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Detroit Symphony Orchestra - financial problems


Old King Log
Staff member
I have always viewed these "upticks" as being due to the increased publicity given the organization by the crisis. There is a certain "well" of supporters for anything (baseball, the Republican Party, public art) that normally remains untapped for a myriad of reasons. Whether through indifference, poor communication by the subject desiring support, or other reasons, the "message" just doesn't get through.

Comes the crisis, and there are two effects:

One is that the increased "visibility" of the subject, this due to the turmoil surrounding the crisis. This alerts the "indifferent" and "out of touch" portions of the pool, and some of these might rise to the challenge and start helping out.

The second is what I call the "pile on" effect. The very act of helping out a down and out operation tends to draw others who, through shame or enlightenment, now choose to join the crowd.

Assuming success, these factors provide a bump that lasts as long as the "feel good" momentum carries forward. Once things shift back to "Things As Usual", some of these marginal folks will drop away.

Or, at least that's what has apparently happened out San Diego way, and in Louisiana. And, like Louisiana (but unlike Southern California), the traditional participant base is eroding. In the case of Detroit, the departure of the upper and middle classes as industry closes down is the issue. In New Orleans (which is the only urban area worthy of the name in the Pelican State), people were dribbling away well before the flood, and business had already abandoned the place. No work and no (comparatively speaking) well-off people means that "art music" takes it on the chin.

While art music has been taking it on the chin for a good many years (starting perhaps back in the 1920's), it could still survive if there were interested folks with enough money to bear their increased funding burden. Take them away, though, and you might as well sell off the music library and rent the pianos and tympani, for the writing is on the wall.

(Do orchestral players use their own tympani? I know that the harp players bring their own tools, but do the percussionists do so as well? Or, do they maintain two sets of kettles, one for the shop and the other for the home studio and practice room?)


Clarinet CE/Moderator
Staff member
on a positive note


Last Updated: July 12. 2011 1:52AM
Star DSO cellist returns on a high note
Robert deMaine says strike showed him how far he can go
Lawrence B. Johnson/ Special to The Detroit News

The question of whether he would play again with the Detroit Symphony Orchestra has clung to the absent figure of cellist Robert deMaine since the long strike ended in April.

In an interview as far-ranging as the four continents on which he has performed in the last year, deMaine said he will return for another season.
But not for the entire season. Beyond that, it seems a world of options has opened, and deMaine hopes to pursue at least some of them.

"During the strike, once I started saying yes to all the things I used to have to refuse, the phone really started ringing," says deMaine. "I'm still young (at age 41) and ambitious, and I have a lot of quality years of playing left in me. I love playing chamber music, and ideally I'd like to play 20-25 concerto dates (as a soloist) a year.

"I still enjoy orchestra playing, but I don't plan to do just that for the rest of my career."

DeMaine joined the DSO in the middle of the 2004-05 season. He quickly established himself as the brilliant second anchor of the strings, opposite concertmaster Emmanuelle Boisvert, who resigned from the DSO in May to take a position with the Dallas Symphony.

The cellist was, as he put it, "out festival hopping" when the DSO strike ended. He said commitments he made beforehand prevented him from rejoining his colleagues for the eight-week season cobbled together after the strike.

"I didn't see how it was for the players, but I understand the tension was just awful," he says. "I feel a little bit like Benedict Arnold, but (the DSO musicians) don't begrudge me for going out and making a living.

"I cannot stress enough how much I love my colleagues in the DSO, the dear friends I have made, and the city of Detroit. Indeed, I was married here, my children were born right across the street from Orchestra Hall, and I got to see the Tigers in my first World Series game."

Next season, deMaine will be in his customary spot with the DSO for all the concerts conducted by music director Leonard Slatkin and a few more. At season's end, he will record John Williams' new Cello Concerto with Slatkin and the DSO.

But the wider world beckons. He's been playing chamber music with violinist Hilary Hahn, and he's the cellist in an active string quartet headed by his longtime friend, violinist James Ehnes.

