Armenian Philharmonic Orchestra

Business Plan 2012 – 2015

Content

1.  Executive Summary

2.  The Role of the Symphony Orchestras in the World

-  Comparison of budgets

-  Presentation of necessities

3.  Future of the Symphony Orchestras

4.  Armenia’s Position in the World Music Culture

5.  Armenian State Philharmonic Orchestra

-  Number of workers

-  Artistic Director

-  Concerts and tours

6.  Scenario Planning for the Armenian Philharmonic Orchestra

-  Scenario 1. Leave Everything as it is

-  Scenario 2. Creation of the Endowment

-  How to get started with our Endowment

7.  Goals of Objectives

-  Scenario 2

8.  Possible business models

-  Business model 2

9.  Financial Statements presentation

-  Incomes

-  Expenses

-  Planning 2012-2015

10.  Investment Needs

11.  Participation in implementation of the project.

Formation of the Board

12.  Conclusion

Appendix 1 – APO Academy outlined

1.  Executive Summary

Our mission statement

Armenian Philharmonic Orchestra is the national center of professional orchestral music in

Armenia. This Business Plan sets out our strategy up to 2015. All our activities throughout this period will contribute to the delivery of our core missions:

-  to inspire, motivate and empower the widest range of people through excellent live orchestral music

-  to sustain, develop and promote Armenian orchestral music

-  to keep the high level of cultural awareness of local audience

By any standards, the work of Armenian Philharmonic Orchestra is a success story since the date of its establishment 85 years ago. During 2009/10, APO supported more than 200 events in partnership with local authorities, festivals and promoters across the world. APO maintains close working relationships with agencies, concerts halls, producers, instrumentalists, vocalists, soloists, from the large symphony orchestras to chamber orchestras and contemporary orchestral festivals.

The key to APO’s success lies in the organization’s unique understanding of the dynamic that exists in music between artists, promoters, local and international audiences, where Armenian Diaspora plays a very important role.

As a national orchestra, APO must prioritize its work, where it can achieve the greatest possible impact. As a national orchestra and the only full symphonic orchestra our country has, the APO carries a mission that no one else can implement in Armenia.

We have a strong track record of taking Armenian orchestral music to parts of the world where there is little or no information about Armenia and where, without our support, brokerage and advice, Armenian music would not take place at all. We also work hard to produce orchestral programs that go beyond the concert platform and contribute to key policy areas such as Master-Classes, Private Lessons, Academia and Training, Artsakh Cohesion and Operatic programs.

In the close future, we prioritize our work in areas of geographic under-provision away from Yerevan, where there is an opportunity to present and promote orchestral music – like to Gyumri, Artsakh, Ejmiadzin and Vanadzor.

Our stakeholders

The main stakeholders of the APO have been AGBU, Ministry of Culture of Armenia and the Presidential Fund.

APO retains a considerable part of its budget through fund-raising actions, donations and concert activity.

Concert Season / AGBU / APO / GOV
1999-2000 / 78,12% / 12,75% / 9,14%
2000-2001 / 78,98% / 10,66% / 10,36%
2001-2002 / 74,66% / 15,65% / 9,69%
2002-2003 / 75,38% / 9,98% / 14,63%
2003-2004 / 61,56% / 22,56% / 15,88%
2004-2005 / 57,55% / 21,99% / 20,46%
2005-2006 / 54,74% / 17,57% / 27,69%
2006-2007 / 46,10% / 28,27% / 25,64%
2006-2007 / 46,10% / 28,27% / 25,64%
2007-2008 / 33,28% / 31,30% / 35,41%
2008-2009 / 27,24% / 36,54% / 36,22%
2010 / 15,64% / 42,10% / 42,26%

Working models. Financial projections and plans

Currently, APO work divides into two core areas: our network of local authority partnerships, such as Ministry of Culture of Armenia, and our network of international orchestral touring throughout the world. Both have the same objective: to reach the widest range of people through excellent live orchestral music, where Armenian music is one of the contexts.

With this business plan we have to incorporate the change in funding structures from AGBU, in which the entirety of that funding was in recent past, to creation of a special Endowment Foundation (established as a 501 c 3 in USA) that can be deployed at the Trustees’ board to be established under patronage of the President of Armenia, and try to attract a Royal Patronage.

