of a unique convergence of history, tradition and circumstances that would be extremely difficult to duplicate today.

Mr. Wolff also fails to point out that Vienna Philharmonic musicians play with 19th century instruments that lack much of the power and brightness of modern instruments. A 100-member symphony orchestra playing, say, the Mahler Symphony No. 1 with modern instruments might blow the windows out of the Musikvereinsaal. This is, of course, an exaggeration. But in fact, according to Professor Beranek, visiting symphony orchestras do have trouble turning down their volume in the Musikvereinsaal.

While the economic barriers to duplication of a “Swiss watch” concert hall like the Musikvereinsaal have more to do with operational costs than capital costs, they are no less real.

Certainly there are inferior large halls, just as there are probably inferior small halls. The avoidance of inferior hall acoustics is, presumably, the reason one hires an acoustic design firm.

Mr. Wolff’s patronizing comments about what “lay people think” to the contrary notwithstanding, a 2,500-seat hall capacity does not constitute an impossible acoustic challenge. An army of musicians, experts and concert attenders believe that Carnegie Hall and Boston’s Symphony Hall, both 2,600 seats-plus, are acoustically exceptional. Not perfect, perhaps, but exceptional.

The author, for one, could live without perfection if it meant the difference between economic viability and endless deficits. And of course, Mr. Wolff’s firm did manage to set their sub-2,000 seat ideals aside in executing acoustic engineering consulting assignments for Dade County, West Palm Beach and Philadelphia.

Operating revenue

TPC:  It is naïve at best to suppose that increased potential revenue (400 extra seats in Kravis) automatically yields increased net revenue.

Granted, if anyone assumed this. This paper points out that the Kravis Center could have broken even if it sold out or came close to selling out only one-third of its sponsor-presenter performances for the year in question. And since these performances are already being marketed, the assumption that marketing costs would necessarily rise is unfounded. Rather than being naïve, this paper’s contention is that the Kravis Center’s seating capacity forces it to “leave money on the table” when popular shows come to town.

AC:  Pressure is usually applied, by presenters (who depend) solely or mostly upon ticket income, on community leaders to build the largest possible seat count they can in each and every performance facility.

Well, yes. And no.

This is a species of the “evil carpetbagger” argument (see below), implying that market-based profit is somehow bad. Heaven forbid that a performance should find market acceptance as expressed at the box office. Yes, Mr. Wolff, presenters do seek to maximize ticket revenue, but only within the constraints of acceptable product quality. And yes, product quality does encompass acoustics.

And so too does every smart nonprofit performing arts organization seek to maximize ticket revenue; at least every one that wishes to survive beyond its next grant funding audit review.

Profit is not a crime. On the contrary, it is a necessity.

And no, Mr. Wolff, presenters with substantial ticket revenues do not blindly argue for ever-larger hall seating capacities. What they do argue for is the biggest capacity that balances their survival with good to excellent acoustics for their performances, as opposed to the economically blind pursuit of acoustic near-perfection.

To suggest that a symphony concert presenter, or even an evil, money-grubbing Broadway presenter, would blindly argue for 4,000 seats in a hall instead of, say, 2,500, simply out of a desire to earn extra profit, is to suggest that the presenter is an idiot. Indeed, some “threshold” level of acoustic quality must be present in a facility in order to realize the intended use.

AC:  Does Orlando wish to build yet another civic facility with taxpayer money to support predominantly the income/profit-making interests of private parties?

Well, sure, if these risk-taking private parties consistently provide the sort of world-class entertainment that the aforesaid taxpayers desire and will pay for. And sure, if these risk-taking private parties add significant value to the community’s cultural landscape, such that the region becomes incrementally more attractive as a place to live, work and visit. The more correct questions are:

• Will the new civic facility meet a bona fide market demand and cultural need in an economically viable fashion, regardless of the legal ownership structure of the presenters?
• Is it likely, in the face of this bona fide need, that private capital could be attracted to fund the entire cost of the project?

And incidentally, profit, when earned, is not just an unsavory gain that accrues to those who cut corners or gain unfair advantage. Profit is, in fact, both the requirement and the reward for accepting risk.

Hall size

The Theatre Projects Consultants memo strongly disagrees with this paper’s observations about success perception in the performing arts, and then proceeds to make exactly the same points. The author cannot find any disagreement between the TPC memo and this paper on the importance of success perception.

This paper simply points out that building a smaller hall in anticipation of poor market demand or mediocre product is defeatist, backward-thinking, and casts a blind eye to future market growth.

AC:  ArtStrategy appears to be pushing the economics of their client, rather than having an open mind to balance … different economic interests …

On the contrary, while the author has long been a proponent of the Festival of Orchestras concept, he also happens to be a Central Florida resident who cares about the community’s future. He has witnessed at least two recent cultural venue construction projects that are now losing their shirts, in operation, because project planners were more concerned with edifice than operational economics.

