2017 Financial Statement

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An open letter from David T. Ormesher, Chairman of the Board

Dear All,

As I reflect on our 2016/17 season, I am amazed again by the quality and diversity of productions I saw on the Lyric stage, the efforts we have taken to advance our art form and the exceptional talent we continue to attract. As Chairman of Lyric’s Board, I also think of the past year as a period of heightened focus, analysis and planning.

Lyric, like cultural institutions nationwide, has felt intensifying financial pressure in recent years as we encounter growing competition both for audience attention and donor investment. As always, our donors have been incredibly generous. In fact, it was the success of our Breaking New Ground campaign that allowed us to continue to modernize our stage equipment and infrastructure while also bridging the revenue shortfall in our annual operating budget. Thanks to the many who donated so generously to this campaign, we have not had to make any sacrifices in the quality of our art while we work to address our underlying financial challenges.

That said, the Board, along with the broader Lyric management team, believes strongly that we have a responsibility to evaluate every facet of our organization and budget to ensure we are building a financially sustainable organization that will thrive for many years to come. Our analysis and self-reflection resulted in six key priorities:

  • Completing more rigorous season planning to ensure we are making the most of our production dollars without sacrificing quality;
  • Reducing operating costs, which to date has been focused on improving efficiency in our administrative functions;
  • Maximizing the revenue-generating potential of the space we own by strategically pursuing and accommodating those who want to use our beautiful opera house – including our recent announcement that The Joffrey Ballet will become a resident company in the Lyric Opera House beginning with the 2020/21 season; 
  • Diversifying revenue with initiatives such as our annual musical;
  • Growing our traditional audience; and
  • Evaluating additional fundraising opportunities.

We have made progress in each of these areas over the past two years, which we are beginning to see in the financial information released today. However, we still have a long way to go to achieve the goals we have set for ourselves. As we look ahead to the 2017/18 fiscal year, the Lyric Board will continue to look across our strong portfolio of assets – and to leverage the wealth of talent invested in this great institution – to ensure Lyric’s rightful place among the world’s great opera companies for many years to come.

We look forward to sharing our continued progress and thank all those who have contributed to our journey to date.

Sincerely,


David Ormesher
David T. Ormesher
Chairman of the Board

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An open letter from Roberta Lane, Chief Financial Officer

At Lyric, we are acutely focused on how to be the best possible stewards of the financial resources entrusted to us, including the charitable contributions we receive from our many loyal donors, the investment audience members make when buying tickets, the incredible value we have in the opera house we own, and our endowment. We are working diligently to maximize every dollar and every opportunity as we pursue our mission to perform world-class opera. We also are increasingly focused on making the right decisions to ensure our continued vitality for many, many seasons to come.

To this end, Lyric’s Board and management team agreed to a realistic financial budget for the 2016/17 season, and I am pleased to report that due to the continued support of our loyal donors, subscribers and single ticket buyers; the progress made on the operating priorities outlined in our Chairman’s report; and our ongoing financial discipline throughout the year, we met or outperformed our goals in every area.

Of particular note, Lyric’s operating revenue and support is up 11% compared to our 2016 fiscal year. Ticket sales revenue remained stable. Donor support increased 10%, and income from our investment portfolio is up 9%, performing particularly well in fiscal 2017 following a difficult year in fiscal 2016. As in the past, revenue generated by our annual musical contributed positively to overall ticket sale trends. We also started to see the benefit of new research-based pricing strategies as well as an increased contribution from rental income. We expect the trend in rental income will continue as a more stable revenue contributor beginning in the 2020/21 season, when The Joffrey Ballet becomes a resident company in the Lyric Opera House. Meanwhile, this income stream is generated by single performance presentations and events curated by a dedicated Lyric team. Our Board and management are diversifying revenue in these ways to help support our continued commitment to mainstage opera.

Lyric also continued to see the benefits of our comprehensive Operational and Financial Assessment, which identified approximately $1.3 million in annual administrative expense savings. These efforts, along with the previously referenced effort to identify audience trends and refine our marketing strategies, were supported by two leading management consulting firms as separate pro-bono projects. The dollar value of the most recent project ($2.3 million) is reflected on our income statement as revenue and as administrative expense, as is required by financial accounting standards. It is very important for our supporters to know that we continue to proactively manage our costs – particularly those administrative expenses that do not directly appear on our stage. Out-of-pocket administrative expenses are lower than the total administrative expenses reported in our financial statements.

