Symphony finances a problem across U.S.

By Michael Tsai
Advertiser Staff Writer

The Honolulu Symphony Orchestra's financial problems and the steps the organization is taking to resolve them are hardly unusual in today's arts and culture scene.

From Pittsburgh to San Jose, symphony organizations face budget shortfalls, dwindling endowments and musicians' contract demands. Some have gone under, while others, particularly those that have been able to reach compromise with their musicians, have been able to hold on.

The Honolulu Symphony is $1 million in debt and has asked its musicians to accept pay cuts, staffing cuts (via attrition) or fewer orchestra performances next season, according to people familiar with the discussions.

Under symphony president Stephen Bloom's direction, the symphony has reduced its running debt by approximately $800,000 during the past four years by cutting programs and adopting a more fiscally conservative approach.

However, Bloom said the Honolulu Symphony's endowment of $5.5 million lags those of similar symphony organizations, which are typically in the $15 million to $30 million range, and gives the Honolulu Symphony little room to maneuver as it seeks solid financial ground.

The symphony's operating budget for the 2003-04 season is $6.4 million, Bloom said.

"Times are not the best economically," said Dale Hall, author of "The Honolulu Symphony: A Century of Music." "The number of concerts has decreased over the years, and ticket sales are always a problem."

Hall said both the symphony and its musicians are in difficult positions.

"You can see both sides," he said. "The Symphony Society is struggling to stay afloat and pay their people. The musicians feel they deserve more money and, of course, they do."

The Honolulu Symphony's troubles have been mirrored in several cities nationwide.

Last month, musicians from the Pittsburgh Symphony Orchestra approved a three-year contract that included pay cuts and reduced vacation time. Its $133 million endowment in 2002 had shrunk to $84 million this year.

As with other struggling orchestras, Pittsburgh was affected by the stock market slump and expenses that outran revenue and donations. The Pittsburgh symphony is trying to eliminate a budget deficit of $3 million. During the past two years, the organization has eliminated 10 administrative positions and cut salary for senior and middle managers.

Pittsburgh's new contract includes two years of pay cuts, but it guarantees that in the final year musicians' salaries will rise to 95 percent of average symphony salaries in New York, Philadelphia, Cleveland and other cities.

Musicians from symphonies in Milwaukee and Oregon have also recently agreed to accept pay cuts.

In fact, financial problems have plagued symphonies of all sizes and locations, from the Honolulu Symphony (which employs a core of 63 musicians for 34 weeks a season) to major, year-round companies such as the New York Philharmonic and the San Francisco Symphony.

LaNell Essary, a spokesperson for the Chicago Symphony Orchestra, said her organization has reduced its administrative staff, consolidated community programs and toned down its programming in an effort to control costs. Musicians also agreed to benefit reductions and a wage freeze.

The orchestra has 112 full-time musicians and an seasonal budget of $57 million.

In 2002, the orchestra posted a $6.1 million deficit, which included a one-time write-off of existing bad debts. It rebounded with a $209,000 surplus this year, but projections for 2004 are grim. The orchestra expects a $4 million deficit as pension payments provided for in the current contract kick in, Essary said.

However, the organization's responsible handling of its financial situation has inspired confidence in its corporate donors, Essary said.

"Corporate giving is up," she said. "We've been very proactive in managing debt and people have responded to that."

For several orchestra organizations in the past couple of years, time, money and patience all ran out before a turnaround could be realized.

Strapped with a $1 million debt, the Tulsa Philharmonic, Oklahoma's only full-time orchestra, shut down in September 2002 after 53 seasons.

During the summer, the San Antonio Symphony board of directors announced it would not be able to meet payroll for its symphony staff and orchestra members and would have to file for Chapter 11 bankruptcy. The symphony is $1.5 million in debt despite a $6 million endowment.

The symphony suspended its scheduled fall concerts but continues to meet with musicians, who have not been paid since May 15, to see if an agreement can be reached to resume operation. A vote by musicians is expected to be announced today.

A telephone receptionist at the symphony said no one was available for comment because "we're on a skeleton staff."

Also during the summer, the 123-year-old San Jose Symphony played its final concert, leaving San Jose as the biggest U.S. city without a symphony orchestra. The organization was $3.4 million in debt with just $300,000 in assets.

Elsewhere, the Colorado Springs Symphony and Florida Philharmonic Orchestra both filed for Chapter 11 bankruptcy this year, and the Savannah Symphony Orchestra in Georgia was forced to cut its season short when it couldn't repay a $1.2 million debt.

In the case of the Florida Philharmonic, the orchestra had secured two donations — one for $1 million to be given immediately and another for $2 million over several years — but both came with the condition that the organization raise enough money to be operational next year. The orchestra was unable to meet the condition, posting a $3.5 million deficit this year and $2 million deficits in each of the past three years.

Some organizations have found successful strategies. After a decade of effort, the Seattle Symphony Orchestra has erased a $2.5 million accumulated deficit and more than doubled its operating budget. (Deborah Card, the Seattle orchestra's executive director during that period, recently left to become president of the Chicago Symphony.) Nevertheless, the organization has faced year-to-year shortfalls since 2002.

And then there's the fairy tale: In January 2002, Joan and Irwin Jacobs turned the formerly bankrupt San Diego Symphony into a major player with an unprecedented $120 million donation.

Reach Michael Tsai at mtsai@honoluluadvertiser.com or 535-2461.