Alberta Ballet trying to recover from financial misstep

Alberta Ballet is struggling to recover from a financial stumble that started three years ago with a cancelled Joni Mitchell ballet.

Since then the company has slid into asubstantial deficit, beenforced to borrow to covershortfallsand isnowpre-spending a rising proportion of money raised against future productionsbefore it ever mounts those performances.

It's a problem that has led to staff cuts, fewer dancers on shorter contractsand a bigfundraising campaign.

The ballet ran an accumulated deficit in 2014-15of close to half a milliondollarson a budget of about $14 million.

The larger worry though is the so-called pre-spend, in which a portion of the coming year's subscriptions are used to cover the current year's spending. In 2014-2015, the pre-spendhit $2.9-million.

Pre-spending next year's revenues

I'd say that cost us about a million dollars ... in single ticket sales that were budgeted forbut were then lost.- Martin Bragg, former Alberta Balletexecutive director

Chris George, the company's executive director, said he can't yet give a figure for the pre-spend in the last financial year thatended June 30.

But he saidthe company borrowed to cover a shortfall through the yearwith a bank line of creditand a loan from the Alberta Foundation for the Artsand paid the debt back before year end with revenue raised primarily through subscription sales for the 2016-17 season.

"The ideal model is that you don't spend any of that deferred revenue that comes in until the actual season," George told CBC News.

Pre-spending is not unusual in the ballet world, but George confirmed the size of that spending at Alberta Ballet is now uncomfortably high, particularly in a recession, where he says both donations from individuals and corporate sponsorship revenue are falling.

So too are annual ticket subscriptions,he expects,though individual ticket sales are still projected to strengthen.

Financial slip

In previous years, Alberta's booming economy and rising revenue from other sources have helped shield against gaping deficits, but that tide has now decisively turned.

George says he has been wrestling with the problem since he took the reins late last yearas interim executive director. He took the role permanently just a few months ago.

The difficulties began in 2013.

On the heels of a series of successful pop productionsthe ballet was working for a second time with singer Joni Mitchell,working to stage a production based on her love songs.

• Alberta Ballet plans second Joni Mitchell collaboration

But the result was a meditation on loss.

$1M loss in ticket sales

MartinBragg,executive director of the company at the time,recalls that Mitchell wouldn't whittle her songbook below 46songs, which was toolarge for a single ballet.

The planned production was cancelledand ticket sales reimbursed.

"That left a Joni Mitchell shaped hole [in finances]" Bragg says.

"I'd say that cost us about a million dollars ... in single ticket sales that were budgeted forbut were then lost."

That yearthe pre-spend jumped to $3.1 millionfrom $1.6million the year before.

It hasn't recovered since.

Rising costs

The loss of the Mitchell production coincided with rising costs elsewhere in the company.

Historicallythe ballet employed dancers on 36-week contracts.

In the 2013-14 season, the company expanded that to 42 weeks.

Bragg says the move was aimed at showcasing Alberta Ballet's own dancersrather than those brought in with guest productionsand attracting the best talent.

But it was also a expensive departure from the norm for the company.

Bragg resigned last summerand moved on to a job as senior vice president at Arts Consulting Group in Calgary. Hesays hisresignation was not tied to the organization'sfinancial difficulties.

Staff changes

"I'd been there five years.It was time," Bragg said.

Former ballet chair Dawn McDonald also presided over the period of deteriorating finances. She resigned the volunteer post in April.

McDonald declined an interview request.

Larry Clausen replaced her.

He's a brand and crisis communications expert with Cohn & Wolfe and has a decades-long association with the ballet.

The recession

The ballet was slow to pare costs in the face of losses but it had plenty of company in failing to anticipate the looming recessionand how deeply it would bite.

The 2014-2015 seasonwas characterizedby an oil price rout.Alberta-based companies cut expectations and slashed staff and other expenses.

By early 2015, a range of arts organizations were feeling the pinch.

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Roughly half the ballet's budget is based on donations and sponsorship by individuals and corporations.

The company lost several of its corporate sponsors and,George says, more significantly is thatdonationsacross the board havefallen heavilythough he couldn't say by how much.

The turnaround

Last Octoberas it became clear that escalating costs would find no counterbalance in rising revenueAlberta Ballet hired turnaround consultants Finley & Associates.

They are the same group that helped revive the bankrupt Calgary Philharmonic Orchestramore than a decade ago.

Early this year itcut administrative staff in marketing and fundraising.In other areas, including the box office, it's outsourcing to the Arts Commons.

They are a group of mostly performing arts organizations thatshare back office expenses.

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Attrition among dancersincluding theretirement of lead dancer Yukichi Hattorimeans the company will be reduced to 26 dancers and two apprentices in the upcoming season.

That'sdown from 31 dancerslast season and labour contractsare back down to 36 weeks in the upcoming season.

Recapitalizationcampaign

On the revenue sidethe company launched a recapitalization campaignaiming to raise $1million this year.

Money, George says,that would go directly toward reducing pre-spending.

It's an audacious efforteven as giving overall is falling.George says the campaignhas entailed very personal requests, "meeting long-time supportersfor dinner, if that's what's required, it's been very individual."

He says it's already raised$420,000though that will be offset by consultantfees.

It's also meant preliminary work to develop a new home for both the company and its school will have to stay on the back burnerand wait for better times.