As for the author’s open mind or lack thereof, vis-à-vis “the needs of Orlando’s other performing arts groups,” an 1,800-seat OPAEC main hall could be disastrous for Orlando Opera (see “The queuing problem”) and the Southern Ballet Theatre. Orlando Opera already finds itself in a predicament whereby only 21% of its income derives from ticket sales. How will the loss of 600 seats per production on its traditional best sales day (Sunday) improve this situation? Those lost seats will not migrate en masse to other, less desirable days and times.

AC/TPC:  The trend in hall sizes is downward; new halls are smaller.

Frankly, any observations about a “worldwide trend toward smaller halls” are meaningless without an objective analysis of each community’s specific circumstances and the associated economics.

Are these new, smaller halls paying their bills or are they ringing up consistent deficits?

Are these new facilities replacements for larger halls or secondary halls in top-10 mega metro markets with long-established symphony orchestras?

This is an important question. One suspects that many of these new smaller halls are specifically designed for symphony orchestras: Dallas’s Meyerson Symphony Hall is a prime example. And a perfect symphony hall is probably not going to be the best place to experience grand opera.

For example, Messrs. Pilbrow and Taylor applaud the Meyerson Symphony Hall’s state-of-the-art acoustics in their memo, but opera aficionados might take caution from the following direct quote of the June 19, 1999 edition of The Dallas Morning News:

“The Morton H. Meyerson Symphony Center is a great place to hear an orchestra, but Wednesday night’s concert proved it’s no substitute for an opera house.”

The Metropolitan Opera House at Lincoln Center, incidentally, has 3,800 seats. And it has been said that one can “hear a pin drop” from anywhere in the house. Again, excellent acoustics and size are not mutually exclusive propositions.

Returning to the subject of smaller, specific-purpose symphony halls, the only U.S. symphony orchestras able to justify their own symphony concert halls are the country’s 20 or so Group 1 orchestras.²

The author will be happy to discuss with anyone, anywhere and anytime the probability that a Group 5–7 orchestra — the group classification to which the Orlando Philharmonic belongs — can grow into a Group 1 orchestra in the current cultural, media, entertainment and information technology environment.³

The carpetbagger argument

AC:  Each year (Festival of Orchestras) brings several of the world’s great orchestras to Orlando, each for one and only one performance. Of course (Festival of Orchestras) prefers to present (each) orchestra in the largest space with the newest décor and the best acoustics. But at what cost to the community and at what increased benefit to the public?

At what cost to the community? What exactly does this mean? Are these performances bad because cash leaves town with the visiting orchestra, just as it does with the Broadway Series; just as it did with the Tombs of China exhibit; and, dare one say, just as it does with the local Orlando Opera?

Yes, that’s right. Rather than limiting itself to the best available local talent (and the author is certainly not suggesting that it should), the Orlando Opera, a local performing arts organization, is projected to spend $355,000 on out-of-town vocalists, conductors, designers, etc., during its 1999–2000 season, with by far the lion’s share of the total — $306,500 — going to the vocalists. This is a more or less customary annual expenditure level for the opera on such items.

By comparison, the Festival of Orchestras will spend $335,000 to bring five world-class symphony orchestras to Orlando during its 1999–2000 season. This represents a fairly customary annual expenditure level for the Festival’s visiting orchestra fees.

That’s $20,000 less for the Festival of Orchestras to bring five major symphony orchestras from around the world, including conductors and soloists, than Orlando Opera will spend on outside artist fees (and such fees do not, incidentally, include the cost of the local pit orchestra). Surprised?

No one begrudges Orlando Opera its soloists, conductors, and other various out-of-towners. But once and for all, let us use this example to put to bed the silly argument that support for our local arts groups is somehow ethically superior to support for performances of “touring” world-class art (that our community is simply incapable of generating on its own).

Frankly, the phrase “cost to the community” is also code for the idea that world-class visiting artists suppress attendance at performances by local artists of the same genre, and thus prevent entrenchment of the latter as viable cultural institutions. Refuting this idea is beyond the scope of this document. On the other hand, it is very important — though perhaps politically incorrect — to understand the hard market reality that Central Florida will have neither the population nor the socio-demographics to support a Group 1 symphony orchestra at any point during the next half-century.

So, the unfortunate truth is that a smaller, 1,800–2,200 seat hall is ideal only for the one use (a local Group 1 symphony orchestra) that will never be able to justify the investment.

This is not a knock against the Orlando Philharmonic; the author believes they are an indispensable cultural asset and he applauds the considerable progress they have achieved. On the contrary, it is simply an honest recognition of market forces that cannot be controlled or ignored.

