Monday, September 10, 2012

Orchestras in Trouble

The latest news about happenings in the music industry includes plenty of articles regarding the financial troubles the Minnesota Orchestra, the St Paul Chamber Orchestra, the Atlanta Symphony, the San Antonio Symphony, and the Indianapolis Symphony (among others) are experiencing.  This comes on the heels of bankruptcy declarations by the Philadelphia Orchestra, the Syracuse Philharmonic, the Louisville Orchestra, the New Mexico Symphony, and the Honolulu Symphony in 2011.  The Detroit Symphony musicians’ strike last year was also well-publicized.  It’s like an epidemic.  The situation is so dire that orchestra musicians are not even being given the option to strike – the management is simply locking them out of their working venues before any threats of strikes are uttered by the musicians union – the American Federation of Musicians.  That is truly unfair to the musicians.  I won’t go into where you can find the various sites where you can read detailed reports – they are in all the major news journals.  Just google orchestras in trouble and you’ll find as many as you have time for.  Many professional experts (and other people “in the know”) have opinions as to what might be to blame for the mess although, logically, there is really only one culprit: the Board of Directors.  The union shares a little blame, but not much.  Among other things, the Board is responsible for fiscal oversight – their function is not all that different from the function of any other business board.  Whatever else they do, fiscal soundness is their most important responsibility.  It is serious business, but it’s as simple as running a household – you either live within your means or you don’t.  It’s as simple as balancing an equation: X (expenses) must equal Y (income.)  X cannot be greater than Y.  Reading a financial report is not rocket science.  Even I can do it.  In any case, Boards typically hire CPAs who take care of analyzing budgets for them.  If an important and culturally significant enterprise like a world-class orchestra goes under, the blame can only be laid at the feet of the Board which has been appointed (or, in many cases, volunteered) to make certain that these problems don’t suddenly catch up to them.  We are not talking about an ENRON situation, where bankruptcy might be largely due to malfeasance, to put it politely.  We are talking about numbers on a sheet of paper which send clear distress signals (warning bells, if you will) far in advance of any peril.  If an orchestra suddenly finds itself in precarious circumstances, that can only mean that the Board ignored the warnings which were visible to them.  They failed to act.  It cannot mean anything else.  Commentators who are looking for other answers – failures in planning, failures in marketing, failures in programing, in audience building, in communications, in education outreach, in personnel policies - are dancing around the real problem. 
Arts organizations are not expected to turn a profit.  Since time immemorial, artists – composers and performers alike - have turned to the Church or to wealthy and generous patrons for assistance – Bach, Vivaldi, Wagner, Prokofiev, etc.  This is especially true of orchestras because they are so expensive to maintain.  There have been very few exceptions to the need for subsidies (at some point) in any artist’s career, but only in the case of individual artists.  Today especially, for instance, top violinists depend on benefactors to provide fine instruments for them to use.  If that’s not a sudsidy, I don’t know what is.  I have never known any orchestra to subsist entirely on ticket sales.  It could be done, but every ticket would have to be priced in the stratosphere where, in fact, nobody could afford one. Not only that, but every seat would have to be sold for every concert.  If you look at it another way, the arts patron – private or public – is really subsidizing the average concert goer, by as much as 60% of the cost of attending any given concert.  Without the benefactors, there would be no art, except for the wealthy, as in days gone by.  This formula however, does not absolve the Board from its responsibility of looking after the fiscal health of the orchestra.  When funds are lacking, it must sound the alarm, but never after the building has gone down in flames.  If the union – having received due notice of impending doom - balks at renegotiating a contract which by its weight may soon kill the whole enterprise, the union should be shut down because at that point, it is getting in the way of sound fiscal planning.  Nevertheless, it seems like that’s already a moot point in the cases cited above. 
Management is frequently asked to enter into iron-clad contracts (containing salary guarantees, etc.) which are unrealistic in income projections; they do so hoping for best-case scenarios which usually don’t materialize.  They also do so to avoid nasty confrontations with the union.  When these contracts result in deficits, the Board then goes begging for extra funds to make up the shortfall.  Even wealthy Foundations and patrons get tired of the same old routine and sometimes close their purse strings; when that happens, a crisis results, especially in hard economic times.  Then, the finger pointing begins, after which a seriously adversarial relationship between Management and musicians develops.  Usually, the enterprise collapses and then is almost inevitably re-started under a cloud of bad feelings.  Contingency funds should therefore always be in place to help during hard times and contracts should be written with plenty of contigency clauses to cover unintended emergencies, regardless of what the union demands.  It beats having to shut the doors.  Will things ever change?  I doubt it.  Ask the New York Philharmonic if it has a surplus – or ask the Boston Symphony or the Chicago Symphony or the Cleveland Orchestra.  I hope so.  


  1. This post was much longer but I did condense it - believe it or not.

  2. There are a lot of assumptions here. "Arts organizations are not expected to turn a profit." But should they be? Art has been subsidized, yes, but should it always be? I have seen a lot of bad subsidized art. It's easy to blame the board of directors, but in most cases, they are volunteers giving their own time and money, and they have their own affairs to worry about first. Artists have to take responsibility for their own survival. Society does not owe them a living.
    You don't say a thing about outside forces. Demographics have cratered pensions throughout the economy, as people are living longer than pensions were designed to serve. Does the union recognize this? The financial crisis only exposed the problem. But worst for classical music, our society has failed to invest in the demand side, so while supply has been subsidized, demand has withered. Organizations that cannot adapt will die. The people who adapt will form new organizations with new models. Creative destruction works in the arts, too.

    1. Right on Bondo!! I could not agree more. I have a Masters in music and am working on an MBA. I understand both the artistic and business paradigms. We are in the middle of a major socio-cultural paradigm shift in which artists are going to be forced to sell tickets or go home. I don't have to like it for it to be true.....