Orchestras fight hard times through bankruptcy, seeking new model

Emily Grannis, Bloomberg News, 8/21/12

[With] growing deficits among U.S. orchestras, some are choosing to resolve [their financial problems] through bankruptcy. The crisis facing such groups, and how they may come out on the other side, was put in the spotlight by the bankruptcy this past year of the Philadelphia Orchestra. The group was the biggest among at least five U.S. symphonies to seek court protection in the wake of the 2008 economic collapse. Others include organizations in Louisville, Syracuse, Albuquerque and Honolulu. The recent reorganization in Philadelphia -- and the decreased debt and expenses the group emerged with -- may serve as a model for other symphonies struggling with fewer donors and lower ticket sales. With its turnaround plan approved, the Philadelphia Orchestra exited court protection July 30 after 15 months, having resolved $100 million in claims with a $5.5 million settlement, shrinking its payroll and winning a release from its pension obligations. Reorganization may not save a symphony. Even when it succeeds, an orchestra may end up with lower-paid musicians or fewer of them, or both. For insolvent symphonies, the outcomes vary. The Florida Orchestra is still performing. So is the Albuquerque Philharmonic. [However,] San Jose's orchestra stopped playing and never resumed. Steve Metcalf of the Hartt School said that one result of the financial crisis among orchestras is that the groups themselves are changing to match the times. He said smaller orchestras are being formed and are managed by musicians not conductors. "A symphony orchestra that has been 110 people in formal wear may be giving way in many cases to a different model," he said. Jesse Rosen, head of the League of American Orchestras, agreed that they need to change. "It's moving quickly from a tradition and set of operating practices that were very successful for the time in which they were developed, which was really the second half of the last century, toward operating models and missions that are attuned to today's world."

 

Napa Valley Symphony files for bankruptcy: "it's time to break a new path"

Sasha Paulsen, Napa Valley Register, 7/23/12

The Napa Valley Symphony Association has filed for Chapter 7 bankruptcy, signaling an end to the 79-year-old institution. "It's not something we did lightly," said Michael Enfield, president of the board. "But sometimes when you're on a path that doesn't lead anywhere, it's time to break a new path, even if it also breaks your heart to do it." Enfield, who joined the board last July, said the organization took a financial hit when its major benefactor, Don Carr, died in an auto accident last summer. "We were working on a plan to create a new model that would be sustainable and supported in the Napa Valley," Enfield said. Carr's death was a double blow for the symphony, which lost not only his direct support but its performance venue, Yountville's Lincoln Theater, which had also depended on Carr's largesse. The Lincoln Theater, citing insurmountable debts, went dark in December. On Feb. 29, the board laid off the paid staff and canceled the rest of the season. The symphony has filed for bankruptcy at a time when a supporting organization, the Napa Valley Symphony Endowment, has assets of more than $1 million. The endowment was created as a separate legal entity in 2009, after episodes mid-decade in which the association raided the endowment fund for operating expenses. At that time, an approximate $1 million endowment had been reduced "to nothing," said Susan Hafleigh, president of the endowment board. It has since been rebuilt through bequests, but "the endowment is not there for day-to-day operations," Hafleigh said. "It's not a line of credit. In the last three years, we've given them $400,000. They would come to us and say, 'If you could just help us out.' We'd say 'OK, but this is the last time. In January they came to us and said, 'We haven't paid the musicians since October.' We felt that as a community we'd all enjoyed the music and we made sure that they were paid. But we also said 'This isn't working.'" If the symphony is dissolved in early August as proposed, the endowment board will then decide what to do with the income from the endowment. [Meanwhile,] the Napa Valley Musicians Association [is] moving ahead with plans to form a new professional symphony orchestra in the valley.