An analogy that might help demonstrate the difficulty of building a large and significant symphony orchestra “from scratch” today is an art museum. How realistic would it be, for example, for the Central Florida community to try to develop an expansive collection of French impressionist masterpieces? With paintings selling at auction for $10–$50 million apiece, the odds of success are extremely low. The reality is that today’s major museum art collections are simply lucky accidents of circumstance, the main circumstance usually being where a major collector or collectors happened to live during the late 19th or early 20th centuries.

Development of a major symphony orchestra, while superficially more achievable, is really not that much different. The supply of top-flight classical music talent is finite, and the annual operating budgets for each of the top 20 or so U.S. symphony orchestras have now passed the $20 million mark. Group 1 symphony orchestra players are paid annual salaries of $75,000 to $100,000 per year, and it is not at all unusual for the annual salary for a Group 1 symphony orchestra conductor to exceed $1 million per year. To Make matters worse, the immutable economic laws of classical music demand that roughly half of these sums come from unearned income (donations). The economic and cultural pressures on symphony orchestras of all sizes are — and will continue to be — extraordinary.

Bob Carr Performing Arts Centre

AC/TPC:  The Bob Carr Performing Arts Centre is essential … without it, local and regional arts organizations will be little better off than they are now … the plan has always been to have two halls … scheduling big visiting symphonies and Broadway shows in the Bob Carr Performing Arts Centre will be much easier when the new (OPAEC) facility is in operation.

OPAEC planners insist that the Bob Carr Performing Arts Centre is an integral part of their plan for the future. But they are making promises about the future that — with all due respect — they do not have the ability to keep. Free market economics, hidden agendas and unforeseen future circumstances will defeat the best of good intentions every time.

Two stories involving famous performing arts facilities illustrate this point. During the early 1960s, proponents of a new Metropolitan Opera House project — then led by Metropolitan Opera General Manager Rudolf Bing — gave every assurance that the old Metropolitan Opera House (which stood between Broadway and Seventh Avenue and 39th and 40th Streets) would not be destroyed if a new building was built. The plan was for the old opera house to remain open for touring performances by major foreign opera companies, while the new hall would serve the local opera company.

Once Mr. Bing had his new opera house open at Lincoln Center in 1966, though, he is alleged to have worked behind the scenes to get the old opera house, which he likely would have viewed as competition for his new showplace, demolished. Did he? Well, the truth may never be known, but the old opera house building was gone within a year or so after the new Lincoln Center facility opened its doors.

And Carnegie Hall would not still be standing — even though the man who purchased the building from Mrs. Carnegie, six years after Andrew Carnegie’s death, promised to do his best to continue the building’s use as a performing arts facility — were it not for the extraordinary efforts of Isaac Stern and his associates in 1960.

Stern led an effort to purchase the building on the eve of its scheduled demolition, a demolition to make way for a garish red high-rise. Carnegie Hall is owned today by a public trust.

These stories are presented only to demonstrate that if Orlando does indeed turn out not to possess sufficient market demand to support two performing arts facilities, and if the proposed OPAEC endowment doesn’t even begin to cover the operating deficits caused as a result of the demand shortfall, then it is by no means unreasonable to assume that the older and less attractive facility may indeed end up being demolished or repurposed to another use.

Conclusion

In the end, the Theatre Projects Consultants and ARTEC memos are red herrings because they do not address the central thesis of this paper: that the Greater Orlando metro market (MSA: Orange, Seminole, Osceola and Lake Counties) cannot support two large performing arts halls. And please note that, within the context of this paragraph, it is stipulated that an 1,800-seat hall qualifies as a “large” hall.

One cannot say for sure what OPAEC planners think about the Greater Orlando market’s performing arts demand because they have not disclosed the results of any market demand analysis to the public.

A second large hall should not be constructed with a blind eye to market demand. Respectfully, this is the Field of Dreams approach to facilities development.

If the Greater Orlando community has a fair public debate and then makes an informed decision to build an 1,800-seat hall, knowing in advance that its new “vocabulary of spaces,” to use Mr. Wolff’s terminology, will lose a ton of money every year, but expressing a willingness to accept the losses as an investment in cultural vitality, then so be it. But let’s at least have an open discussion.

Postscript

This paper was researched and written in 1999.

Over the years, the author has been contacted by educators, researchers and elected officials in other communities around the country who have found the paper useful.

The only editorial updates to this paper since 1999 — other than this postscript — are periodic corrections and updates to broken website links and organization names, as organizations have failed, or rebranded, and / or changed their legal and Internet domain names, or changed the web page naming conventions on their websites.

The proposed 1999 Orlando arts center project was never built. That effort, spearheaded by the University of Central Florida and the City of Orlando, lost support and was shelved after publication of this paper.

In 2006, a new plan for a downtown performing arts center was put forward by a consortium of Orlando and Orange County elected officials, and corporate and business leaders. The new plan called for a 2,700 seat main hall, consistent with the principal recommendation of this paper.

