How will the financial crisis affect the arts in the Czech Republic?(analysis)

All the indications are that the cultural sphere and the "creative industries" altogether will be facing lean times in the coming years, especially as concerns funding. It is therefore high time for us to be asking how the crisis will impact on music and the arts in general in the Czech Republic?

If we are talking about the funding of culture, for several decades now there have been two basic models: the American and the European. The European model is built on the principle of state responsibility for and subsidy of the arts. The American system of support for the arts is based on the tradition of philanthropy--patronage by companies and individual donors. In the USA there is no ministry of culture, for example. In a period of financial crisis, however, private donors become scarcer and less generous. The president of the Kennedy Centre in Washington and well-known crisis manager Michael Kaiser, whose achievements have included saving the Royal Opera House in London from bankruptcy, says of the present situation:

"Nobody has any idea of where this will stop. I have never before seen the level of donations and subsidies rail so rapidly"

(daily Baltimore Sun 23rd November 2008). In the United States the crisis has already destroyed one opera company (in Baltimore) and other institutions are being forced to put off planned premieres (for example the Washington National Opera's costly projected production of Wagner's Ring).

The American model is therefore collapsing and more and more leading cultural managers are calling for state intervention. In an article for the Washington Post (29th December 2008) Kaiser appealed for an immediate state injection of finance for arts organisation. He also appealed for changes in the law and greater tax relief for donors to the arts. In the USA the culture sector provides 5.7 million jobs and has a yearly turnover of 166 milliard dollars, but because the network of cultural organisations is very fragmentary, the bankruptcy of these organisations isn't going to hit the headlines in the same way as the collapse of a big automobile factory. In short, if the state is concerned to save gleaming automobiles, it ought also to save what is hidden under the bonnet--its cultural riches.

The European Way

In Europe the situation is similar, but with the difference that the priority to be given to cultural funding is up to the political decisions of individual governments. As in the USA, the nightmare that haunts organisers and artists is cut-backs on marketing costs on the part of companies--i.e. the sponsors of art. This has a direct impact on artists. The first thing that occurs to us all is that there will be fewer receptions and other social events where artists can make extra money (e.g. to supplement the below-average levels of pay in orchestras). But there will also be a reduction in the overall sums devoted to sponsoring cultural events. This is either because firms will be making genuine economies (in this case spending on promotion and marketing is always the first item to be cut before redundancies become necessary) or because the financial crisis will provide firms with a good excuse to reduce what many managers consider unnecessary expenditures and use the savings to improve the running of the firm and raise profits. The fact is that many firms in Europe still engage in sponsoring not out of any general company philosophy of building up a good name for their trade mark through socially responsible actions (Corporate Social Responsibility in the jargon), but just because "the others do it". This is the same as when someone installs a swimming pool in the garden just because his neighbour has one. So now that the other firms are in crisis and cutting back sponsorship, these firms can cross it off the budget too without embarrassment and nobody will now blame them for not being socially responsible when times are hard. Paradoxically it will be the profit-making cultural sector that will be financially the worst hit. For they are essentially in the same position as the sports sector. Both sectors are very dependent on consumer priorities--how much money people are prepared to spend on goods that are not essential for survival. In 2009 we shall therefore discover the extent to which particular cultural events or sports are in fact mere dispensable entertainment or a real priority to which part of the family budget will always be sacrificed. It is to be expected that most of these events will experience a drop in ticket sales. Just as most managers and companies will deny themselves the luxury of a new model automobile (and the motor industry is already running into difficulties as a result), so the football fans will content themselves with watching marches on the TV and last year's team tee-shirt, a family will go to a musical just once a year, if at all. In normal circumstances these losses could be made up for by support from private sponsors, but as mentioned earlier, company economies on marketing outlay will make this kind of support much harder to come by.