 

Ex-Barnes Museum CEO: We weren't bankrupt, but saying so helped us relocate

Christopher Knight, Los Angeles Times Art Critic, 7/2/12

The new Barnes Foundation museum has just opened in Philadelphia, and now comes a startling comment from a former Barnes executive: No financial crisis really existed when trustees went to court a decade ago to ask permission to build a new museum. Desperate financial need was widely claimed as a leading reason for the still-controversial decision to move the astounding trove of paintings by CÚzanne, Matisse, Seurat and dozens more from their historically incomparable home in suburban Merion, Pa., to a big, shiny new tourist-site downtown. A local court agreed to what had been portrayed as a heroic rescue effort based on urgent financial necessity. Kimberly Camp, who actively supported the move, was president and chief executive of the Barnes from 1998 to 2005 when the fight took place. Camp winds up a recent blog post on her website with this observation:

"The Barnes has always belonged in Merion. Its circumstance required its relocation. That circumstance was not bankruptcy. I shared that fact with a reporter a few weeks before the opening, and he told me that I had dropped his jaw. Bankruptcy was not the reason we filed the petition to move the Foundation to the city. At the time the petition was filed, the Barnes Foundation had a cash surplus and we had no debt -- none. But, saying so made the rescue so much more gallant."

Gallant? Camp doesn't elaborate on the actual circumstance requiring relocation; but making a venal act appear noble lent a certain glow to the court battle over wrecking the nation's primary cultural achievement of the 20th-century's first half. The 2002 court ruling allowing the Barnes Foundation move is the art-world's Bush vs. Gore. Camp, who was running the place in 2002, now affirms what many already knew -- no fiscal crisis existed -- and she offers sympathy-generation (or fear-mongering) as a reason for fudging the fact as the wrecking crew went off to court. Barnes Watch, the citizens group that struggled against insurmountable odds to prevent the move, [has] filed a petition to the Superior Court of Pennsylvania. The Barnes Watch attorney's letter asks for a hearing based on Camp's statement, "since apparently false information was presented" during the initial trial.

 

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Commentary: Why arts managers short of cash are looking at Detroit

Terry Teachout, The Wall Street Journal, 8/17/12

When it comes to the fine arts, things are really, really rough all over. That's why everybody in the art world is now talking about the Detroit Institute of Arts, a world-class institution that just came within inches of closing. Instead, it's now more financially stable than at any time in the past quarter-century. DIA director Graham Beal went to the voters, asking the residents of Michigan's Macomb, Oakland and Wayne counties to pass a modest 10-year-long dedicated property-tax increase known as a "millage." It would supply up to $23 million each year for the next decade -- 91% of the DIA's annual operating budget -- thus buying time for Mr. Beal and his colleagues to build up the museum's operating endowment to the point where it can bring in sufficient income to pay the bills. But how do you get suburban taxpayers to pony up in support of a museum located in the heart of a city on which most of them long ago turned their backs? Mr. Beal announced that residents of every county that passed the millage would be admitted free to the DIA....and all three counties passed the millage. What lessons can other arts organizations learn from the DIA crisis? To begin with, the DIA showed it was serious about money by slashing every thimbleful of fat out of its budget. It simultaneously showed itself to be responsive to the wishes of its patrons by undertaking an imaginative reinstallation of the museum's permanent collection that was both user-friendly and artistically responsible. Contrast the DIA's approach with that of the Atlanta Symphony, which is opting for innovation-free budget cutting instead of institutional transformation. Or the New York City Opera, which has "transformed" itself into a mini-NYCO. Cutting is not enough. You also have to think creatively and be willing to take risks, as the DIA did when it asked the people of Detroit and its suburbs to agree to a tax increase. Yes, Mr. Beal's three-legged plan was museum-specific, especially the free-admission leg. But the thinking behind it has universal applicability. To wit:

* Don't ask the public for more money unless you can prove that you're not wasting the money you're already spending.

* Keep the needs of your clientele in mind at all times.

* When the world changes, change with it.

That last commandment is the toughest to embrace, as well as the most important. No arts organization, however important it may be, is entitled to succeed. It must keep on proving its worth to the public, year after year. But Mr. Beal and his colleagues have clearly accepted the iron necessity of finding creative new ways to engage in the business of high art. As a result, they now have a shot at long-term survival --and they've earned it.

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