However, the new plan also included a smaller 1,700 seat hall designed for optimal orchestra acoustics. As pointed out in this paper, two large performance halls with 4,400 seats of combined seating capacity will strain the operating economics of the facility. It is likely that the 1,700 seat second hall was a concession to pressure from political allies and supporters of the local symphony orchestra.

The Dr. Phillips Center for the Performing Arts was approved by city and county elected officials in 2007. The project broke ground on June 23, 2011 and the first phase opened on November 6, 2014. The first phase included the 2,700 seat main hall but not the smaller hall.

By cleverly packaging the new performing arts center together with financing for a new downtown sports arena and improvements to the city’s football stadium, local elected officials broadened support for the project and gained access to Orange County’s considerable tourist development tax revenue, which is an unusually large revenue source — relative to other similarly sized metro markets — because of the area’s theme park tourism.

The original 2006 project construction cost estimate for the Dr. Phillips Center was $376 million. At the time, Dr. Phillips Center Chairman Jim Pugh told elected officials, “I can say, unequivocally, it will not go over budget.”⁴

Of course, unequivocal predictions about future outcomes are absurd on their face. Alas, Mr. Pugh’s prediction was way, way off. The Dr. Phillips Center’s young history since groundbreaking has been a textbook study in financial and construction mismanagement.

Dr. Phillips Center President Katherine Ramsberger admitted in 2017 that the project’s final price tag will exceed $550 million.⁵ Ramsberger blamed cost overruns on construction cost inflation (“the costs go up the longer we wait”), but inflation alone does not explain a 46% project cost increase over 11 years. More likely, mismanagement, scope creep and deliberate lowballing of the initial cost estimate are to blame.⁶

Deliberate lowballing of the initial construction cost estimate for a public project would by no means be unique to Orlando. Community leaders routinely pressure consultants to lowball cost estimates for new public facilities. For a better understanding of the lowballing phenomenon in public works projects, see “Megaprojects and Risk: An Anatomy of Ambition” by Bent Flyvbjerg, Nils Bruzelius and Werner Rothengatter (the seminal work on megaproject cost overruns) and “Mega-Projects: The Changing Politics of Urban Public Investment” by Alan A. Altshuler and David E. Luberoff.

The new Dr. Phillips Center had attendance of 302,582 people for its June 30, 2016 fiscal year, and about 300,000 for its 2015 fiscal year.⁷ These figures surpass the legacy Bob Carr Performing Arts Center’s attendance, but are well below levels that would be reasonably expected for a shiny new performing arts center in the Orlando metro market, especially given metro Orlando’s population growth during the 17+ years since this paper was written.

While the author has not seen an attendance breakdown, it is likely that Broadway Orlando shows comprise the biggest single chunk of the new center’s attendance.

The Orlando Opera referred to in this paper declared bankruptcy in 2009. A new organization, Opera Orlando — formerly Florida Opera Theatre — has since taken its place. Southern Ballet Theatre has rebranded itself as Orlando Ballet. The Festival of Orchestras, created in 1994 by philanthropist and Central Florida cultural icon John Tiedtke, closed in 2011. The Festival of Orchestras, which presented a slate of four to five visiting symphony orchestras each year, sold more than a quarter million seats over its 17 season run. Long opposed by the local symphony orchestra, the Festival was ultimately killed off by political maneuvering that denied the popular concert series dates in the city-owned Bob Carr Performing Arts Center. This tactic forced the Festival to move to venues several miles outside of downtown Orlando, which eroded its classical masterworks audience.

About the author

Jeff Prutsman conducted extensive research on performing arts market demand between 1995 to 2000, as part of Signal Strategy Group’s ArtStrategy performing arts marketing practice. ArtStrategy directed all marketing for two Central Florida performing arts organizations during this time, the Festival of Orchestras and the Bach Festival of Winter Park. This work included marketing the most successful live masterworks event in Central Florida history: 5,500 paid attendance for two Festival of Orchestras performances of Beethoven’s Ninth Symphony by the Sydney Symphony Orchestra under Maestro Edo de Waart, featuring a combined choir of 300 voices from the UCF University Chorus and Stetson University Choral Union. During the ArtStrategy marketing tenure, the Festival of Orchestras maintained by far the highest percentage of available seat inventory sold (in excess of 90%) of any performing arts group using Orlando’s Bob Carr Performing Arts Centre. ArtStrategy also completed special projects for United Arts of Central Florida, the Orlando Philharmonic Orchestra, Orlando Opera, and the former Central Florida Civic Theatre. Mr. Prutsman is a former magazine publisher (Orlando^® and Sunshine Artist™ magazines) and holds a BSBA degree from the University of Florida’s Warrington College of Business.

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©1999 Jeffrey D. Prutsman. All rights reserved.