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At a press conference at Toronto's Royal Ontario Museum last month, staffers were happy to accept some extra funding from the Ontario government - but it was someone else's news that really had them buzzing. "Did you hear Luminato got $15-million?" they kept asking in amazement.

How did a 10-day Toronto arts festival, which had completed only one season, win a direct provincial grant of a kind usually reserved for established government agencies? How did Luminato, that ill-defined grab bag of splashy public spectacles and pricey international performances (which gets under way for a second season on June 9) come out of nowhere so fast?

The answer is: one part strategy, one part timing, many parts political connections.

Amid high-level discussions about how to rebuild Toronto and draw more tourists to the city in the aftermath of the SARS scare, Luminato was founded by Tony Gagliano, the CEO of St. Joseph Communications (which publishes Toronto Life magazine) and management consultant David Pecaut, senior partner with the Boston Consulting Group.

Pecaut recalls that when they first consulted prominent Toronto arts administrators, the advice was to go big or go home. "Thirty or 40 years ago, you could start a Stratford with two plays," Pecaut said in a recent interview. "Today, you have to come out of the gate big or people wouldn't understand what you want to do."

So Luminato's strategy was ambitious from the start: Be a festival that would not only engage Torontonians with free shows but also rebrand Toronto internationally.

When Gagliano and Pecaut made their pleas for funds to the Ontario Liberal government - before the recent $15-million, no-strings-attached grant for commissioning future performances, Luminato received a total of $7.5-million toward its first three years - they picked a good moment. With a rising loonie following on the heels of SARS and tighter passport controls, both Ontario's manufacturing base and its tourism industry have taken a beating. Talk of economic development increasingly centres around the so-called creativity agenda launched by American academic Richard Florida and his notion of the creative class: When Ontario's politicians bought the idea that a splashy arts festival in Toronto could boost the whole province's fortunes, they clearly had been reading their Florida.

Most importantly of all, however, Gagliano and Pecaut were talking to their friends.

Pecaut's wife, Helen Burstyn, is a long-time Liberal supporter who used to work in Premier Dalton McGuinty's office and is now the volunteer chair of the Ontario Trillium Foundation, a provincial social and cultural funding agency that has given the new festival a small grant. (Pecaut said his wife would have removed herself from any discussion or vote on such a grant.) Meanwhile, Gagliano is friends with former Ontario finance minister Greg Sorbara: The politician's family was one of those that contributed to a $10-million Italian-Canadian donation to the current Art Gallery of Ontario renovation, an unusual philanthropic scheme organized by Gagliano.

The two men's political and corporate connections have earned Luminato an unprecedented amount of money for a new organization..

"Anything can go far fast with money," says Harbourfront Centre CEO Bill Boyle, who has sat on Luminato's steering committee of arts executives from the start. "David and Tony are brilliant at that. Most of us thought it was a pipe dream in the beginning, but these two guys actually delivered the money. I am still staggered by it."

That provincial grant has left some arts administrators simply wishing they were as well-connected, but others question why Luminato should be allowed to bypass the traditional arms' length process.

"If the lion's share of the money is going to get political, how can you compete?" asks one senior Toronto arts administrator who asked not to be named. "The Ontario Arts Council got $5-million [a year for four years in the same round of grants] The Ontario Arts Council serves maybe 400 arts groups across the province. ... It sucks."

Of course, direct political intervention in arts funding is hardly unknown in Canada, and festivals, especially in Quebec, are often the recipients of such largesse. Montreal, known as a city of festivals, has been particularly successful in securing federal money. When its organizers first approached the federal Conservatives, Luminato discovered that festivals did not qualify for cultural grants; events in Quebec and elsewhere were the recipients of regional-development grants for which an Ontario group could not apply.

Finance Minister Jim Flaherty eventually fixed the Luminato problem last year, launching a $30-million fund for community festivals (despite accusations it was as ripe for misuse as its earlier incarnation had proved during the Liberals' sponsorship scandal) and giving the Department of Canadian Heritage extra money for arts festivals to book acts. Luminato got $1-million.

If Luminato has succeeded at the provincial and federal levels, however, the City of Toronto logo is puzzlingly absent from the festival's glossy brochure. Both civic and Luminato leaders stress the relationship is cordial, and point out that, in the midst of a budget crunch, the municipal government is contributing a great deal of indirect support, such as extra city buses, for the event. Nonetheless, political observers suggest there is a rivalry between the city (which funds various street festivals; and contributes $740,000 toward its own new, one-night Nuit Blanche event in October) and Luminato, which civic officials perceive as a purely provincial creature. "We don't fund provincial agencies," said Toronto city councillor Kyle Rae, stressing the city's support was being made in kind.

From the start, Luminato has never thought small, and the story of its political clout and the many resentments it has engendered may become a mere footnote in its glorious history - if it is glorious. More important than its international image is its local relationship with the arts groups who will provide the new Canadian programming Luminato organizers say is so central to their mandate. "I have travelled to dozens of these international cultural festivals," remarks Boyle at Harbourfront, where much of Luminato's closing festivities will take place this year. "Most of them become alienated from the cultural fabric of the city. For Luminato to succeed, it has to be seen to be a partner with those groups who program 365 days a year. It's really important we say Luminato is us. If Luminato is 'them,' it will fail."