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TEACHING NOTE
CASE 19
The Green Music Center
at Sonoma State University
Overview
In April 2016 the Green Music Center (GMC), a performing arts center located on the campus of Sonoma State
University (SSU), faced an impending financial deficit. Sonoma State University was one of 23 campuses of
the public California State University (CSU) system, a system that had seen drastic budget reductions during
the Great Recession in 2009-2010, and very little in the way of budget augmentation from the State of California
since that time. Both the GMC and SSU had crafted mission statements that promoted the importance of a broad
cultural perspective, education, and community engagement.
While the GMC’s presenting series had thus far maintained a balanced budget for all four years since the Center
commenced operations, the University needed to prepare for the expiration of a $1.25 million annual MasterCard
Suggestions for Using the Case
University life and performing arts programs are typically well known to students, so the Green Music Center
case should provoke substantial debate over the tension and tradeoffs between supporting an educational mission
and supporting a community performing arts mission. In addition, the case provides an exceptional opportunity
to have students understand that not-for-profit organizations frequently incur problems similar to for-profit
*This teaching note reflects the thinking and analysis of Professor Armand Gilinsky, Sonoma State University. We are most grateful
for his insight, analysis and contributions to how the case can be taught successfully.
*
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You may choose to position the Green Music Center case after your coverage of Chapter 9, but it can be
successfully used after students have read Chapters 3-5. It is definitely a good case for drilling students in the
tools of analysis covered in Chapters 3 and 4.
Video for Use with the Green Music Center at Sonoma State University Case. There is a 4:16
In our experience, it is quite difficult to have an insightful and constructive class discussion of an assigned case
unless students have conscientiously have made use of pertinent core concepts and analytical tools in preparing
substantive answers to a set of well-conceived study questions before they come to class. In our classes, we
expect students to bring their notes to the study questions to use/refer to in responding to the questions that
analysis or that you plan to cover during your class discussion of the case.
To facilitate your use of assignment questions and making them available to students, we have posted a file of
the Assignment Questions contained in this teaching note in the instructor resources section of the Connect
Utilizing the Guide to Case Analysis. If this is your first assigned case, you may find it beneficial to have
class members read the Guide to Case Analysis that follows Case 31. The content of this Guide is particularly
helpful to students if your course is their first experience with cases and they are unsure about the mechanics of
how to prepare a case for class discussion, oral presentation, or written analysis.
Suggested Assignment Question for an Oral Team Presentation or Written Case Analysis. Our
suggested assignment question for the Green Music Center at Sonoma State University is as follows:
What advice would you give to the incoming University President regarding the future
of the Green Music Center? Prepare a report that includes: (1) an evaluation of the GMC’s
Assignment Questions
1. How could the GMC be used to support the University from both a financial and educational standpoint?
2. How well are the University and GMC operating by their mission? What could they do to better align
themselves to the mission?
3. How might the GMC facility generate additional revenue? What potential conflicts might arise from these
revenue generation strategies?
4. What does a PESTEL analysis reveal about GMC’s potential success at SSU and within Sonoma County?
5. Perform a five-force analysis of the performing arts industry. Based on this analysis, is the industry attractive?
Is the GMC correctly positioned?
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6. Evaluate the GMC’s current and prospective financial statements provided in the case. Based on your
analysis, what are some alternative means of providing funding support for the GMC? What are the pros and
cons of each alternative?
7. If you were the incoming University President, would you choose to financially support the Green Music
Center, and if so, to what extent?
Teaching Outline and Analysis
1. How could the GMC be used to support the University from both a financial and educational
standpoint?
The Green Music Center has the potential to become an integral source of revenue for Sonoma State
University.
nThe additional Full Time Equivalent Students (FTES) attracted and enrolled through construction of the
facility could ultimately yield over $12 million annually in tuition to the University
The additional Full Time Equivalent Students (FTES) attracted and enrolled through construction of the
facility could ultimately yield over $12 million annually in tuition to the University. About half of this
amount would cover the cost of instruction, while the other half may be used for programs to increase
student success, or other academic initiatives.
nThe GMC could also provide enhanced educational opportunities through creativity and integration.
Located in a relatively rural area, there are limited chances to expose students to the types of cultural
offerings that are brought to the Green Music Center. This alone adds an educational emphasis, but the
opportunity also exists to further integrate the in-classroom learning to the co-curricular programming
at the GMC.
2. How well are SSU and GMC operating by their mission? What could they do to better align
themselves to the mission?
nThe Green Music Center in 2016 had captured its vision of appealing to the community audience;
however, it had lost sight of its commitment to advancing educational opportunities within the Center.
