Opera Australia has posted a $7.1 million trading deficit for the year ended December 2020, or almost $6.5 million after bequests are included, which is “clearly a serious result”, concedes the outgoing Chief Executive Officer Rory Jeffes.
The company received $11.4 million in “absolutely critical” JobKeeper subsidies in 2020. “If we hadn’t had that $11.4 million, we would have been potentially looking at a $20 million trading loss, and that would have meant us having to take more drastic action,” says Jeffes.
Rory Jeffes. Photograph © Keith Saunders
The sizeable deficit, which follows a $198,534 trading surplus in 2019, was “pretty much what we were predicting in the last quarter of the last year” during attempts to balance fiscal responsibility with keeping the company together, he says.
The company has attributed its financial woes to the forced cancellations of all performances from March 2020 due to COVID-19, and comes despite the company making 56 staff redundant late last year, including 16 musicians.
Opera Australia did not qualify for sustainability funds because it owned a prop and wardrobe warehouse in Alexandria in inner-Sydney, which it sold to a division of Perpetual Superannuation for $50 million, or $46 million after taxes, in late December. Those funds are not included in the 2020 report because the sale was finalised early in 2021.
The company, which is based in nearby Surry Hills, will continue to use the 1.27 hectare Alexandria industrial space for a couple more years, after which it will look to lease or buy space outside of Sydney for storing props and wardrobe items, says Jeffes.
Given this financial result, were the redundancies of backhouse staff and about a quarter of the company’s musicians last year an inevitability? “Given the crisis, yes, it was part of a much broader, comprehensive recovery plan,” says Jeffes.
“Of course, in the moment, there is always great disquiet and people are unhappy with redundancies and of course I completely understand that; it was not a decision that was made with anything other than intense sorrow.”
“If you look at this year, 2021, we’re back on stage delivering full-scale, grand opera. If I tell you, for instance, that five weeks before the launch of the Melbourne [autumn 2021] season we had to make a decision whether to proceed or not, and it was pretty much a line-ball decision, if we didn’t have the flexibility to control the costs if we had to cancel, then we would not have gone ahead with the Melbourne season.”
“So [in that scenario], all the employment, all the economic benefit that came out of our Melbourne autumn season would have been lost; that’s why it was critical to undertake that restructure last year.”
Opera Australia’s production of Aida, Melbourne, 2021. Photograph © Jeff Busby
Can he guarantee there will be no more losses of jobs? “The redundancies were really difficult for everybody. Fifty-six people in total were made redundant. It was across the company. I know people focus on the orchestra, but it was across the whole organisation,” says Jeffes.
“At this stage, I can tell you there would be no further plans for any redundancies because the really hard decisions that we’ve made and implemented mean that we are able [now] to provide security in employment, and that is absolutely core to our mission over the rest of the recovery period.”
Does he see recovery ahead, provided there are no more long-term lockdowns in Sydney or Melbourne? Is there still any risk of going into administration?
“We have got much better now at being able to deal with the unexpected. Through the restructure we undertook last year we have put the company in a position now where if there are further disruptions – which, just looking at Melbourne [this week], I don’t think it’s going to be the last one – we will be able to handle it.”
“It doesn’t look pretty, but at the same time we’ve set ourselves up for that recovery phase, and let’s face it, it’s going be another 18 months [of recovery], that we are confident of being able to provide secure employment and to be able to do what we can on stage.”
The company is “incredibly proud” that “we’re the only opera company in the world that generates more than half of our income from ticket sales, in a normal world – boy [was] that our Achilles’ heel for 2020 – and what we need to do for the next 18 months is ensure that we are attracting as many domestic audiences as we can.”
“Hence a broader range of what we do, while obviously focusing on our raison d’être and our licence to operate, which is around grand opera, is [also to be] about musicals and special events that will broaden our reach with domestic audiences until we start getting international ones coming back.”
In February, Jeffes announced he was leaving Opera Australia after serving as chief executive for four years. His final date with the company is “fluid”.
“I have told the board I would like to stay as long as it takes for the succession to be actioned and for the next CEO to be arriving. Whether that happens or not we’ll see, but having announced I would be leaving in February this year I imagine I would certainly be departing before the end of this year.”
Why is he leaving – has it been difficult implementing the cost cuts? “Yes, it certainly has been, but I have to say that my reasons for the timing of my departure, as I said at the time, are that with the other transitions that will be happening for the organisation over the coming years, the board was seeking from me, and I was considering my position, on whether to extend for a further five years at this point.”
“For all sorts of personal reasons, nothing really to do frankly with Opera Australia, I made the decision that there are other things I want to get involved in, and other ambitions I want to do in my remaining productive years.”
What might those be – where is he going? “That’s still an open question. There are a number of things I’m looking at. I have a particular interest in being able to support future talent, whether in the performing or composition fields or some other areas.”
Opera Australia’s financial misfortune is in stark contrast to some other companies: Sydney Symphony Orchestra and Melbourne Symphony Orchestra each posted profits for 2020.
The SSO’s $7.8 million operating surplus in 2020 is its biggest since before the global financial crisis, while Belvoir Street Theatre announced a “solid surplus” of $800,000, and Sydney Dance Company posted a $1.063 million operating surplus.
Despite facing challenges in 2020 greater than those in living memory, the MSO posted an operating surplus of $1.14 million – $1.54 million after fair value adjustment – compared to a $173,115 operating surplus in 2019.
Musica Viva Australia meanwhile posted a $75,274 surplus in 2020 after receiving $1.5 million in government stimulus money, compared to a $260,727 deficit from ordinary activities in 2019 before the counting of bequest income.
A company spokesman said Musica Viva is travelling nationally in concert halls and schools throughout 2021: “We were able to continue our work through live and digital performances in 2020 because of support from JobKeeper and other government programs. This support also allowed us to prepare for the uncertainties of 2021 as we rebuild.”