[Dixielandjazz] Musical Troubles

[Stephen G Barbone]

OKOM is not the only musical genre in financial trouble.

Cheers,
Steve Barbone
www.myspace.com/barbonestreetjazzband

Philadelphia Orchestra May Declare Bankruptcy

NY TIMES - By DANIEL J. WAKIN - April 15, 2011


Painting a dire financial picture, leaders of the troubled  
Philadelphia Orchestra said on Friday that bankruptcy protection was  
vital to its survival.

The orchestra’s board was to vote on Saturday whether to seek  
protection under Chapter 11 of the bankruptcy code. Officials said  
concerts would not be affected.

While orchestras have filed for bankruptcy before, either to  
reorganize or to dissolve, the Philadelphia Orchestra would be the  
most prominent in recent memory to do so, and such a move would be a  
striking sign of the difficulties symphonies and opera companies are  
facing these days. The decision comes as the players and management  
have been locked in difficult contract negotiations.

“It gives us a better chance of raising the investment funds that are  
needed to revitalize this orchestra over the next five years,” Richard  
Worley, the board chairman, said of a Chapter 11 filing. “We need a  
fresh start. We need to escape contractual entanglements that we  
cannot possibly afford.”

The largest such entanglement, he said, was the cost of musician  
pensions, which amount to a total of around $46 million, a figure that  
the players dispute, saying the amount is only about $8 million.

Orchestra officials said they were basically out of cash. Joseph  
Bondi, a financial consultant advising the management, said the  
orchestra could meet its bills for only about two more months. Mr.  
Bondi and the officials spoke in a joint telephone interview.

A Chapter 11 filing would also presumably buy time with other business  
partners, including the orchestra’s landlord, the Kimmel Center. “It  
gives the company the opportunity to review all of its contracts,” Mr.  
Bondi said.

According to figures provided by the orchestra, ticket sales and other  
revenue are expected to bring in $14.1 million this season. Annual  
fund-raising, gala proceeds and endowment income will bring in $18.9  
million. The $33 million total compares with what the orchestra said  
was $46 million needed to run the orchestra. Even with additional,  
emergency fund-raising, the deficit is expected to be $5 million.

A bankruptcy filing is “protection at a time when our cash is running  
very low, and it’s a path for us to get to our five-year plan,” said  
Allison Vulgamore, the orchestra’s president and chief executive. The  
plan envisions raising another $100 million for the endowment, which  
now stands at $140 million, and $60 million in operating money to  
invest in the orchestra’s artistic plans, she said. Deficits would  
continue but diminish.

John Koen, a cellist in the orchestra and the head of the players’  
union, condemned the bankruptcy filing.

“The musicians are extremely opposed to this because it’s unnecessary  
and it would be damaging to the institution,” Mr. Koen said. “It’s  
absolutely the wrong decision.”

In a tactic previously used by other musicians in labor disputes, the  
Philadelphia players briefly left the stage before their concert on  
Thursday night and passed out leaflets to the audience calling on  
people to oppose a bankruptcy filing. The leaflets said such a filing  
would make it hard to attract “the best new players” and hurt the  
orchestra’s ability to raise money.

The musicians and orchestra executives have been negotiating to reach  
a new contract with the help of a mediator since the old pact expired  
last season. Terms — including salaries — have been frozen since 2008.  
The players gave up raises in an effort to help, and managers have  
taken pay cuts. The staff has also been reduced.

The orchestra has long been in severe financial difficulties. Mr. Koen  
blamed high rent at the Kimmel Center and the diversion of revenues  
from shows at the Academy of Music, its old stage, partly for the  
problems. Money taken in from presentations there goes to the Kimmel  
under the orchestra’s arrangement with the hall, Mr. Koen said.

Part of the orchestra’s woes stem from a leadership vacuum several  
years ago when it lacked a permanent board chairman, chief executive  
and music director. (The French-Canadian Yannick Nézet-Séguin will  
become music director in September 2012.) Mr. Koen also faulted what  
he called two decades of bad management, especially a “failure to  
market the orchestra appropriately and hire quality people for  
development.”

The troubled economy has taken its toll on orchestras. The Detroit  
Symphony just finished a bruising six-month strike that ended with  
large pay cuts. The Louisville Symphony filed for bankruptcy  
reorganization last year, and the symphonies of Honolulu and Syracuse  
went out of business in recent months, although a group of backers is  
trying to reconstitute the orchestra in Honolulu.