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Minnesota penalises musicians while spending $52 million on … a new lobby

Musicians in the Minnesota Orchestra are having $40,000 clipped off their pay, while the company spends $52 million on doing up the lobby of the concert hall. Different budgets, explains chief executive Michael Henson. Oh, yeah?

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Comments

  1. Robert Fitzpatrick says:

    Michael Henson has shown his very sharp learning curve. How quickly he has adjusted from the UK system to USA cacophony especially his use of PC jargon, what the French call “la langue de bois” (not be be confused with “la gueule de bois” aka a hangover, which is also possible in this case). Capital money for bricks & mortar is the easiest to raise in the USA (everybody loves a new edifice complex) and operating funds are the most difficult to raise (nobody wants to pay for basic needs) The problem is that these capital campaigns distract from current and future efforts to raise money. Amazing that in spite of the recession, they could find $52 million.

    The musicians need Osmo Vanska to take a public stand; that’s the language that the Board will understand. He is enough of a maverick that he just might do it. (Go Osmo!)

    • Robert Fitzpatrick says:

      Actually, endowment funds are the most difficult to raise in the USA because there are no immediate visible or audible effects. The rule of thumb is that the endowment should be at least 10 times the operating budget, Most major American orchestras are gravely underfunded in this area.

    • The other problem is that operating costs are recurrent whereas capital/building costs are mostly one off. You still have to factor in the recurrent cost of maintaining the building, though in the case of a renovation, you might actually make a saving here.

  2. There is no bigger proponent than I for the idea that artists should be paid, fairly, for their work (and I’d point out that musicians are not always so supportive of other artists and that there are thousands of dancers, actors, and designers would would love to be in a position in which, were $40,000 to be cut from their salaries, there would still be *some* salaries remaining), but I’ve also worked in arts management and it’s highly likely — even probable — that the money largely grant money which cannot legally be used for anything other than the purpose for which it was granted. If so, not only is it from a different budget, it cannot be transferred to the payroll budget without committing fraud.

    • Gabe Langfur says:

      True. However, it took time, energy, and money (payroll to administrators) to raise that much money for a renovation – time, energy and money that, during a difficult economy, should have gone to the core mission of the organization, not the cosmetics of the hall.

      • …And how long would the orchestra have been able to pursue its core mission while playing to empty seats?

        “Art for art;s sake” is a great movie studio motto, but it’s less effective as a business model.

      • Fundraisers are always in a difficult position. You have a handful of funding priorities and opportunities and then you find people to give money for them. If a bunch of people/companies/agencies/foundations wanted to give money to this lobby project, you can’t force them to also give money to operating expenses.

        One could argue that the entire fundraising team ought to be singularly focused on raising immediate funds so that those pay cuts don’t have to happen. But that is a vicious cycle, because you end up going crazy every year to raise money to paper over what may really be a structural problem, to the exclusion of raising money to do anything else, like necessary capital improvements.

        My only concern about this is that $52m is a LOT of money for a renovation of one part of the building. I mean, they must have some pretty ambitious plans for this lobby. It does seem rather extravagant given the orchestra’s operational deficits.

  3. another orchestra musician says:

    Investment in upgrading outdated and inadequate performance facilities tends to be money well spent. Most municipal auditoriums erected in North America between 1945 and 1990 are, or were, very dreary buildings. Its playful flying cubes along the auditorium ceiling notwithstanding, I think that Orchestra Hall, Minneapolis is no exception. Difficult to imagine that audiences would have continued forgiving its obvious shortcomings for much longer.

    Cinema operator Marcus Loew is said to have explained that “people buy tickets to theatres, not movies”. The same holds true for symphony concerts. Although I feel sad that the musicians are being forced to take a large pay cut, I think management deserves praise for seeking to improve the quality of the Orchestra’s facilities. An attractive, well-functioning venue helps augur the Orchestra’s continued success.

    • Robert Fitzpatrick says:

      No question that keeing one’s house in order is always a good idea both literally and figuratively. When it comes to symphonic music, people might buy tickets for the theater at first, but eventually the architectural novelty wears off unless the artistic level of the performances is consistenly high. Would people continue to fill Disney Concert Hall in LA if the musical content were not as impressive as Mr. Gehry’s opus? They could always just take the guided tour and ogle at the public spaces and the striking exterior.

      Is the new lobby at Orchestra Hall in Minnesota a good idea? Of course it is. Does the Minnesota Orchestra need to rethink its financial obligations in these hard times. Of course it does. Administrations tend to treat the musicians as if they were spoiled children who are being paid a lot of money for having fun and, unfortunately, the musicians often prove them right. This brinksmanship and oneupsmanship serves no one. I suggest binding arbitration immediately when such a stalemate is reached through an outside panel appointed by the mayor and/or governor. That way, everybody will be unhappy except the music lovers because the concerts would continue.

