What Price the Philharmonic? : Corporate sponsorship--with strings attached--is becoming a regular source of funding for arts groups

Replete with floodlights, fast-talking dealers and thousands of potential customers who had come to gawk at the new Mercedes-Benz 500SL, the downtown event could have been just another glitzy auto show.

Hardly. It was a recent invitation-only, largely black-tie crowd at the Dorothy Chandler Pavilion for the display of the luxury automobile--base price $83,500--and featuring a private performance by the Los Angeles Philharmonic.

There was little talk this night about music making or Stephen Bishop-Kovacevich’s playing of Beethoven’s First Piano Concerto. Rather, the conversation among most concert-goers centered on options and leases and trimmings and tops.

Dr. and Mrs. Stan Silverman, who came from Orange County, said they were there “strictly for the car” because, as Mrs. Silverman said: “It’s a mystery car. None of the dealers have it. This is such a great idea.”

Conductor Andrew Litton, an auto buff who also has led orchestras at dental conventions, found the experience “fun.” He said backstage that he didn’t mind one bit that the audience applauded between movements--considered a no-no among cognoscenti.

Mercedes-Benz, in return for an annual $250,000, three-year donation to the L.A. Philharmonic, was also granted title sponsorship of a 14-concert Celebrity Series that began last season and carries the auto maker’s name in the title through 1991. For the concert on this night--Nov. 21--the company was allowed to disperse all 3,000 tickets for the concert to key dealers and clients. It was, according to the Philharmonic, its first-ever sponsored concert for an exclusive audience.

Since the mid-1960s, corporate funding of the arts has been largely philanthropic in nature, with few strings attached. Now, however, with arts groups increasingly finding themselves financially strapped, more and more are seeking corporate funds. The Philharmonic’s list of corporate sponsors runs the gamut from Reebok to Bullock’s; Vons to Xerox.

Many corporations in an effort to increase visibility--and sales--are deploying marketing and advertising dollars to sponsor special events. As title sponsor of the Los Angeles Philharmonic’s Celebrity Series, Mercedes-Benz is guaranteed considerable mention in programs, brochures and newspaper and magazine ads.

The Philharmonic’s executive vice president and managing director Ernest Fleischmann is optimistic about this new source of funding: “We can provide specific sponsors with access to specific audiences whom they would not be able to reach otherwise. We’re talking about banks, the auto industry, insurance, travel. We’re an obvious vehicle for them to use to convey a good image to the kind of market they’re trying to reach. It’s not that easy to get contributions just for general operating expenses.”

Thomas Kendrick, president of the Orange County Performing Arts Center (which was built entirely with private funds), cautions organizations to weigh carefully what they are getting against how much they are giving away before permitting a company to take advantage of their name.

“The need for financial aid to arts groups is tremendous,” Kendrick said. “The problems come when the lines between marketing and charity begin to blur.

“People coming to a cultural institution don’t expect to see posters in the lobby,” Kendrick said. “There is a danger of a backlash from patrons. Arts and nonprofit arts centers have a certain image that is important to maintain. They are not sports arenas or rock concert sites where marketing is overt. They need to exercise balance.”

The L.A. Philharmonic is not alone in its pursuit of potential donors. As part of a deal with the Center Theatre Group to fund gala nights at “Phantom of the Opera,” Lexus periodically has parked a LS400 on the Music Center Plaza. Similarly, a model is on display outside the Performing Arts Center, where the Lexus Great Orchestras Series presented by the Orange County Philharmonic Society is under way.

The New York Philharmonic, which has about 10 major sponsors, also is being courted by car makers. Things have reached the point, said Jerry Kleinman, the orchestra’s director of development, where Lincoln Center management has stipulated that only one car be allowed on display at a time. “Otherwise, this place will turn into a parking lot,” he said.

During a telephone interview, Kleinman posed the question of ethical restraints:

“Do you allow a tobacco company to sponsor an event, or someone who does business with South Africa?” he asked. “Or accept a gift from a company that makes contraceptives when abortion is such a hot issue? Or let a beer company sponsor a kids’ concert? And do you also take into account whether these corporations help the homeless or those with AIDS?”

Mostly, Kleinman concluded, you “cut the best deal you can.”

Some arts leaders remain concerned that many corporations opt to support heavily-promoted one-night stands rather than cultivate more low-key, long-term relationships.

Music Center President Esther Wachtell laments a general lack of commitment to the community.

“The impulse behind corporate sponsorship, although we want and recognize it as a very valuable tool, is a different impulse” than from corporations that build and invest heavily in the community. “This is an impulse we should all prefer,” she said.

Most arts organizations are unwilling to reveal details of their corporate ties--the same goes for the corporations--to keep from jeopardizing “future negotiations” regarding the amount of donations versus services received. Generally, a discussion of what a corporation receives in return for its money is off limits, though the tangible benefits--like the Mercedes-Benz concert--are obvious.