"I'm at the point where I can pick and choose my gigs," he says. "But it comes at a price. I was home barely three weeks this year, and I missed my family terribly. Thank goodness for (the Internet video phone service) Skype!"

And this last year of performances with orchestras in the U.S. and abroad has brought other tantalizing prospects. DeMaine said there's mutual interest with three high-profile European orchestras for the position of principal cellist.

"I realize just how fortunate I am," he says, "and thank my lucky stars that things have worked out for me."

Lawrence B. Johnson is a cultural writer and critic. lawrencebj@gmail.com

From The Detroit News: http://detnews.com/article/20110712...-cellist-returns-on-a-high-note#ixzz1RulIbDvF


Clarinet CE/Moderator
Staff member

Debt threatens DSO's turnaround planning

Detroit Symphony Orchestra leaders have long said that fixing the organization's troubled finances for good meant repairing the business model on three fronts -- the musicians' contract, real estate debt and the endowment. But with the start of the 2011-12 season just around the corner, the DSO's turnaround plan has stalled at step two.

DSO leaders say that the new contract hammered out in April cutting musician salaries by 23% was a critical first step toward a sustainable future, though it came only after a horrific six-month strike that threatened to permanently cripple the orchestra.

Now the DSO has to restructure the $54 million in real estate debt on which it has defaulted, and the orchestra has to rebuild its decimated endowment. In the wake of massive deficits and stock market losses, the value of its unrestricted endowment has fallen to just $19 million -- from nearly $60 million in 2008.

But orchestra leaders find themselves stymied. Two years worth of talks with the banks that hold the debt on the Max M. Fisher Music Center have not produced a compromise. And without a bank deal, officials can't begin the serious groundwork for an endowment campaign. The stalemate threatens to derail the DSO's post-strike recovery before it has a chance to fully blossom.

"We have a chance to seize a more viable, vital future as a result of the hard work that's already been done," said DSO executive vice president Paul Hogle. "But that opportunity is fragile and requires making progress in a way that earns the community's confidence."

At the heart of the DSO's dilemma is a catch-22. The major donors needed to rebuild the orchestra's endowment won't pony up their millions if they think the money is going to go straight to the banks rather than support the orchestra.

"They want to know that they're giving money to a viable organization," said Bud Liebler, a DSO board member.

At the same time, banks would typically view those same donors as a prime source for repaying the debt, said David Blaszkiewicz, president of Invest Detroit, which bankrolls local redevelopment projects.

"It can be a little bit like a standoff," he said.

When a business or nonprofit defaults on a loan, the case is mediated by a special unit within the bank charged with recovering as much of the bank's money as possible while exiting the deal.

A spokeswoman for Bank of America, the leader of the consortium that holds the DSO's debt, declined to discuss details of the talks. "The DSO issues are multifaceted and complex and in a bank syndicate such as the one working with the DSO, decisions are made jointly and need the support of the group," said Shirley Norton, a San Francisco-based senior vice president of Bank of America, adding that the banks recognize the DSO's unique role in the community.

The other banks are JPMorgan Chase, Comerica, PNC and RBS/Charter One.

DSO officials also declined to discuss details of the talks. However, whatever form a final agreement takes, it will likely wipe out a substantial part of the $19 million in cash reserves that remain in the unrestricted endowment. The DSO also has a restricted endowment that stands at $26 million. But this money, an interest-earning nest egg, can't be raided to cover operating shortfalls.

Donations, deficits

The orchestra has been in default on its debt for two years, ever since the value of its unrestricted endowment fell below the $54 million it owes. Late last year the banks paid off the orchestra's bondholders and assumed control of the debt. The DSO has since stopped paying the interest charges and fees that total $2 million to $3 million annually.

The banks could foreclose on the Max and push the DSO into bankruptcy, though there are no indications that this option is on the table.