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3. How might the GMC facility generate additional revenue? What potential conflicts might
arise from these revenue generation strategies?
nAs shown in case Exhibit 7, certain types of shows produce higher net revenues, and those shows
typically feature more popular artists and world music.
The GMC could make a concerted effort to program more shows involving popular artists and world
music. While these offerings might not be compatible with the offerings of the classically themed
nThe Green Music Center could consider creating a support network of young professionals, who can
donate on a smaller scale, in the $500 – $5,000 range.
In 2016 the annual board dues for the Board of Advisors was $50,000 per year. There was a small
percentage of the population that can afford to support the GMC at this level, but may also want to
is most easily achieved through programming, but typically not the type of programming that appeal to a
large customer base. This is the conflict of the GMC- is it better to program to the largest community, the
highest earned revenue, or to those most likely to donate? And in any of those cases, is the educational
mission being served?
4. What does a PESTEL analysis reveal about the GMC’s potential success at Sonoma State
University and in Sonoma County.
This is a great opportunity to cover a key conceptual framework for evaluating the external environment,
covered in Chapter 3.
PESTEL analysis is an acronym that serves as a reminder of the six principal components of the macro-
environment: political, economic, sociocultural, technological, environmental (concerning the natural
environment, not the business environment), and legal/regulatory. See Table 1.
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TABLE 1. PESTEL Analysis for The Green Music Center at Sonoma State University
Political California State University System
Economic High median income
Social Sonoma County has an older, white population, with a high median income, and high
education levels
Attendees to performing arts tend to be white, over 45, with high levels of education
Environmental Clean air, and temperate weather
Outdoor lifestyles
Political
nThe fates of Sonoma State University and the Green Music Center are largely dictated by the state of
California.
nThe most immediate political concern is that of the on-campus community.
• Funding priorities on the campus level are generally decided through the shared governance process
meaning faculty members have a say through the Academic Senate.
Economic
nResidents of Sonoma County have a high median income relative to the rest of the state and nation, but
also an exceedingly high median household price.
• Using this as an indicator of buying power parity, those in Sonoma have less discretionary income
than those in California or the US.
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nConsidering Sonoma County echoes the nation, it is neither a more volatile nor more stable location for
a performing arts center than anywhere else in the country.
Social
nThe demographics of Sonoma County are conducive to supporting a music center.
• The ideal patron is out there, but the challenge of the GMC will be to ensure they know what the
Center can offer them, and create a culture of performing arts attendance that had previously been
limited to one other competitor.
Technology
nTechnology in performing arts is highly unchanging; however, there may be some benefit to implementing
a more cohesive ticketing system, which can track not only sold tickets, but also participants in education
programs.
Legal
nThere are tax implications that SSU must monitor that are beyond industry best practices.
Environmental
nSonoma County has beautiful and temperate weather throughout the summer allowing the university to
maximize use of the facility at this time.
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On balance, Sonoma County is well positioned to support a successful performing arts center. Compared the
State of California, and the United States, Sonoma’s demographics most closely align with those of performing
arts attendees listed in the 2015 National Endowment of the Arts survey. The county is predominantly white,
5. Perform a five-force analysis of the performing arts industry. Based on this analysis, is the
industry attractive? Is the GMC correctly positioned?
Another key framework for assessing the competitive environment is the five-forces of competition model
introduced in Chapter 3. See Figure 1.
FIGURE 1. Five-Forces Analysis For The Performing Arts Industry
and competitive
advantage
Competitive pressures coming
from the threat of entry of new rivals
Potential New
Entrants into the
Performing Arts
Industry
Rivalry Among Competitors—High
nThe GMC faces both direct and indirect competition.
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nIndirect competition includes rivalry for donor dollars from other nonprofits within the county and
nationally.
Threat of New Entrants—Low
nThe threat of direct competitors is low, as the start-up capital required for a performing arts center is
fairly extensive.
nThe threat of indirect competitors, however, is incredibly high, as all that is required to become a
nonprofit is to file basic paperwork with the State.
Threat of Substitutes—High
nThe market from which the Green Music Center draws patrons and donors spends much of their leisure
and entertainment time and dollars on dining out, going to movies, and enjoying outdoor activities.
Bargaining Power of Buyers—High
nBuyers have high bargaining power due in large part to price sensitivity of ticket sales.
nBuyers have many other choices for entertainment, and switching costs (except, perhaps for season
ticket holders of professional sports teams) are low.
it from other performing arts centers both inside and immediately outside of Sonoma County.
Bargaining Power of Suppliers — Moderate to High
nArtists are heavily in demand, and thus have control over the price they charge.