Until late April, fund raising for the annual musical event was on track. But then a pair of major sponsors revealed they would no longer underwrite the festival.
Now its future may be in doubt.
"We really need to have the festival fully funded to sustain its business model," said Indy Jazz Fest Producer Helen Small, who also is president of the Indianapolis-based American Pianists Association. "In no way is it guaranteed that the festival will be here forever for future generations."
Indy Jazz Fest must scramble to recover at least $270,000 it had banked on for this year's event-only seven weeks before artists take the stage.
In early April, Small told IBJ the 2006 event was shaping up well, with planned expenses of $1.27 million. Her intention had been to raise enough money through donations and corporate sponsorships to cover costs in advance. It's the same plan she's followed since taking over Jazz Fest in 2003. Last year's festival had a $1 million budget, all of which was raised beforehand.
"When things like this happen, it just gives you pause," said Small, who declined to name the departing sponsors. "I never dreamed that we would not meet even last year's goal. And we are short of last year's goal."
At this point, she said, it's too late to alter the Indy Jazz Fest's 2006 expense structure. Contracts for artists have been signed. Festival logistics were negotiated months ago. And since fund raising for this year's event began before last year's had finished, there aren't many rocks left to turn over.
Most potential underwriters already have been approached, so a white knight sponsor will be difficult to find. That means Indy Jazz Fest likely will have to rely on the volatile revenue of tickets, food and memorabilia to make up the shortfall.
The festival is slated for Father's Day weekend and has all the makings of a hit, with 19 acts performing over three days on two stages. Headliners include Bonnie Raitt, Wynton Marsalis and Dr. John. But now, if turnout is less than expected, the 2006 festival could end up in the red.
That's the scenario that sunk Indy Jazz Fest's original management. The festival was an unqualified success when it debuted in 1999, but a rainout the following year and poor attendance the next left previous organizers saddled with over $600,000 in debts they never repaid.
Small and the APA agreed to take over Indy Jazz Fest only after many of its creditors wrote off their unpaid bills. The Indianapolis Bond Bank stepped in to forgive about half the outstanding Indy Jazz Fest debt, and repeated annual six-figure grants from the Lilly Endowment Inc. helped bail the festival out.
Since 2003, Small has managed a modestly profitable festival, setting aside gains toward plans for an endowment. She wouldn't say how much profit last year's festival booked, but the money earned from tickets, food and paraphernalia became the foundation of the 2006 event.
Small said she was on track to repeat that performance until she got late word from the two sponsors. One said it would not underwrite the 2006 festival. Another said it will meet its commitment this year, but won't return.
Under APA, Indy Jazz Fest isn't quite as lavish as it used to be. Small has scaled back the event to two stages and sharpened its focus on expenses. And an additional emphasis on in-kind contributions has shaved $200,000 in costs once paid outright, she said.
For example, Indy Jazz Fest used to buy food for artists and volunteers. But Small said that was an unsatisfactory arrangement, since it could only afford cold meals. For the 2006 festival, she approached Indianapolis-based MCL Cafeterias Inc., which agreed to provide 600 hot meals worth about $5,000. In exchange, MCL is listed among Indy Jazz Fest's sponsors.
Casey McGaughey, MCL's director of business development, said the deal is a good one for his company, too.
"It just made sense for us, because of the media exposure they're able to achieve with the event," he said. "They draw a very wide demographic. It's [an audience] that we feel really good about as potential customers."
Similarly, APA convinced the Omni Severin Hotel to become another in-kind sponsor. Omni Severin Director of Sales and Marketing Chris Ratay said he believes, with proper encouragement, that Indy Jazz Fest could become the kind of annual event that draws a large regional crowd.
The downtown hotel is setting aside some rooms for APA and is promoting an "Indy Jazz Fest Package," which includes tickets, valet parking and a jazz brunch.
"What we do is, we provide them up to 75 rooms a night for the talent that comes in. We're doing it for basically our cost," Ratay said. "I think we'd all love to see a weekend where every hotel downtown was sold out. That would be wonderful."
Indianapolis-based Klipsch Group Inc. donated sound equipment such as iGroove speaker systems for iPods. Small will use the gear to defray some of the cost of artists, who take it in trade. Or it will become prizes for Indy Jazz Fest radio promotions.
"This is the ultimate music festival in our home market. Being heavily tied to jazz and music is important for Klipsch. We like being identified with this kind of activity," said Klipsch President Paul Jacobs. "We think having this kind of music festival is really important, and we'd like to see it continue to grow and expand."
Despite Indy Jazz Fest's financial setback, Small said the 2006 show will go on.
"It won't endanger this year. But it jeopardizes the future of the festival. In order to build the event with a sustainable future, we really need to cover the costs prior to ticket sales," Small said. "We can probably weather this year. But we want to be to the point where we can assure Indianapolis that the festival is going to be around as a real cornerstone of our cultural landscape."