The bank negotiations aside, the five months since the strike ended have been promising. The DSO hit its revised, post-strike fund-raising goal of $9.5 million for the fiscal year that ended Aug. 31 -- though the sobering reality is that that still left a $1.5-million deficit on a pre-strike budget of $25 million. The original fund-raising goal before the strike was $11 million.

In a more complete snapshot of the depth of the orchestra's challenges, however, the DSO is still projecting $9 million in operating deficits over the next three years, excluding any interest payments. "The next step is undeniably removing the debt that hangs over this institution," said Hogle.

The glittering Max M. Fisher Music Center, which opened in 2003, stands as a symbol of the DSO's boldest aspirations but also as a key contributor to the more than $20 million in red ink since 2008. To pay for the building, the DSO issued $54 million in bonds in 2001 with plans to pay the annual interest with endowment income, a typical strategy for nonprofits. The principal was due in 2030.

At first, there was enough endowment growth to fund the debt, seed operations and reinvest in the principal. But then the stock market nosedived during the recession, and millions in expected new endowment gifts and pledges also disappeared. With costs rising and annual donations and ticket sales falling, the DSO burned through cash at an alarming rate.

The financing plan for the Max became an issue during the strike as musicians and their supporters called it poorly conceived and proof of shortsighted management. The plan required an annual market return of 7.75% to work -- a figure comfortably in line with pre-recession industry standards, according to financial experts consulted by the Free Press.

"No one could have predicted the depth of the economic collapse," said Blaszkiewicz of Invest Detroit.

Assuming the DSO reaches an agreement with its banks, it will have to pivot to recapitalize the institution. That means replenishing the money paid to the banks and then raising at least $50 million to $75 million to push the endowment to a level that would generate enough income to fill current operating gaps.

That's a tall order in this economy, especially in metro Detroit, where many nonprofits are starving for annual support and the relatively small pool of big-money arts supporters is already complaining of donor fatigue.

Nor will the orchestra have a splashy building project like the Max to hang an endowment campaign on like it did in the 1990s. DSO board member Liebler said one possibility might be to tie a campaign to both the rebirth of the city and the rebirth of the orchestra. With all of the recent development downtown, he said, a revitalized DSO -- including its world-class artistry and expanded outreach programs -- would be another jewel attracting people to play and live in the city.

"That's one way to do it," he said. "Let's get in on the ground floor and play off the momentum in the city."

Contact Mark Stryker: 313-222-6459 or mstryker@freepress.com


Clarinet CE/Moderator
Staff member
Things are looking up, well, kind of

May 31, 2012 at 12:02 pm
DSO reaches $54M debt deal

By Detroit News staff and wire reports

Detroit— Detroit Symphony Orchestra officials announced Wednesday they have reached a settlement with the group of banks holding $54 million in orchestra debt.

But citing a confidentiality agreement, DSO officials declined to answer specific questions regarding the deal.

"The settlement removes substantial liability from our balance sheet," said Arthur Weiss, DSO board tresasurer, an executive committee member and a partner at the firm Jaffe Raitt Heuer & Weiss, which handled the negotiations.

"And I don't use the words 'substantial liability' lightly," he added.

Asked whether the banks simply refinanced the debt, DSO vice president Paul Hogle said, "No. It is done. It is finished."

The debt, a bond incurred in 2003 while building The Max M. Fisher Music Center and renovating Orchestra Hall, has long been viewed as a factor that discouraged some donors from making major gifts.

The settlement was announced Wednesday before the orchestra's executive committee and released publicly Thursday morning. Details of the deal were not disclosed.

Resolving the loans enables the orchestra to move forward with its strategic recovery plan and follows several years of financial troubles, including a contentious six-month strike by musicians who in April 2011 agreed to major contract concessions.

The loan settlement took two to three years to complete, Weiss said. Weiss negotiated with the five banks and their counsels to broker the deal.

"We settled it," Weiss said. "We have a lot of work ahead of us. We have to create a strong foundation for this cultural institution and increase annual fundraising. We have to make sure we meet the annual giving and we will continue to do whatever we can to put the institution on a sound financial base.

