Dueling Band-Woes

Hot fun in the summertime seems like a lost cause in the Twin Cities.  Instead, it looks like we will be treated to a summer of great discontent, followed by only the Gods know what.  There’s only one guarantee – this is not going to be pretty.

The travails of the Minnesota Orchestra have already been documented.  But not to be outdone, the news breaks that the SPCO, that shining jewel in the crown of St. Paul, is suddenly teetering on the contractual brink.  Rumors have been swirling around the musician’s network in the Twinks about both orchestras for months now and the question has to be asked: How in the world could both of these organizations be in such bad shape simultaneously?  This is certainly NOT what the Twin Cities are known for.

The first and most obvious problem with any orchestra is the whole issue of fixed costs.  To wit – no matter how you slice it no amount of upgrading or modernizing is going to let you get out of the fact that an orchestra is personnel intensive.  Straight off you have musician’s salaries, and one has to take these numbers with a grain of salt.  What tends to go unmentioned when we talk about the base salary are perks such as seniority, overtime, principal pay, etc., and the granddaddy of them all – benefits.  By my back-of-the-envelope calculations at the SPCO the total expenditure for musicians probably takes up 40% of the annual budget.  Add another 40 people onto the payroll (staff – most of which not paid nearly as well as the musicians, but paid none-the-less) and a full 60% of your expenditures go towards employees (2010 990 form courtesy of GuideStar.org).  Your fixed salary compensation for 2009 is $6,750,000 on expenditures of c. $11 Million.  (Fees for guest artists tend to be lumped into this category as well, in case anyone is wondering.)

Ironically, the Minnesota Orchestra,  a much larger organization, has an even worse salary to budget ratio.  Expenditure for personnel came in at $22M, a full 70% of the M.O.’s yearly budget.  The much, much scarier ratio is this:

SPCO    2010 Expenditures:   $11,162,917       Ticket Sales:  $1,790,771

M.O.     2010 Expenditures:    $31,597,305      Ticket Sales:  $5,558,011

Now, the M.O. has the great advantage of owning their hall, and they claim an additional $3.5 Million from hall rentals, tickets, etc.  None-the-less, on their 2010 990 forms the M.O. and the SPCO claim ticket sales from their own concerts that cover only 17% and 16% of their yearly expenditures, respectively.  In other words, over 80% of their yearly budgets must be covered by grants, donations, or non-ticket income!!!

In today’s philanthropic world it is hard to see how this can continue.  The Arts are struggling to retain philanthropic sponsors who are constantly being lured by the siren call of having their name on a building.  Take Cleveland, for example.  One need go no farther than one mile from the beautiful Severance Hall to run up against The Cleveland Clinic and their gleaming, overwhelming, state of the art, incredible collection of brand new buildings, all of which are ready to welcome the next wave of ridiculously wealthy families from oil rich Middle East states to come and buy access to the best medicine not available to the average American.  Anyone working in philanthropy today will tell you that behemoths like The Cleveland Clinic are very, very hard to compete against.  Having your name on a gleaming new building is much sexier than underwriting the salary of some crazy reed nerd sitting in the 2nd bassoon chair.

The grant world is similarly shaky.  The Hu-Di-Fluh Foundation may have been a major supporter of yours since the Hoover administration, but suddenly the new trustees decide to “change the focus of the foundation.”  That $1 Million you have been taking for granted has now disappeared and it must be made up somewhere.  Unfortunately, Mrs. Fluhbinuh, the 93 year old scion of one of the founding families of your area, has finally been declared non compos mentis, and her children have “different funding priorities” for the family money.  Now where are you going to turn?

2007 – Timing, it’s all timing…

So with these fixed personnel costs the musicians contracts take on added weight.  If the Star Tribune article is to be taken as true, the M.O. contract signed in 2007 guaranteed a 26% wage hike over 5 years.  Funny enough, that’s the same year the SPCO musicians signed their contract.  Almost immediately both organizations discovered that there was absolutely no way they would be able to fulfill these obligations and a series of givebacks ensued at both places.  In hindsight it is now blatantly clear that both of these contracts were utterly misguided.

Unfortunately, there is plenty of blame to go around.  If the Board of the M.O. speculated that these increases could simply be paid for via the endowment then the governance for that organization is severely wanting.  That the musicians bought into this does not absolve them of some of the blame, either.  Indeed, the problem is that everyone drank the same kool-aid.  It’s 2007, the height of the Bush bubble.  Sure, we’ll grow our way out of this deficit by slashing our income and increasing our spending.  Then reality set in, the housing bubble burst, the markets crashed, and those rosy expectations went the way of the dodo.

It is tempting to suspect that the same thing happened at the SPCO that year, but there is an added twist – the “New Model” that was put into place.  This is something of a wild card and it makes it difficult to predict how the “Old Model” of the SPCO would have gotten through the past several years.  Of course, it also makes it difficult to truly evaluate the “New Model.”

Meanwhile, the M.O. is about to shut the hall down for a $50 Million renovation.  The irony is that the hall desperately needs this renovation.  Orchestra hall was conceived, designed, and built in the early part of the 1970s (a decade of architectural failure only outdone by the previous decade’s fascination with Brutalism), and it is a miracle that it functions as well as it does.  The offices are cramped and outdated, the public space is barely usable and, frankly, it’s a little ugly.  At any other point in time this would make perfect sense, but the optics of the situation are not going to be pretty, especially if there is a work stoppage in the future. I will bet good money, however, that it was a LOT easier for the M.O. to raise money to renovate the hall then it has been to raise money for general expenditure.  Shiny buildings trump people in today’s philanthropic world.

Of course, the people who are going to end up being screwed the most by all this are 1) the musicians; and 2) the audiences.  At both the SPCO and the M.O. salaries will decrease significantly, and benefits may take a hit as well.  The only question is – how will that happen?  Follow the Detroit model?  Was that whole mess worth it?  How about the Philly model?  Was that worth it?

How about some Rocky Mountain High?  It seems that the Colorado Symphony Orchestra has managed to reinvent how they are doing business in a short 7 months.  How did they manage to do it?  Trust and co-operation.  It became obvious to all the stakeholders at the CSO that they were up the creek together and the only way out was for everyone to paddle in consort.  I’m sure this is very disappointing for those who desperately believe in the “Us vs. Them” approach to management/musician relationships, and to be fair the jury is still very much out as to the long-term health of the CSO.  But for the time being that Rocky Mountain High is good to hear, while the dueling band-woes on the northern Mississippi might soon give away to a version of another popular tune – “The Devil Came Up to Minnesota.”  And, Lord knows, said Devil is going to be knocking on some doors and demanding a paycheck.