That said, Lyric’s total expenses – the largest components of which are, by far, artistic, production and facilities expenses – continue to exceed our annual operating revenue, creating a gap that we have been able to fill using funds raised through our Breaking New Ground campaign. This was an intended purpose of the campaign, and year-over-year, the amount of our draw declined to $6.5 million in fiscal 2017 from $8.6 million in fiscal 2016. Still, we continue to draw Breaking New Ground funds at approximately twice the rate anticipated when the campaign was originally conceived, and accordingly, are implementing initiatives across the company to reduce costs and raise additional revenue.

In closing, I want to reiterate my confidence in Lyric’s overall financial health. While industry-wide trends have led us to be more creative – and, at times, more cautious – in managing our financial resources, we also have many assets, an organization-wide commitment to implementing the six key priorities outlined in the Chairman’s letter aimed at achieving long term financial sustainability, and an experienced Board and management team committed to the future of this organization.

Thanks to all of you who continue to support our mission.

Roberta Lane
Roberta Lane
Chief Financial Officer


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An open letter from Anthony Freud, Lyric’s General Director, President & CEO

Dear All,

Lyric's 62nd season reflected our dedication to securing an artistically thrilling and financially sustainable future for this company – and I am pleased to report that we have made meaningful progress in both of these areas. I'm very proud of what we accomplished with our eight memorable opera productions and across all of our lines of business as described in our Chairman’s letter. This is an exciting time to be part of the Lyric family, and I remain very optimistic about our future.

The 2016/17 season opened with our acclaimed new production of the first opera of Wagner's Ring cycle, Das Rheingold. Audiences and critics universally lauded the production, with Lyric's brilliant musical director Sir Andrew Davis on the podium and imaginative and compelling direction from David Pountney. This energy continued through Lyric's remaining mainstage productions, all of which featured powerful and memorable performances from magnificent casts, as well as the world-class forces of the Lyric Opera Orchestra and Chorus.

Two masterpiece of the bel canto repertoire were beautifully presented: Graham Vick's atmospheric production of Donizetti's Lucia di Lammermoor and Bellini's vocally formidable Norma from director Kevin Newbury. Bel canto specialists Enrique Mazzola and Riccardo Frizza gave these performances wonderful style on the podium.

Three diverse French works made a spectacular impact, beginning with Lyric's long-awaited company debut of Berlioz's Les Troyens with a riveting, highly-theatrical interpretation by director Tim Albery. Massenet's Don Quichotte and Bizet's Carmen, with fresh staging and glorious casts, rounded out the French trio with tremendous audience response.

Lyric's new production of Mozart's The Magic Flute proved the perfect holiday offering, delivering wide appeal with its charming and imaginative new production from the mind of director Neil Armfield. The grand opera season ended with a glorious revival of Tchaikovsky's Eugene Onegin in Robert Carsen's exceptionally sensitive production.

Lyric Unlimited and our annual musical production enjoyed tremendous success and impact in the 2016/17 season. Lyric Unlimited, one of the most dynamic and innovative facets of the company, concluded its most ambitious project to date, Chicago Voices. Lyric's creative consultant, Renée Fleming, is the guiding force behind Chicago Voices and her vision and imagination were fully realized through the project's final year and the culminating Gala concert in February, which also became a performance special for public television. The second round of Community Created Performances, another anchor in the Chicago Voices series, generated a phenomenal experience for all those involved and for everyone who witnessed the performance at the Harris Theater. Like every Lyric Unlimited project, the efforts undertaken will continue to have impact in our community far beyond their initial offering.

Lerner & Lowe's My Fair Lady from our Broadway at Lyric series continued our track record of very successful musical productions that provide both tremendous world-class entertainment and the opportunity to share it with many audience members who are new to Lyric.

Last season’s successes make me confident that Lyric will tackle the challenges ahead, while continuing to deliver the kinds of life-changing artistic experiences that our audiences expect. All of us believe in the power of great art and in continuing to seek ways to harness that power to serve our community.

I am grateful to Sir Andrew Davis and Renée Fleming, as well as our dedicated staff, artists, donors, volunteer boards and, most of all, our audiences, whose support and enthusiasm has been the greatest inspiration across the season.

Long Live Passion,

Anthony Freud
Anthony Freud
General Director, President & CEO

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View Lyric Opera of Chicago's full FY17 financial statement.
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