"We have a ways to go, but it's a sound step."

The orchestra still faces an expected $3 million operating deficit heading into the start of its new fiscal year in August, and could spend another three to five years with a negative balance.

"We will definitely still be in the red," Hogle said.

But the orchestra is on track to raise the final $2 million of its $12 million annual fund campaign goal by Aug. 31. The campaign provides half the orchestra's operating revenues.

Hogle also credited sacrifices by the orchestra's musicians for helping get it through tough money times.

The three-year, $36.3 million concessions pact they agreed to following the strike is more than 11 percent less than the previous contract.

In 2009, 39 staff positions were eliminated, while pay cuts of 5 percent and 10 percent were instituted. Music Director Leonard Slatkin agreed in 2010 to a three-year contract extension and a pay cut.

"If the debt is removed, that's a tremendous thing," Chicago-based arts consultant Drew McManus said.

"With a labor disagreement and that ugliness that ensued, it was from that standpoint (the orchestra) couldn't renegotiate with the banks unless that was done first," McManus said of the new contract.

Concertgoers also appear to be committed.

The number of households buying season tickets is up a third, while there is an 85 percent renewal rate for next season's tickets, Hogle added.

Earlier this month, a collaboration concert with performer Kid Rock reached its $1 million fundraising goal. Proceeds are to help pay symphony musicians for community outreach and education efforts.

From The Detroit News: http://www.detroitnews.com/article/20120531/METRO/205310401#ixzz1x5QPcSoH


Brassica Oleracea
Staff member
From teh article:

"Among other things, Stern split the violins to place them on either side of the stage (not everyone approves) and moved the lower strings — cello and viola — together into the center."

I'm canceling my membership right now!

Kidding aside -- I'm unlikely to pay for a membership for an orchestra that's 1000 miles away from where I live -- if that factoid made the article, it must have been a really slow news day. Which, come to think of it, isn't a bad thing ....
From teh article:

"Among other things, Stern split the violins to place them on either side of the stage (not everyone approves) and moved the lower strings — cello and viola — together into the center."

I'm canceling my membership right now!

Kidding aside -- I'm unlikely to pay for a membership for an orchestra that's 1000 miles away from where I live -- if that factoid made the article, it must have been a really slow news day. Which, come to think of it, isn't a bad thing ....
Yes, especially considering that the split violin was the norm until the late 1950s.


Clarinet CE/Moderator
Staff member
Update on the DSO

copied from the Detroit News 4/18/2013

Two years after a debilitating strike pushed the Detroit Symphony Orchestra to the brink of its storied existence, the band is back.

It is establishing a presence in suburban markets filled with loyal patrons, and its free webcasts are reaching the largest online audience of any orchestra in the world. Next month, it will return to New York's Carnegie Hall after a 17-year hiatus, signaling a revival through hard work and innovation that could be subtitled DSO 2.0.
"Things have gone better than I thought or hoped," Haden McKay, a cellist and member of the orchestra's bargaining committee during the strike, said in an interview Wednesday. "Overall, the orchestra has stabilized. There's been an effort on all sides to rebuild relationships."

The DSO's budding rejuvenation, thought unlikely by many when the six-month strike ended April 4, 2011, offers persuasive evidence that the titanic clash of lofty artistic tradition with hard financial reality can begin to chart a sustainable path forward for the orchestra and the city it has called home for 125 years.
All it takes is honesty, compromise, a credible balance sheet and the courage of leadership to unambiguously state that a symphony orchestra should be sustainable and accessible to the community as it exists today — not a cloistered citadel of culture from a bygone era ensconced in Orchestra Hall.

"If you don't figure out how your orchestra meets the needs of the city whose name you bear, your death is at the door," says Paul Hogle, executive vice president of the DSO. "I don't think 'The Club' gets that."

