POSTED ON JUNE 16, 2010:
Look before you Leap, Mr. Mayor ...
Privatizing the PAC might not keep local arts a priority in the grand scheme
Tulsa faces a serious budget crisis, like many other cities and, indeed, many countries. Accordingly our City Councilors need to review all public expenditures with laser-like vision and ask tough questions. But we need to be sure that every area of city government delivers a real, sustainable return on its investment of our hard-earned tax dollars.
This applies to the arts as much as to any other branch of City government. Tulsa's Performing Arts Center (PAC) is one of the City's premier assets -- alongside Gilcrease Museum, Tulsa Parks and the Tulsa Zoo. Like them, it generates sales taxes and attracts visitors.
The Administration is apparently seriously considering awarding management of the PAC to SMG, which manages the BOK Center.
(Um, sorry to interrupt, but ... isn't the City required to issue a Request for Proposals, inviting vendors to compete for the business? How many others are likely to compete for the job if they suspect it's already a done deal?)
Many City departments don't generate any revenue at all -- at least, not directly. Road-widening, for example, costs a lot, yields no revenue and may well be counter-productive.
Tulsa has a road system sufficient to meet the needs of twice the city's population. This seems extravagant, to put it mildly. Wouldn't it be nice if we could say the same about our swimming pools, parks, after-school activities and libraries -- amenities that actually enhance the experience of daily life in Tulsa?
Let's take a closer look at the case for/against transferring management of the PAC to a company such as SMG.
First, what might the objectives of such a transfer be?
To reduce the City's cost base, perhaps? If this was the intent, there wouldn't be a lot of point in it, since the PAC's operating costs are a necessary investment that delivers sales tax revenues in return and more besides.
To eliminate waste, then? Nope. The arts have had a lot of practice at eking out a living on tiny budgets. Artists are famous for starving -- with style -- in freezing, attic rooms.
So it may come as no surprise that the PAC has a sound fiscal record. Its managers have actually reduced the cost base by 50 percent in the past five years, from $2.9 million to around $1.4 million. Despite draconian cutbacks, the PAC has managed to keep the performing arts alive and more or less flourishing in Tulsa.
(Maybe, but cuts to the PAC budget have taken a toll. The Frequent Local User Discount -- designed for arts groups who rent the PAC's stages -- has already been sharply reduced, which has hit our performing arts organizations.)
OK, so ... perhaps the administration's goal would be to increase the PAC's net profit to the City?
This rationale doesn't bear much scrutiny either. First, the present management has never been required to make a "profit" as such: The focus has been on creating a fertile arts community, for a modest cost. Second, what makes the administration think SMG (or similar) would do the job any better than the current management team -- a team of experienced managers with a deep understanding of the local arts scene?
Third, why would a company like SMG focus much attention on this relatively small potato in its portfolio of entertainment spaces? I mean, where would you focus your attention if you were in charge -- on your 18,000-seat megabox or on a theater with 2,400 seats and a few, even smaller (and un-remunerative) spaces? A temptation would be either to manage the PAC on wet, Friday afternoons or to hand the whole thing to an enthusiastic, office intern.
A critical weakness in the "for-profit" management option is that a third-party operator is driven by its owners' requirement to maximize its own bottom line profit. It has nothing to gain from the contribution that local arts programs make to the financial, social, cultural and educational welfare of the entire community. So it's highly unlikely that such an outfit would make much of an effort to sustain the same level of local, creative talent, which leads to a loss of local jobs.
A for-profit company has a few options to try to make a profit from the PAC. It can raise rental prices, reduce overheads or reduce marketing costs. It can increase the number of shows it puts on -- if there's the capacity and sufficient consumer demand. It can change the "product mix" to higher-margin "road shows" with a broad appeal, and then keep 'em coming. This translates into higher ticket prices -- and fewer local productions.
On balance, we'd probably be more likely to see a dumbing-down of the PAC's offering to "proven" (i.e. generic, non-local) attractions. Not that there's anything wrong with traveling favorites; part of the PAC's offering is already dedicated to this through Celebrity Attractions.
To raise the PAC's venue rental prices would have a traumatic effect on local arts organizations. They depend on affordable access to audiences. If they have to move venues, it's likely to be more difficult for audiences to find them and to buy tickets online. The PAC fits the bill and is the natural home for them.
