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Case 19 Teaching Note The Green Music Center at Sonoma State University
9
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?
Students should be directed to Case Appendix A, which contains eight year pro forma financial statements
for them to examine and evaluate long term financing plans based on four scenarios, all of which include the
expiration of the MasterCard Sponsorship in 2019. Table 2 summarizes the alternatives.
TABLE 2. Funding Alternatives for the Green Music Center at Sonoma State University
Scenario #1 • Current Programming and Fundraising levels remain unchanged
Scenario #2 • The University does not contribute any additional funding
• Annual Giving and Sponsorships increase by 20% annually
• Foundations and Grants increase 10% annually
• Creation of a $2 million endowment which will grow by 2%, and distribute 4% of market
value annually
Scenario #1
Scenario #1 shows the current fundraising and programming levels, and assumes there will be no change to
either the level of activity on the production or fundraising side.
Scenario #2
Scenario #2 would mean that SSU offers no additional financial support and all new fundraising must come
from external sources. There are several development goals that must be attained in order to make this option
to be viable. First, Annual Giving, and Sponsorships must both increase by 20% every year. Additionally,
Pros:
nBy completely funding operations externally, the Green Music Center will be afforded the opportunity
to redefine itself and its mission.
Case 19 Teaching Note The Green Music Center at Sonoma State University
10
nIn this sense it will also be eased of the burden of further integrating academic involvement into
performances.
Cons:
GMC Development staff.
nIt leads to a chicken and egg situation in which they will need to hire more staff to raise funds aggressively,
ultimately increasing the amount they will need to fund to cover their increased staffing costs.
nThere is the ultimate question of whether these fundraising levels are even possible with the current
demographics of Sonoma County.
Scenario #3
In Scenario #3 the activities of the Green Music Center are reduced to only those that are intended to benefit
Pros:
nContrary to Scenario #2, absorption of fiscal responsibility would grant SSU complete control over
programmatic and academic decisions.
nAdditionally, since there would be no community-oriented programming, the overall cost of operations
would decrease dramatically.
• As the case mentioned, the new FTES added to capacity by the construction of the GMC will yield
over $12 million in new revenue.
Cons:
nBy cutting off communication with the larger Sonoma County community, SSU will be isolating itself
in a time when it needs to be formulating strategic partnerships.
Case 19 Teaching Note The Green Music Center at Sonoma State University
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nLimiting the number and variety of shows produced may ultimately counter the University’s mission, as
it will no longer be providing the breadth of experiences and diversity than it had previously provided.
Scenario # 4
Under Scenario #4 the GMC and SSU form a greater partnership in the funding model. GMC continues
to raise funds externally with a projected annual increase of 5% in Annual Giving, Sponsorships, and
Pros:
nThe GMC Development Office will have more modest fundraising expectations, which they may be
able to exceed.
nBoth organizations will be able to realize the goals outlined in their missions, as they will be able to
provide programming to both the campus and Sonoma County communities, and provide an educational
component.
Cons:
• In any year, but especially during a budget cut, the new President would probably face opposition
from other governance bodies—faculty representatives on the Academic Senate and student
representatives on the Associated Students Senate—as to why resources are used to support the
GMC when they are also needed elsewhere.
nThe incoming University President, Dr. Sakaki, must then be prepared to explain and defend the mutual
benefits created by a partnership between Sonoma State University and the Green Music Center.
Case 19 Teaching Note The Green Music Center at Sonoma State University
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7. If you were the incoming University President, would you choose to financially support the
Green Music Center, and if so, to what extent?
Our recommendation to incoming president, Dr. Judy Sakaki, would be to fully embrace the educational
potential and financially support the operations of the Green Music Center.
nIn the joint funding scenario presented in this case (Scenario #4) Sonoma State University backfills the
funding need that is not provided through other revenue sources in amounts ranging from $889,898 to
$1,136,279.
It would be fiscally irresponsible for Dr. Sakaki to agree to sign a blank check on an annual basis in order
to support the Center.
nWhat would be more prudent would be for Dr. Sakaki to determine a specific level of support, and
provide it through salary and benefits.
• For example, if she determined SSU’s contribution would be $1 million, then $1 million of the
$1.77 million in salary and benefits would be absorbed by the university.
The integration of the Center into the University would only be complete if there was a renewed focus on
aligning the missions of the two organizations. The common theme is a focus on education and community.