      • ” Does the Minnesota Orchestra need to rethink its financial obligations in these hard times”

        Given that the orchestra cannot legally use the monies granted for capital improvements for anything else, how would you suggest they do this?

        • Robert Fitzpatrick says:

          I suggest that they ask their Board to dig deeper into their pockets and to give or get the needed money from 3rd parties (government, foundations, and corporations). The 3Gs are the rule on a non-profit Board: give, get, or git. I suggest that they look at the way the endowment is managed. There is no question that the $52M capital expenditure is no longer the issue; finding new support is critical; killing the orchestra or wounding it gravely is not the answer.

        • Is there a legal mechanism for asking donors to allow re-allocation of their donation to a musicians’ endowment from the capital campaign?

          • Robert Fitzpatrick says:

            In my opinion it would be extremely difficult and even counter-productive and in some cases illegal to re-allocate these funds. I’m sure most of the money has either been spent or commited contractually to the project which is underway. Some of the gifts have undoubtedly come from certain Foundations who, according to their own bylaws, only support bricks & mortar projects. Those gifts would have to be returned. There is probably a lead donor whose name will be on the new structure and hundreds, if not thousands, of smaller donors who would have to be consulted and many could ask to have their gift returned. The larger gifts usually arrive in stages over a 3 or 5 year period. The Minnesota Orchestra Federal 990 Tax Form of 2009 shows a significant amount of money among its assets listed as “pledges.” This usually indicated a pending capital program. The construction appears to be necessary and it could be fatal to the organization to abandon it this late in the game. I’m sure that the musicians are not asking for that drastic step.

            Minnesota is hardly in bad shape compared to others (Indianapolis has it much worse). I believe that a lot of this trend is the result of the Philadelphia Orchestra bankruptcy-restructuring efforts while avoiding the nasty ‘B” word. There is also a not-so-hidden agenda of union and pension fund busting nationwide. Consolidating a new artistic model of the symphony orchestra in the 21st century with the new business model (lean & mean, for sure) that corporate types demand will be an ongoing bloody battle for years to come. In some cases, the downturn and the recession have become an excuse to bring the artistic personnel in line with the corporate goals. I’m very happy to be retired from this world. I am still waiting to hear from Osmo Vanska on this situation. Typically MDs leave the country during such strife and remain unavailable for comment until some kind of settlement is imposed.

          • Very enlightening. I sense a new “mentality,” as you said. It seems that the management of so many orchestras now views these negotiations as almost a zero sum game. That is frightening for the future – and not only for the arts world.

          • Robert Fitzpatrick says:

            Zero-base budgeting is now very fashionable and corporate types on non-profit Boards are insisting on this approach. I’m not sure I actually understand it all but here it is:

            http://www.caltax.org/ZeroBase.pdf

            This might give some clues as to where the Boards in Atlanta, Indianapolis, St. Paul and probably Minnesota are heading or at least their point of departure. Another aspect of this is cost/benefit analysis. For example: why have 16 first violins when there could be a smaller number that would provide the same or almost the same effect most of the time? 4, 6, 8, 10, certainlly not 16…Scary!!

          • Yes, it is very scary. I wonder about these peoples’ souls. How can they not understand the human value of music?

    • Bonnie West says:

      I don’t believe the comment above from another orchestra musician is from another orchestra musician! Also I think the musicians are not paid enough as it is. Look at athletes who are in the NFL or NBA . Members of the Minnesota Orchestra are in the elite category. They are NOT simply a local regional orchestra they are among the world’s greatest. And all this aside. WHO among us could suddenly afford a 30% cut in our salary whether we made $300,000 or $30,000 a year. ??

      • another orchestra musician says:

        Bonnie, be assured that I am indeed an orchestra musician, widely traveled, and that like the musicians of the Minnesota Orchestra, I worked in the elite category. I retired from orchestra activity a few years ago.

        I don’t think it is good that the musicians of the MO are being coerced to accept a pay cut. I do think they will find that their bargaining position is weak. Bottom line is that management hires the musicians and signs the paychecks. Musicians want those paychecks. Management is under pressure from some of its benefactors, who themselves are successful businesspeople, to reduce labour costs. It won’t be spoken openly, but we can feel confident that not a few benefactors are making their continued support for current operating expenses contingent upon lower musician wages and benefits. Minimum salaries that are triple the national median strike them as inappropriately high, given that the product of the musicians’ work cannot be sold at anywhere near the cost of its own production.