Eventually, it may have no choice. Financial pressure and changing demographics are even squeezing "The Club," the nation's leading orchestras, in ways their reputations and comparatively large endowments allowed them to avoid:

San Francisco took an 18-day strike this spring. Philadelphia went bankrupt two years ago, emerging last July after it agreed to settle $100 million in claims, debt and liabilities for $5.49 million. Dallas has money troubles, and musicians at the Minnesota Orchestra and St. Paul Chamber Orchestra are locked out in a labor dispute.
The DSO has a head start, partly because the global financial meltdown and the implosion of the Detroit auto industry exposed the orchestra's fiscal hole and heavy debt burden sooner than many of its peers. The result is that the orchestra moved to restructure its finances, to change its outreach, its philosophy and its labor contract, because perpetuating the status quo increased the likelihood of collapse.

"The arts are wise to consider the question of access and whether they believe in it or not," says Anne Parsons, president of the DSO. "We are in year two of the pilot phase of what they can become. We're not going to lose it; we're going to make it better here. We changed because we had to."
They did, and Parsons played the heavy in the confrontational strike. Two years on, she credits the musicians with leading the effort to shape the DSO's outreach to neighborhoods, hospitals, retirement centers and schools. And she is proud the orchestra has successfully attracted nine musicians, including Concertmaster Yoonshin Song, to fill vacancies connected in various ways to the strike.

"We wanted them," Parsons says. "We hired them, and we'll keep hiring them."

Orchestra musicians are paid, on average, 22 percent less than before the strike. Their renegotiated contract gives members the chance to earn more by opting into a pool to work additional services, a flexibility enabling the DSO to extend its presence with 24 performances in six suburban communities, as well as make other appearances.

"I'm thrilled to be here," says Joe Becker, 27, the principal percussionist who came to the DSO from the Jacksonville Symphony Orchestra. "We're hoping we're ahead of the curve with all of the problems in the past. People are very optimistic here, in the city and in the orchestra."

They have reason to be. For as much as the DSO is running a tight financial ship and pushing urgently to grow its under-funded endowment, the orchestra's leadership is defying the arch-conservative conventions of its industry. Its outreach to Dearborn and Grosse Pointe, Southfield and the Bloomfields, among other places, is designed to meet patrons where they live.

The DSO's online push to extend the orchestra's brand and artistic cred at home and overseas already is paying dividends. Twenty-two free webcasts this season, sponsored by the Knight Foundation and the Ford Motor Co. Fund, are expected to reach 250,000 listeners worldwide, up from 120,000 last season, thanks in part to simulcasts by established classical music sites based in Paris and Russia.

A "boxed set" of MP3 live recordings of Beethoven's nine symphonies, priced at $19.99, soon will be available for downloads. The DSO's digital gurus also are crafting a plan to offer access to its expanding archive of webcast concerts for a small month fee — all more achievable ways to burnish the brand than funding commercial recordings or pricey European tours.

It all amounts to what both orchestra officials and musicians agree is a promising start, not a destination. Annual donors are estimated to total 6,500 this year, up 46 percent from the low point of 4,439 in 2010; but that's still below the typical donor base of 8,500 to 10,000 for peer orchestras of similar size.

The DSO's restricted endowment totals roughly $30 million in the wake of a confidential deal with five banks to eliminate its $54 million debt. An endowment for an orchestra of Detroit's size and pedigree should be "well north of $100 million," says Hogle. "We're severely under-capitalized. We're not alone in that."

No, they are not.

"We are all stakeholders," says Phillip Fisher, chairman of the DSO. "Without musicians, there is no institution. Without excellence … (and) donors we don't survive. Today we have a completely different opportunity."


(313) 222-2016

Daniel Howes’ column runs Tuesdays, Thursdays and Fridays.

From The Detroit News: http://www.detroitnews.com/article/20130418/OPINION03/304180367#ixzz2QohSoNfb


Clarinet CE/Moderator
Staff member
Playing in the Community ... For instance at a local High School a few miles from me.
they've been doing really well in their outreach program as I've seen them in high school, churches, and many other venues. I think during the strike they actually practiced from time to time in various venues such as churches, schools, etc.