Soviet Arts Festival : Soviet Arts Festival Skeptics Watch Fiscal Performance

By LEONARD BERNSTEIN

Oct. 22, 1989 12 AM PT

TIMES STAFF WRITER

Nearly two years after Mayor Maureen O’Connor announced creation of a $6.25-million cultural experiment, San Diegans today get a first glimpse at whether “San Diego Arts Festival: Treasures of the Soviet Union” is worth $3 million in public funding.

For the next 22 days, the festival’s financial success will be closely watched by opponents who were skeptical about the expenditure of $3 million in hotel tax revenue on a project that also has drawn mixed reviews for artistic merit.

O’Connor has pledged that the festival will return $1 million in profit to city coffers to fund recreation programs that would have been eliminated. The money has been built into the 1989-90 fiscal budget.

With the public scrutiny in mind, the private, nonprofit festival corporation has designed a conservative financing scheme that is designed to make the most of the city’s chances of recouping some revenue and distributes the risk of failure to the presenting organizations that are hosting the festival’s two dozen events.

In almost every case, if an event makes money through ticket sales, profits will be kicked back to the festival corporation and, after expenses are paid, to the city. But, if ticket sales lag, the cultural organization, not the festival, bears the risk of financial loss.

“The basic concept is to subsidize their operating loss with San Diego Festival contributions,” said Bruce Herring, executive director of San Diego Festivals Inc. “Hopefully, no one loses any money, and no one’s going to make any money.”

“We always take a risk. That’s part of the life of an art museum,” said Jane G. Rice, deputy director of the San Diego Museum of Art, which is hoping just to break even on its showing of Faberge eggs, despite a $663,700 city subsidy.

“We’re very excited by the exhibition. We’re very used to taking risks. We feel this is a good risk,” she said. Rice said the museum’s costs are substantially higher than the $663,700 subsidy, but declined to give a total.

However, the Old Globe Theatre’s managing director, Thomas Hall, said the Globe requested $440,000 from the festival to cover production expenses for “Brothers and Sisters” but was awarded just $250,000 in subsidies.

“We estimated we need that much to not be in any kind of liability,” Hall said. “When we were told there would only be $250,000 available, the board decided to go forward, even though we knew we had some liability after the fact.”

The city also will take home 10% of the wholesale price of a wide array of products licensed by the festival--hats, posters, T-shirts, sweat shirts, lapel pins, tote bags and the like--and will be retailing a variety of items at a festival store on the B Street Pier and at booths scattered about the city.

In addition to jewelry, books, Soviet-made watches and clothing, festival-goers will be able to buy Chardonnay, Cabernet and rose wines bearing the festival label in restaurants and stores.

Festival organizers are being very secretive about the bottom line. Herring refuses to predict whether the extravaganza will return money, even though ticket sales for most events are brisk. The licensing side of the revenue is a complete unknown, he said.

“The reason I’m conservative is that this city has never done anything like this before. It’s not like a Super Bowl or an America’s Cup, where there’s a reason for people to buy” merchandise because they are fans, Herring said.

City Manager John Lockwood, however, is confident that the festival will return $1 million to the city and guessed that the final total could be as high as $1.5 million.

“With the tickets they’ve already sold, and the rest of it, I’m very comfortable with that million coming back,” Lockwood said.

“The theory that I started with from Day 1 is that we’re going to contribute $3 million to this festival and we may not get a penny back,” he added. “On the other hand, if we get a million (dollars) or $2 million or $3 million, the more the merrier.”

O’Connor helped matters considerably by rounding up commitments for more than $3 million in private contributions from some of the city’s wealthiest benefactors, including $1 million from McDonald’s restaurant chain owner Joan Kroc and $500,000 in a combined grant from Union-Tribune publisher Helen Copley and the James S. Copley Foundation. The San Diego Unified Port District also added $500,000.

“We were at $5.5 million one month after I started,” Herring said. “So it was relatively easy” to fund the festival.

Private contributions were continuing even as the final days of preparation waned; the festival received about $50,000 last week from several people responding to a solicitation letter last month. The money probably will be spent to expand free bus service for children attending festival events, he said.