Wrapping Up The Class
The factors in a company’s — or not-for-profit organization’s — environment that have the biggest strategy-
shaping impact typically pertain to the company’s immediate industry and competitive environment.
nThe six principal components of the macro-environment are political, economic, sociocultural,
technological, environmental (concerning the natural environment), and legal/regulatory.
nSome drivers of change are unique and specific to a particular industry situation, but most drivers of
industry and competitive change fall into one of the following categories:
• shifts in buyer demographics
Case 19 Teaching Note The Green Music Center at Sonoma State University
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• technological change and manufacturing process innovation; product innovation; entry or exit of
major firms
• regulatory influences and government policy changes
• changing societal concerns, attitudes, and lifestyles.
nThe real payoff of driving-forces analysis is to help managers understand what strategy changes are
needed to prepare for the impacts of the driving forces.
nThe most powerful and widely used conceptual tool for diagnosing the principal competitive pressures
in a market is the five forces framework, which holds that competitive pressures on companies within
an industry come from five sources
• evaluate how strong the pressures stemming from each of the five forces are (strong, moderate or
weak
• determine whether the collective impact of the five competitive forces is conducive to earning
attractive profits in the industry..
In the case of the GMC, the combination of unfavorable environmental drivers with an inherently unattractive
Case 19 Teaching Note The Green Music Center at Sonoma State University
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Epilogue
At the end of FY 15/16 on June 30, 2016, the Board of Advisors dues were decreased to $20k/person, with a
preferred $50k give in an effort to appeal to a wider base of donors.
On July 1, 2016, Dr. Judy Sakaki became Sonoma State University’s 7th President.
* * *
On August 26, 2016, President Judy K. Sakaki was welcomed with a standing ovation in Weill Hall at Sonoma
State University’s Green Music Center Monday morning at her first ever Sonoma State Convocation, and that
was even before she delighted the audience with her commitment to making Sonoma State a more student-
centered, inclusive and academically excellent university.
“I am listening and learning every single day,” said Sakaki. “I have been since day one here on campus.”
She said her first seven weeks on campus have been spent, in large part, getting to know the Sonoma State
community. “I started with meetings, individual appointments, and department visits,” she said. “There is
incredible wisdom and experience on campus. Leadership, for me, is a collaborative process.”
She also introduced a permanent Associate Vice President and Chief of Staff, Bill Kidder, J.D., who served most
recently as Associate Vice Chancellor/Chief Compliance Officer and also Assistant Provost at UC Riverside.
Nearly $45,000 in tickets have been reserved for academic classes at Sonoma State for performances at the
Green Music Center, including Pat Metheny, the Folger Consort with Derek Jacobi, Jazz at Lincoln Center, Zakir
Hussain, Itzhak Perlman, the Shanghai Acrobats and many others. “The Green Music Center exists, first and
“It’s letting people access a different way of thinking and experiencing as part of their liberal arts education,”
says Horstein.
Case 19 Teaching Note The Green Music Center at Sonoma State University
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One performance in Schroeder Hall was specifically arranged for the Arts Integration program. On November
13, German electronic music group Aggressive Loop Productions plays live accompaniment to the 1927 German
silent film “Berlin - Symphony of a Great City.” More than 60 percent of the tickets in the 240-seat recital hall
are already reserved for classes of students studying German, music technology, and modern languages and
literatures.
1,000-student total.
* * *
On September 30, 2016, J.D. Morris, writing in the local Press Democrat, reported:
Sonoma State University President Judy Sakaki has scrapped high-profile plans for a 10,000-seat outdoor
pavilion project at the campus’ Green Music Center, a move she framed as a bid to save money better spent on
Sakaki, who took over as president of the Rohnert Park campus in July, called the move “the most important,
difficult decision I’ve made since I assumed the presidency.”
“The concern was, as we look at what our students need — what the campus needs — in terms of focusing on
student success and improving our graduation rate, and making sure that, academically, we have the faculty that
Groundwork on the area, near Petaluma Hill Boulevard, had begun but was halted. Recently, crews have begun
restoring the area as an open lawn.
MasterCard pledged $6 million for the project, but Sakaki said that money would not have come until after the
facility was built and the university would still be responsible for operating costs.
Case 19 Teaching Note The Green Music Center at Sonoma State University
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call. She described her decision-making process as “really thorough and consultative.”
Armiñana could not be reached Thursday and Friday for comment. One of his top officials, Larry Furukawa-
Schlereth, the recently departed vice president of administration and finance, voiced disappointment the project
