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The Honolulu Advertiser
Posted on: Tuesday, April 13, 2010

Competing plans for Honolulu Symphony reorganization allowed


By Michael Tsai
Advertiser Staff Writer

Hawaii news photo - The Honolulu Advertiser

The Honolulu Symphony canceled the end of its season in December, declaring bankruptcy following several years of financial shortfalls and last-minute bailouts.

ADVERTISER LIBRARY PHOTO | May 9, 2009

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U.S. Bankruptcy Judge Robert Faris yesterday denied the Honolulu Symphony Society's request to extend the period in which it alone could submit a plan for its reorganization.

The decision allows the symphony's musicians and other parties to submit competing plans for the troubled organization's emergence from bankruptcy. Until yesterday, the symphony society had the exclusive role of coming up with a reorganization plan.

In asking for an extension, the symphony society said it took a long time to complete a comprehensive organizational analysis, which is needed before it can come up with a reorganization plan.

The 258-page analysis, prepared by Honolulu Symphony Foundation chairman Mark Wong and his company, Data Collection Systems, was released last week and includes recommendations for drastically reducing the symphony's concert schedule and overall budget. The Musicians' Association of Hawai'i, Local 677 of the American Federation of Musicians, has criticized the report as flawed in its data collection and analysis and biased against the symphony musicians.

Faris characterized the situation as a "mutual firing squad," and said his decision was intended to "keep the door as wide open as possible."

"It's in the hands of all the people in this courtroom, as well as the public, who buys the tickets," Faris said.

Faris set a deadline of Oct. 15 for the society to submit its plan.

Jerrold Guben and Tina Colman, co-counsels for the symphony society, said the society welcomes other ideas for reorganization but stands by its contention that the symphony's business model needs to change if it is to remain sustainable.

"They can come in with their own plan and their own (collective bargaining agreement) with the appropriate documentation, of course," Colman said. "But it will be problematic if they don't change the model."

Representatives from the musician's union, which argued against the extension, said they welcomed the opportunity to share their ideas for reorganization and to voice a perspective they say has been virtually ignored in the process.

"They had five months to come up with a plan and they didn't," said Jonathan Parrish, a spokesman for the Musicians' Association and co-vice chairman of the Orchestra Committee. "We have a vision for what the Honolulu Symphony should be and how we can contribute to the community, and we're looking forward to sharing it."

The two sides expect to meet within the next few weeks to begin talks on a new collective bargaining contract.

BANKRUPTCY FILING

The 109-year-old symphony filed for Chapter 11 bankruptcy reorganization in December and canceled the remainder of its 2009-10 season. The decision came after several years of financial shortfalls, last-minute bail-outs and a protracted effort to pay back wages owed to its musicians.

"Filing for bankruptcy in December was a very difficult decision, very emotional, and a lot of people were not happy with us," said Kimberly Miyazawa Frank, chairwoman of the symphony society's board of directors. "But we didn't have a choice. It's our fiduciary duty not to put on concerts that we can't pay for."

Miyazawa Frank and other symphony officials said the economic downturn finally cracked open what had been an accumulation of telling fissures in the symphony's structure and budget plan.

"For years, we had operated with 30 percent of revenue coming from ticket sales and subscriptions and 70 percent from contributions," she said. "It's a tough model, and it's always been a struggle. With the downturn, that 70 percent became unreliable and unrealistic. We needed to figure out how to reduce without affecting the quality."

The organizational analysis is intended to guide the development of a new, sustainable business strategy for the symphony, Miyazawa Frank said.

Using customized Web crawlers that collected data and documents from federal agencies and industry sources, analysts compiled extensive information on economic characteristics, organizational performance, community dynamics and other areas deemed relevant for understanding the symphony's current problems and potential solutions.

The analysis concluded that the primary causes for the symphony's financial problems were:

• A business model based on "an unrealistic and unsustainable" budget driven by a desire to compete with other national orchestras.

• Wages disproportionate to the number of hours and weeks worked.

• An oversupply of seats and performances.

• "Expectations that the Society is an employment agency or welfare department responsible for the entire financial well-being of its part-time employees."

DRAMATIC CUTS

The analysis includes recommended budget parameters that would reduce the symphony's overall budget from $7 million to $3 million in the first year of recovery; cut the number of concerts from 24 to 14 and the overall number of performances from 43 to 20 (24 after the recovery period); and limit the number of services (outside performances) from 272 to 50 (70 following recovery). Meanwhile, the symphony's administrative staff would increase from five to eight in the first year and 12 after recovery.

The report also includes a list of "conceptual recommendations" to emphasize sustainability, increase service to the community, diversify programming, eliminate contract ties to Hawai'i Opera Theatre and Ballet Hawai'i, and improve transparency.

While many of the recommendations, including those for increasing educational programs and leveraging Hawai'i's proximity to Asia, have been included in previous efforts to address the symphony's problems, they weren't fully carried out, Miyazawa Frank said.

"These are not brand new ideas, but they weren't pursued to fruition because there was no need," she said. "Now with the bankruptcy and the need to show a more feasible and viable plan, there's the impetus to follow through."

Miyazawa Frank said the analysis reflects the reality of the symphony's position and the difficult decisions that must be made to ensure its sustainability once it returns.

Symphony musicians, however, accuse symphony management of freezing them out of reorganization talks Parrish said the symphony management did not meet with musicians until last Tuesday and that although two musicians sit on the board of directors, neither was included in the board's reorganization committee and recommending cutbacks without regard for the quality of the symphony or the well-being of its musicians.

In their written opposition to the symphony's extension of exclusivity request, the musician's union said the organizational analysis "totally lacks self-reflection or self-criticism, but instead amounts to a white paper to whitewash and avoid identifying the glaring and unavoidable failure of management to cultivate an informed donor base capable of sustaining a symphony Honolulu and the State of Hawaii deserve."

"It is extremely difficult to have even a modicum of respect for board leadership that prepares such a thinly veiled advocacy piece, based in such ignorance not only of the organization they allegedly steward, but of the symphony industry itself," the musician's union said. "With so little understanding of the considerable complexities of running an orchestra, with so little institutional memory, after removing all expertise from their staff and hiring people with absolutely no background in even a related field, the Debtor presumes to string together internet facts to justify its already-held, self-justifying beliefs."

'PAY TO PLAY'

The musicians' union estimates that the shortened performance schedule will cost musicians 92 percent of their overall wages. Coupled with changes to their medical coverage plans, which would reduce the symphony's contribution toward their premiums to 30 percent, musicians "will have to pay to play in the orchestra," Parrish said.

Parrish said the musicians, who previously agreed to pay cuts and other concessions to keep the symphony afloat, were surprised by the symphony society's decision to declare bankruptcy just three months after unveiling another reorganization plan.

The union contends that the musicians are still owed about $100,000 for a week of performances in October, as well as back pay for the weeks between their final performance and the official announcement that the rest of the season would be canceled. It also is seeking back pay for service musicians whose paychecks were reduced by 15 percent without an agreement between the symphony society and the union.

While Miyazawa Frank said developing educational programs funded by corporations or foundations will provide more employment opportunities for musicians, Parrish noted that the symphony's proposed plan does not mention this specifically, thus leaving musicians with no assurances they'll be able to make up for lost income.

Symphony musicians performed during the six-week Hawai'i Opera Theatre season and have been making ends meet with teaching and other side work. They've also continued to hold educational workshops and other symphony-related programs with funds raised by independent performances.

"I've played music for 27 years with seven different orchestras," Parrish said. "We have a perspective that you couldn't get from a Web crawler or data processor or even our board members."