The 2018 Colonial Williamsburg Annual Report was just released with financial results that included the first full year of outsourcing and restructuring. Despite its importance, there was only one page of “Condensed Consolidated Statement of Financial Position,” with emphasis on “condensed.” The balance sheet and income statement numbers are so intertwined, it’s often difficult to decipher the numbers.
CEO Mitchell Reiss has said repeatedly that with restructuring and out-sourcing in place, CW would be on a path to sustainability. It is noteworthy he never presented any financial forecasts to support his optimism.
This was the year that would tell the tale, but the results do not begin to support his claim. Key 2018 results compared with 2017 were:
» Operating revenue was down $10 million, from $109 million to $99 million, reflecting the outsourcing of some revenue operations.
» Operating expenses were down $22 million, from $223 million to $201 million, for the same reason.
» The resulting operating deficient was down $12 million, from $114 million to $102 million.
After five years of promises to employees, volunteers and donors, CW continues to run $100 million annual deficits. This is not sustainability. Nowhere in the report are the revenue and expenses numbers discussed, or attendance, a major metric, or the large $350 million debt.
Not surprisingly, CW announced this week that Reiss will leave at the end of his five-year contract in October.
While he failed to deal with CW finances and made many bad decisions, just as culpable, perhaps more so since they hired him, was the uncompensated CW Board of Trustees. Boards are responsible for overseeing CEO decisions. But the only oversight the CW Board provided was awarding Reiss a $100,000 bonus. It appears our board is like all corporate America boards, an old boy’s and now old girl’s club. I’ll be on your board if you’ll be on mine.
There is only one solution to CW financial problems without making major cuts: Increase the endowment to $2 billion. An annual drawdown to cover the entire deficient would represent a sustainable 5% annual withdrawal. Private contributions and grants would then be free money to invest in people, programs, education and buildings.
Without an immediate increase to the endowment, CW is a major market downturn away from bankruptcy.
Another important CW problem is relevance. Given the multitude of problems facing the country today, there’s little public interest in the country’s founding. But a CW closure would still be a tragedy for Williamsburg and Virginia. Seeking solutions in the past, CW has been too insular. It’s time to look beyond itself and consider outside counsel to recommend financial fixes and reimagine CW as a public attraction. CW desperately needs professional governance. Who is selected as the next CEO will hold the future of CW.