There's a risk that SMG (or similar) might view the PAC as little more than a way of spreading its own management overheads. Worse, it might simply be doing the City a "favor" in agreeing to run the PAC. It would certainly not get rich from it, even if it did dumb down the PAC's offerings.
No disrespect to SMG, which is a great business and knows its core business very well -- it even runs PACs in some places -- but with what strategies?
The local arts organizations that perform at the PAC in its "Summer Stage" season, for example, do much more than merely perform at the PAC. They also employ and inspire a lot of people. So the PAC helps keep scores of creative Tulsans employed. They add up to an economic engine, generating sales, property and payroll taxes. Those incomes feed into many, local consumer industries. And they keep creative people here in Tulsa.
The same arts organizations provide education programs in our schools and community centers, enriching our children's creativity and prospects. They add diversity and texture to the fabric of Tulsa's civic life. That fabric is important to employers who have a tough enough task already in retaining and recruiting talented, educated employees.
It's a matter of competitive necessity and economic viability that Tulsa has a critical mass of creative, young adults living here. Yet, our population is static and aging. That's really not good.
Research conducted some years ago for Americans for the arts shows that the arts generate a greater return on investment for a community than sports (3:1), government jobs (7:1) and corporate investment (10:1) by a long shot. The arts were found to generate a 16:1 return on investment. It makes sense when you think about it: A lively arts community attracts tourists and visitors who hang out in cafés, visit galleries and restaurants, buy gifts, stay in hotels, visit other attractions, mingle with the locals. In short, they spend more.
The arts also attract inquisitive, creative people who just might decide to live here. They're often the same people who want lively, walkable neighborhoods in which they can sip lattes, dream dreams, create new businesses and jobs -- and where their children might want to stay. Some of us living here now quite like the sound of all that, too.
To transfer the management of the PAC to SMG would be to award a further 8 percent of Downtown's entertainment seats to an entity that already manages 60 percent of those seats (including the Convention Center's 8,900-seat arena). How exactly does that stimulate healthy competition? Is it consistent with a well-run market economy, and is it really in the interests of Tulsans? Do we feel comfortable with entrusting a single entity with more than two-thirds of Downtown's venue seating?
What would happen if the City becomes disappointed with SMG's service in managing the PAC -- or if SMG decided it wanted to hand it back? It would be tough to re-assemble the pieces. Some of Tulsa's prime cultural assets, the Ballet, Symphony and Opera, for example, depend on a smooth-running operation. The PAC would risk being a pawn in negotiations with the City, and a head-ache for future Mayors and Councils.
The PAC performs another vital role. Opportunities to engage youngsters in local, creative projects are falling away as fast as education dollars for the arts. Texting and online social media -- however conveniently these get around the need to bum a ride from a parent to visit friends -- can obviously never replace the creative spark that happens when people get together. The PAC liberates the creative juices of the community.
Some of those programs keep kids off the streets and creatively occupied. Witness the enthusiasm with which youngsters in Tulsa Public Schools have embraced the "Phoenix Rising" project, a cooperative effort with the Juvenile Justice Bureau and the Arts & Humanities Council of Tulsa.
Let's put this into an historic perspective. The PAC was established back in 1977 as the home for local, performing arts organizations. It's a "department" of the City of Tulsa. This might not sound sexy, but the City of Tulsa's own website describes it as the "cultural apex" of creativity, artistic talent and innovation. The PAC's programs proclaim what we stand for, artistically, as a city. Quality, variety and local flavor are an integral part of its purpose.
So to privatize the PAC's management might look to a bean-counting consultant (or to a Mayor) like a quick, easy, budgetary no-brainer. But it ain't -- not even on economic grounds. It risks uprooting an entire eco-system that is crucial to Tulsa's viability and livability.
So our message here is: Don't rush into this thing, Mr. Mayor. Consult very carefully with the people who understand the arts and its business. The long-term, downside risks -- strategic, financial and political -- are high.
A final thought. Underlying this discussion is a deeper one. What is the City of Tulsa for? Is it only about providing pared-down, basic services, such as roads, pot-hole-filling and (if you're very lucky) buses to an ever-sprawling city? Or should it be re-inventing itself to compete in a changing and challenging world? If the latter, then we're on the wrong track.
Every fiscal year we chisel away at life-renewing amenities such as parks, the arts and swimming pools.
Are we OK with this picture, Tulsa?
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