It was made clear that after AGBU’s decision to step out of regular support to APO, and a very difficult year thereafter when irregular donations from various sources did not bring any stability to the APO operation, only a growing Endowment Fund can strengthen the operation of the APO in the new millennium.

The Endowment Foundation is instrumental to sustain a steady operation of the APO and the staff team towards implementation of the set goals. This should be a growing foundation with a down investment of $20000 000 with a perspective to yield $4 000000 annually from current $1800 000 to cover APO’s operations in the years after. Our goal is to have a $60000000 Endowment Foundation by the end of 2013 yielding 6-8% annually to cover operations and annual inflation rate.

Sustainability and effective Governance

As the only national symphony orchestra with an active involvement in more than 200 events in last two years, APO has a responsibility to promote best practice guides on sustainable touring for our partners. We will also include sustainability best practice guides within our program and promoter agreements.

We shall create a Board of Trustees and recruit Trustees who think strategically and are well networked with a national overview to join the Board and help take the APO to the next level in terms of profile, influence and impact.

Outcomes, targets and measurement

To deliver on all of these agendas, APO has devised four overall outcomes which will govern all of its work. These are:

1. A vibrant and sustainable market for excellent live orchestral music

2. A greater diversity of people, including hard-to-reach national and international groups, experiencing live Made in Armenia orchestral music.

3. Armenian orchestral music is valued by policy makers, partners and the public, as

a) A vital art form, and

b) An effective tool in addressing wider social and economic agendas.

c) A necessary element of national cultural awareness and a must for the cultural policy.

4. APO is a fit-for-purpose, sustainable organization.

Each of the outcomes corresponds to four broad themes around our quality, reach, impact and

value. We have then identified actions that will deliver those outcomes and we set out a list

of priority areas where we will focus our work. These can be seen on page 10.

Risk and scenario planning

The development of this plan coincides with a very challenging economic environment as the

World's economy has just overcome after a prolonged recession. This may well have a considerable impact on the maintenance of the partnerships on which the APO depends

to deliver its outcomes. These are:

-  the sustainability of local authority and promoters’ investment in orchestral programs,

-  the availability of additional funding streams

-  and the renewal and increase of funding from our major stakeholders – Ministry of Culture of Armenia and VivaCell MTS - between 2012 and 2015.

In view of this only creation of the Endowment Foundation under auspices of the President of Armenia can guarantee a decreased level of risks.

With a new funding settlement from a prospecting Endowment Foundation, we are poised to consolidate our position as the only national symphony orchestra for orchestral music and ensure that the widest possible audiences can continue to enjoy and be inspired by the excellence of the Armenian Philharmonic Orchestra.

2. The role of symphony orchestras in the world

The operation of any symphony orchestra has deep educational background. It sustains cultural awareness of any nation and supports its continuous development.

It nurtures and stimulates talents to learn and expose their abilities. To have a symphony orchestra is also a matter of prestige and understanding of unique cultural role that the symphony orchestra implements in the society.

There are at least 800 orchestras in Germany. Among them - 80 world class symphony orchestras. There are 300 symphony orchestras in USA, nearly half of them youth. There are 50 world class orchestras in England. Only BBC has 5 symphony orchestras: BBC Concert Orchestra, BBC Philharmonic and BBC Symphony Orchestra, are best known. There are 20 orchestras in a 4 mln. Ireland.

The Orquesta Sinfonica Simon Bolivar (Simon Bolivar Symphony Orchestra) led by a prodigy conductor Gustavo Dudamel is a Venezuelan youth orchestra. It is the apex of the nation's system of 220 youth orchestras, known as El Sistema created by Dr. Abreu.

Facing red ink after decision stepping out of regular support of the APO by one of the main stakeholders, the Armenian Philharmonic Orchestra might be undertaking profound change. Eduard Topchjan the orchestra's Artistic Director said, "We simply can't go on doing the same thing . . . we have to be able to create an Endowment Fund to sustain our operation on a regular basis.

It has long seemed that orchestras need to re-envision themselves as educational institutions. This would mean re-envisioning the content and purpose of subscription concerts: more thematic programs, more cross-disciplinary content embracing dance, film, theater, and the visual arts. One result would be a means of escape from the rigid confines of classical music. Another would be new links to museums, to high schools, colleges, and universities. An expanded mandate; an enlarged mission.

The Symphony orchestras of the world operate having different sources of income.