Moreover, the festival budget has been backed up by the labors of city workers paid by taxpayer dollars. Today, for example, is Super Powers Sunday, and Balboa Park will be patrolled by 50 to 75 police officers and cleaned by 40 to 50 Park and Recreation Department staffers.

Overtime for those employees will be covered by the festival, Lockwood said, but the city will not be reimbursed for the labor of those who would normally have been on duty.

Also uncalculated is the cost of the effort put in by Lockwood, Assistant City Manager Jack McGrory, city attorneys, two employees in the city auditor’s office, the city’s special events coordinator and others. The price of their time may never be known, Lockwood said, though he hopes to pin down the festival’s total cost to the city by Dec. 1.

City policy is to write off the cost of much of that labor on the theory that special events bring tourist and tax dollars into the city.

“This event is being treated no differently than any other special event that the city of San Diego is involved in,” McGrory said.

Councilwoman Judy McCarty, who voted against city funding for the festival, said that money should be returned for recreation programs only after city expenses for police and trash collectors are reimbursed by the festival.

“The profit is a profit only after expenses are paid. This is part of the cost of putting it on, and you pay your bills first,” McCarty said.

The $3 million in hotel room tax revenue voted by the council has been a longstanding source of controversy.

Although O’Connor describes that city revenue as “new money” because it is paid by tourists and comes from a 1-cent addition in the city’s hotel tax fees, critics of the public expenditure have pointed out for the past two years that the funds could have been used for other city purposes, such as hiring police or funding recreation programs. City Atty. John Witt last year ruled that hotel tax funds, which are spent on tourist-related activities, could be placed in the General Fund and spent on anything.

The mayor has insisted the San Diego Hotel-Motel Assn. agreed to the tax increase only because the funds would be spent on the arts and to restore Balboa Park. The organization would have fought an increase targeted at other needs, she maintained. But her critics note that a majority vote of the council is all that was needed to raise the tax.

Nevertheless, about 97% of the money spent on the festival will stay in San Diego, Herring said, infusing an estimated $35 million into the local economy. Each of the major festival productions will cost several hundred thousand dollars, with the Boris Godunov opera leading the list at an estimated $998,000.

Other productions costs include the Faberge eggs, $$663,100; the Globe’s “Brothers and Sisters,” $750,000, and the San Diego Symphony’s presentations at $750,000.

Big-ticket expenses include security, insurance, transportation and festival advertising and promotion. There are no festival-wide calculations for those expenses, but budgets submitted by each organization show that a healthy part of the expenditures are being devoted to those items.

For example, the San Diego Museum of Art budgeted $234,000 for security for the display of the 27 Faberge eggs. (The museum refuses to say how much it is actually spending to guard the eggs.) The Timken Art Gallery has budgeted $50,000 on round-the-clock security for Soviet icons that will be exhibited on the B Street Pier.

The eggs were flown in their own coach seats on airliners from New York and Moscow and were transported from Lindbergh Field in a museum van trailed by a radio-equipped van carrying armed security guards, all at museum expense.

Insurance for the jewel-encrusted artifacts was budgeted at $119,000. The Timken budgeted more than $20,000 to insure the icons.

SUPER POWERS SUNDAY EVENTS

Free events and performances will be staged throughout Balboa Park, from 9 a.m. until 5:30 p.m.

1. Organ Pavilion. The zoo’s Animal Pals will be on hand beginning at 10:30 a.m. Opening ceremonies begin at noon, featuring the SDSU Wind Symphony, local and Soviet dignitaries and the Georgian Child Folk Dancers.

2. Starlight Bowl. Georgian Adult Folk Dancers and Mexican Folkloric dancers.

3. Casa del Prado Theatre. San Diego Youth Symphony and Soviet prodigies.

4. Old Globe Stage. American opera singers.

5. El Prado. Street entertainers.

6. Federal Building. Soviet Poster Art exhibition.

7. Hitchcock Area. Soviet Marionettes and Marie Hitchcock Puppets.

8. Fountain Area. Showcase for young San Diego performers.

9. San Diego Zoo. Gates open at 9 a.m. Children under 15 years admitted free.

10. Casa del Prado Patio. Chess exhibition.

11. Spanish Village. Arts and crafts exhibits and street entertainers.

12. Centro Cultural de la Raza. Soviet, American and Mexican muralists.

13. Timken Gallery. Soviet craft artists.