- 5% pay cut across the board
- Additional administrative cuts
- One extra dark night per week
- Cut one new production from the season
This proposal will save approximately $26 million from the Met budget (even when accounting for lost revenues) and represents a reasonable compromise between the unions' requests and the Met administration's financial necessities.
The savings needed:
Let's begin by looking at how much money the Met needs to cut from its budget for the upcoming fiscal year. The original presentation by the musicians' union proposed approximately $31 million in savings, but the Met management rejected many of their suggestions as unfeasible. As the motivation for the cuts is long-term financial security (and 'motivating donors') rather than an immediate budget shortfall, we needn't set a strict minimum bound. This proposal will account for just over $26 million in possible cuts.
The suggested measures... #1, pay cuts ($10.9 million):
Realistically, we're not going to get through this without some pay cuts. Labor costs (including overtime and benefits) account for approximately two-thirds of the operating budget. Last year, they ran $200 million out of a $311 million budget (source: financial statement). Let's say we cut pay 5% in real terms. (A small note: Taking into account measure #3 below, this actually represents to be a 5.55% cut from remaining compensation.) I leave it to the unions and the Met to negotiate how much of that should come from base pay versus benefits. That saves us $10 million. Let's further assume that the $18.6 million in 'general management' is primarily labor costs, and this can also be cut by nearly 5%. There's another $900,000 saved.
The suggested measures... #2, additional administrative cuts ($4 million):
- As a good-faith measure, 'general management' can accept an additional 5% cut, and senior management can voluntarily cut another $100,000 (total) from their pay, for a total of $1 million in savings
- Reduce spending in the 'Other' category of the budget by 25% to save $1.25 million
- Now that the HD program is ramped-up, reduce media expenses by 5% to save $1.7 million
- Some cuts in this category could also come from increased utility efficiency in the opera house or reduced legal spending
The suggested measures... #3, one dark night per week ($8.3 million):
This is where estimation gets difficult. Many of the costs involved in productions do not scale linearly, so we can't just assume this will save us 1/7 of production costs. On the other hand, a dark night per week could provide additional savings by either reducing overtime costs (via providing more non-overtime hours on the stage for rehearsals) or by allowing the theatre to be rented out on one dark night per week.
Taking all those into consideration, I estimate this will save us another 10% of the $200 million 'New York season' item. Of course, this will also cost the Met approximately 1/8 of their box office revenue, or $11.7 million. (I use 1/8 rather than 1/7, because I assume that by choosing the dark night and doing some minor season adjustment wisely, we can ensure we cut lower-selling nights.)
The unions and agents will need to agree to waive any resulting broken/modified contract fees in order for these savings to be fully realized.
The suggested measures... #4, one fewer new production ($3.1 million):
The average Met new production last season cost $3.1 million. Let's eliminate one new production. We probably need to slightly reduce other new production costs to account for any broken contract fees and other expenses that will result. I'll assume we can do so.
Gelb currently claims that new productions are generally funded by earmarked donations. This cut also relies on fundraisers convincing one new production donor to donate the sum to the general budget or endowment fund instead.
Total savings: $26.3 million
These are rough estimates. Some of my proposals are probably unreasonable. Maybe my target amount is too low. Maybe I forgot to take some vital piece of information into account. I would welcome feedback or suggestions, either in the comments or via e-mail (izwb.calico@gmail.com).