For example the Phoenix Symphony operates on an annual budget of more than $10 million and is supported by ticket sales and private and corporate contributions, as well as by public funding provided through the Arizona Commission on the Arts, the National Endowment for the Arts, and the City of Phoenix's Office of Arts and Culture.

Another example is illustrated by operation of the Syracuse Symphony Orchestra, which is a major, full-time orchestra performing approximately 200 concerts during its 35 week season, including classics, pops, family, holiday, chamber orchestra, education, ensemble and summer parks concerts. With an annual budget of $7 million, one of the Orchestra’s many distinctions is its commitment to regional touring throughout Central and Northern New York State. In addition to its home series in Syracuse, the Orchestra performs self-presented subscription series. The Orchestra also runs out performances to over twenty additional communities throughout New York State.

These two orchestras serve to the communities which are about the same size the Armenian Philharmonic Orchestra serves, that is why we decided to use them as examples for our minimal optimal budget.

Whilst it is curious to present the big numbers, such as the budget of the Los Angeles Philharmonic with the largest budget of any American orchestra -- $92 million – thus the Los Angeles philharmonic continues to present expensive touring orchestras in 2009-10, and that roster included two concerts by the Berlin Philharmonic conducted by Simon Rattle.

Other world symphonic orchestras of supreme class, such as Berliner Philharmonic Orchestra also have big annual budgets, which nevertheless are smaller of those in USA. State subsidy accounts for the bulk of the BPO budget, almost 62 percent of which derived from earned income as of fiscal 2008. Although the orchestra refuses to cite current figures, as of 1995 the Berlin Senate (which supports seven professional orchestras and three opera companies in the German capital) supplied about $15 million of the orchestra's $27.5 million annual budget.

As a matter of fact, Berlin spends about $593 million on the arts annually, $425.5 million more than the National Endowment for the Arts spends on all of the arts in the U.S. -- this despite the fact that, two decades after the fall of the Wall and the reunification of East and West Germany, Berlin is laboring under a massive deficit of just more than $89 billion.

And the relative youth of the orchestra's 128 musicians is a further means of moving the orchestra forward. Nearly half of the members are younger than 40, including 11 20-somethings. The average player age is 40, compared with 50 at the Chicago Symphony. And numerous women musicians are in the ranks.

What's more, the BPO is a remarkably international assemblage, with no fewer than 20 nationalities represented. The ranks include Americans, Canadians, Swiss, Austrians, Italians, Israelis, Hungarians, Czechs, Poles, Japanese, Australians and New Zealanders.

This is a tendency to have international assemblage in the cast of the orchestra, and it is normal to have at least 11 wind and brass instrumentalists to be invited to a way younger ensemble, which the APO is.

Annual Operating Budgets of Symphony Orchestras in North America

1. Boston Symphony Orchestra $70M (NY Times, 2004)

2. Los Angeles Philharmonic $92M (LA Times, 2010)

3. New York Philharmonic $65M (2010) – Global Sponsorship scheme by Credit Suisse Bank (Switzerland)

4. Chicago Symphony Orchestra $61M (Chicago Tribune 2008)

5. San Francisco Symphony $63M (ArtsJournal, 2009)

6. Philadelphia Orchestra $51M (Philadelphia Business Journal, 2008)

7. Atlanta Symphony $46M (2010)

8. Cleveland Orchestra $42M (2010)

9. Cincinnati Symphony $39M (Cincinnati.com, 2009)

10. Pittsburgh Symphony $32M (2010)

11. National Symphony $30M (Washington Post, 9/05)

12. Minnesota Orchestra $29M

13. Detroit Symphony $28M (2004)

14. Indianapolis Symphony $27M (Indianapolis Star, 10/2006)

15. Baltimore Symphony $28M (2010)

16. St Louis Symphony $24M (Bizjournals, 2008)

17. Houston Symphony $24M (2010)

18. Dallas Symphony $24M (DSO Website, 2008)

19. Seattle Symphony $24M (2010)

20. Metropolitan Opera Orchestra $19M (Orchestra Facts, 2003)

21. Milwaukee Symphony Orchestra $17M (2010)

22. Utah Symphony & Opera $17M (Salt Lake Tribune, 2002)

23. New Jersey Symphony Orchestra $14M (NY Times, April 2006 )

24. Toronto Symphony $14M

25. Oregon Symphony $14M (2010)