Confidential Instructions for Lyric Opera's Business Manager (buyer)

You have been with Lyric Opera for three months. So far, things have been going well, but your negotiation with Sally
Soprano's agent will be your most important assignment to date. You want to make sure that your boss, the Artistic
Director, is pleased with the outcome. You met with your boss yesterday, and gathered the following information:
The Lyric Opera is an established institution in a major metropolitan area. As with most opera companies, it is a nonprofit
entity and is financed by a combination of ticket sales, foundation and corporate grants, and income from a modest
endowment. It usually breaks even over the course of the year, with fairly good attendance in its 2000-seat hall. Ticket
prices range from $18 to $55, with $28 a reasonable average for rule of thumb accounting.
A production of Bellini's Norma is scheduled to open in three weeks. The production is scheduled to run for six weeks,
with three performances per week. There are three sopranos in Norma. Norma is the high priestess of the Temple of Esus,
and is secretly married to the Roman Consul, with whom she has two children. The other two soprano roles are those of
Adalgisa, the virgin of the temple, and Clotilde the attendant to Norma. The challenging title role is generally
acknowledged to be a prize for a young soprano, although the age of the character is not specified. The age of the children
is also unspecified, but Norma attempts to kill them in a rage over her husband's infidelity.
When the Lyric announced this season's schedule over a year ago, Renata Risingstar was listed in the title role for Norma.
Ms. Risingstar is generally regarded as a first-rate performer, although she has not yet attained the popularity Sally enjoyed
at the peak of her career. Three weeks ago, however, the Lyric suddenly dropped Ms. Risingstar from its advertising for
Norma. Although it is not widely known the Opera wanted to hold off making a public announcement until the diagnosis
was confirmed), the reason for the omission is that Ms. Risingstar has developed a benign throat tumor that will require
surgery prior to the performance date. The Lyric has been unable to find any other good soprano who is available for the
dates of the performance. The soprano engaged for the secondary role (at a salary of $14,000) knows the Norma role. She
has a good voice, but is a relative newcomer to professional opera and clearly lacks the experience necessary to perform the
title role well. The Lyric is therefore in a tight spot. Cancellation of the opera would result in a loss of hundreds of
thousands of dollars.
Fortunately, Sally Soprano, a distinguished, though somewhat aging soprano, heard rumors that the opera was in trouble
and called the Artistic Director to inquire whether there was any possibility that she might sing the lead. Up to now, the
Artistic Director has held her off, hoping to find a younger lead. Unfortunately, that now appears impossible, and the
Artistic Director is suddenly quite desperate to sign Sally. You have scheduled an early appointment with her agent.
Sally Soprano has sung many times for the Lyric Opera over the years, but the last time she sang was more than a year ago
in the secondary role of Adalgisa, also in Norma (for which she received $12,500). Four years ago, at the pinnacle of her
singing career, the Lyric paid Ms.Soprano $22,000. for performing the title role in Norma. That was regarded as extremely
high at the time, justified only by the fact that Sally was at the apex of her career and had a significant following (which has
probably fallen off somewhat since then). But, over the last four years, inflation and the increased popularity of opera have
in general brought about a near doubling of the average salaries of the top opera stars.
As a matter of policy, the Lyric does not generally disclose the compensation of its performers. However, for negotiating
purposes, you have been given access to the salary figures paid by the Lyric in recent years for the title and secondary roles
in Bellin's Norma:

Five years ago

Title Role

Secondary Soprano

(Norma)
$14,000
$22,000.
$17,500.
$21,000.
$25,000.
??????

(Adalgisa)
$7,000.
$8,000.
$9,000.
$12,500.
$12,000.
$14,000

Although cases vary widely, as a general rule, the Lyric tends to follow the industry-practice of paying performers in lead
opera roles of this type about twice the amount received by singers in secondary roles. Also, following the industry
practice, the Lyric has always paid its performers a flat rate salary.

In general, the nonprofit Lyric needs to keep the costs of performances as low as possible. The Lyric's average house over
the year is generally 85%. This is also the breakeven point. Of course you also have many sold-out performances, but
the average is 85%, give or take 5%. Anything less than 85% attendance would cause the Lyric to lose $50,000 or more,
and a house of 50% or 60%, while unlikely, would be a disaster. (These kinds of figures probably explain why Ms.
Soprano has had so few offers for lead roles recently. While her voice remains fine, most operas are anxious to avoid even
the smallest chance of an off day.) For Lyric it is important to generate as much surplus as possible to cover the next show
which we are doing for artistic reasons but we know will lose money.
This year, Ms. Risingstar was to have been paid $30,000. In view of the emergency situation and the great desire of the
Artistic Director to obtain Sally Soprano, the Lyric trustees have authorized you to offer her up to $45,000. should that be
necessary. If she holds out for more than that, the Lyric will just have to use the neophyte secondary soprano in the title
role and hope that she miraculously rises to the occasion. (You would probably pay her something less than double her
secondary salary of $14,000. For that, certainly no more than $28,000.) You should also bear in mind the potential adverse
impact on future negotiations with other performers should an unusually high salary for Sally become public knowledge.
The Artistic Director wants Sally, despite thinking that she is too old for the role. The Director believes that with proper
makeup and a little luck Sally could work out extremely well. In any event, there is little alternative. As it is, the late
announcement of the title role may adversely affect box office sales. The Artistic Director is hoping, however, for a
favorable public response to the announcement of Sally in the title role.

To:
From:
Re:

Prepare for your meeting with Sally Soprano's agent.

I hope this gets to you before your meeting with Sally's agent. I had the carpet pulled out from under me this morning. The
advertising, people have "reconsidered" what they think we need to spend promoting Norma. They requested a $10,000
minimum boost in their promotion budget. They feel this is critical for a successful run that will meet our attendance goals.
Mr. Drysdale (my boss) approved their request and decided that this is also the moment to stem the rising tide of salaries.
While I don't mind putting money into promotion I don't think it should come out of salaries. Keeping the performers
happy and committed is also critical to the success of the project. I argued my case as strongly as I dared, but couldn't get
anywhere.
Drysdale wants to limit direct expenditures on salary since these become essentially matters of record and precedents for
future negotiations. He wants to keep balance between roles in particular, and limit the lead role to double what we pay for
a secondary role. For Norma this means that the lead would be limited to $28,000. I think we might be able to argue for
the $30,000 that was budgeted for Ms. Risingstar, but anything beyond that--like the $45,000. I was promised yesterday--is
out of the question.
I don't know what to tell you. Drysdale and I both want Sally, but he won't budge on the salary, despite the fact that there
seems to be money around for other things. Just look at how easily advertising got a $10,000 bump. Drysdale seems
determined to hold the line, even if it means going with the second soprano.
I prefer Sally. I think she's primed for one more great performance and I'd love for it to be with Lyric. She'll need some
pampering, but with the right support, I think she can still pull it off. When Sally puts her mind to something, she can be
quite a force. She could also help some of the younger members of the cast with voice, acting, and presence.
My sense is that she needs this role at least as much as we need her. I don't know this new agent Haskell, but I know
Cleaver and that firm. They tend to prime their recruits, so expect some exaggerated demands and an effort to back you
into the corner. You may have to push back to get what you want. $30,000. Is nothing you need to be ashamed of. In fact,
it's quite reasonable for someone in Sally's position, despite what Haskell may say.
Drysdale is going to be following this one closely. Getting Sally would be great for the company and a real coup for you,
Good luck. I hope you can work something out.