The West German auto manufacturer is one of the largest corporate donors to the Philharmonic. It is also one of 30 corporations and corporate foundations funding the orchestra to the tune of $1.6 million this year (out of an operating budget of $29 million). The figure reflects steady growth since late 1984, when the orchestra hired Laurel Karabian, a former director of annual support for the San Francisco Symphony and a member of the California Arts Council, to head its development department and expand fund-raising activities.

In fact, the Philharmonic’s move into the realm of corporate sponsorship followed on the heels of the Los Angeles Olympic Games. Here, said Karabian, was the ideal example of official sponsorships at work.

“Sports promotions were so successful that companies started looking into ways of tapping into a more discreet market,” said Karabian, 35, who heads a full-time staff of five--Philharmonic personnel number 58--at her Music Center offices.

“The Philharmonic, because of its size and reputation has an advantage in finding corporate support. Its quality is already established,” said Karabian.

That quality is what appealed to Mercedes-Benz. “It makes sense for us to invest in the Los Angeles Philharmonic,” said Hans Jordan, senior vice president of marketing for Mercedes-Benz of North America, Inc. “Los Angeles is a very cultural city and we have a lot of customers there. We plan to increase our investments in classical music; it fits the image of our car.”

Some Philharmonic support remains charitable: The W.M. Keck Foundation has awarded the orchestra a $1.2-million, three-year grant for educational programs. The E. Nakamichi Foundation has given $200,000 towards the Los Angeles Philharmonic Institute.

But other corporate sponsors negotiated something in return:

* For a $200,000, three-year donation, American Airlines got the company logo lit up in fireworks at the explosive Hollywood Bowl finale concert in September. As with all sponsors, the airline’s name was flashed on the electronic marquee fronting the Bowl on Highland Avenue. The airline also offered travel discounts to Bowl subscribers and got its logo in the brochures.

* The Boston Safe Deposit and Trust Company of California, a financial services firm with a branch in downtown Los Angeles and a regular contributor, has given $50,000 to underwrite the Philharmonic’s upcoming Pension Fund Benefit Concert. In return, the company gets to invite about 150 clients to the event.

* In a deal packaged by Venice-based Chiat/Day/Mojo advertising agency, Southern California Nissan for $100,000 secured title sponsorship of the Jazz at the Bowl concerts and a prime spot near the Bowl entrance to display a 1989 Maxima. Nissan also was able through direct mail to invite subscribers, dealers as well as Porsche and Corvette customers to a Sunday brunch, where 15 new models were displayed on stage.

“Nissan attracts people in the upper-middle bracket and jazz hits that segment,” commented Laura Parker, who handled the account. “This relationship has given Nissan good exposure in the L.A. market.”

Torrance-based Lexus, a division of Toyota Motor Sales U.S.A., Inc., has similarly sought the largely upscale cultural audience in Southern California. An Orange County Philharmonic Society spokesman confirmed that Lexus has given the organization $40,000 in cash, and a LS400 model car priced from $35,000 to be raffled in return for title sponsorship of its Great Orchestras series.

When contacted by The Times, Dave Illingworth, Lexus vice president and general manager, refused to discuss details of the firm’s financial arrangements with any arts organizations. The company also provides support to the San Francisco Opera, Dallas Opera, Chicago Symphony and the Philadelphia Orchestra.

Orange County Performing Arts Center policy dictates that the facility not be used for commercial exploitation, said Kendrick. But the board, deeming Lexus’ gift financially essential to the Philharmonic Society, which has a budget for 1989/90 of about $2.4 million, authorized the car’s installation as a “one-time exception” and controlled the display, even to color-coordinating the rug under the model.

Arts institutions--and their audiences--are becoming increasingly attractive to corporations, said Jim Andrews, senior editor of Special Events Report, a Chicago biweekly trade publication that tracks corporate sponsorship.

“Most event sponsorships are still for sports,” he reported, citing that in 1989 about $2.1 billion overall has been spent on corporate sponsorships of special events.

“But arts festivals and music are now getting more attention primarily because these are uncluttered areas and you can still go in and make your mark.”

Nationally, since the early 1980s corporate and foundation donations to the arts total nearly 12% of all giving, according to data from the Conference Board, a New York business information service.

In a 1987 look at the nation’s larger 325 companies, the group concluded that more than $178 million was given to the arts.

Support, whether in advertising or philanthropic dollars, should be “reached for aggressively,” in the opinion of the Center Theatre Group’s Gordon Davidson.

“Corporate sponsors need to be encouraged,” said Davidson, producing director of the Ahmanson and artistic director of the Mark Taper Forum. “We worked with AT&T; on a production in New York and it was terrific. Of course, I wish there were gifts that came just because people believed in the shows and were not also serving their own needs and images. But it’s tough out there and anything that can pry open dollars is worthwhile.”