        A factor that weighs into the calculations of management and its benefactors is that most professional symphony players have multiple jobs. Alongside their nominal full-time activity as titular member of a marquee orchestra, they teach private students, they play gigs, they participate in festivals, and so on. Their status as elite professionals makes them sought-after. This supplementary activity is, by and large, healthy for the musicians and for the community they interact with; but it is something that a bank teller, for example, or an auto worker could not engage in. It has the effect of rendering musician arguments regarding work hours and salary a bit suspect.

        Management also knows that many thousands of young musicians graduate every year from the world’s conservatories and music schools, and that these graduates obscenely outnumber the vacancies in well-paying professional orchestras. Management therefore doesn’t fret at the thought of losing a handful of players malcontent over their salary reduction. And lets be frank: where are those frustrated MO players going to go? To Saint Paul?

        Place the above alongside the reality that many financial placements are incomparably less remunerative today than they were in years only recently past. A huge endowment may be returning a pittance. Who knows, the MO may even have entrusted some of its endowment to a Ponzi scheme à la Madoff. Other arts organisations did. Thus I take for given that management is going to stand its ground. It likely has no better choice. I also think that disbursing funds toward facilities improvement that were from the outset designated for the purpose of facilities improvement is not an act of maliciousness, but rather a vote of confidence in the institution’s future.

      • A Professional Musician says:

        @ Bonnie – comparing orchestra musicians’ salaries to those of elite athletes is laughable. NFL/NBA/MLB athletes are in their jobs because they are the best of the best, but that is NOT the fundamental reason why they are paid such large sums. They are paid the way they are because they (and their product) generate billions of dollars in revenue for their leagues, owners, cities, and corporate sponsors. If orchestras were bringing in comparable amounts, then sure, the best players in the best orchestras should get a proportional piece of the pie. But the pie is getting smaller and, unfortunately, the musicians will continue to take hits until SOMEONE figures out how to turn a profit running a major orchestra. So far, almost no one has. So, whether or not these musicians are the greatest isn’t the issue (and for what they do, they certainly are) – it’s a matter of money coming in versus money going out.

        I say all this as a passionate lover (and performer) of orchestral music – they’re one of our most treasured cultural institutions. But the business models by which they run are outdated, and MUST adapt to the world around them before that world passes them by entirely. Simply stating “but look, they’re the greatest at what they do!” just isn’t quite enough to make it all work.

  4. Petros Linardos says:

    What kind of lobby costs $52 million? What is known about the scope of that project?

  5. Truly apples and oranges. Anyone writing here ever been in the old ‘lobby’? I have. Many times. It was done on the cheap 40 years ago and I would argue this is money well spent. A new look and feel for the hall will absolutely attract audiences who otherwise would not go. The operating budget shortfalls are another issue completely, in my opinion.

  6. MN music lover says:

    What’s not being mentioned is that the MN Orch Assoc has raised over 100 MILLION in the past five years. The orchestra also has an endowment of over 100 million dollars. According to a recent post in the Mpls Star Tribune the musicians are asking for an independent audit of the orchestras finances since they haven’t received a convincing answer about the status of the endowment funds. Along with the financial give backs, the Assoc. is asking for more than 250 changes in work rules.

    This is not about money; it”s about ideology-

    you need to invest in skin and bones as well as bricks and mortar

    • Robert Fitzpatrick says:

      Amen. I believe that the endowment is considerably more than $100M according to the 990 tax form filed in 2010 (reflecting the FY2009). The expenses that year were $31M. The work rule changes seem like the real agenda.

      • “The work rule changes seem like the real agenda.”

        Absolutely.

        What some people don’t understand about endowments is that the principal (in this case, the $100M…whch is more than Mitt Romney makes in a week) isn’t the be touched; all that’s available is the return on that investment, which is probably not as high as it was 12 years ago.

        Still, it would be *very* interesting to see an audited financial report.

        • Robert Fitzpatrick says:

          An annual draw of 5% max. of the total return is the norm (that is of the total of the corpus of the endowment usually based on a rolling average of a certain number of years or quarters). Despite the downturn, if they haven’t averaged at least 5% over the past 10 years, they need a new portfolio manager. Most organizations have several managers in competition with each other. Usually a bond specialist, an equities manager, and someone to handle alternative investments (hedgefunds, private equity, RITs, etc.), My TIAA-CREF pension fund, conservatively managed, has done better than 5% since 2002.

          A minimum of $5M of their annual budget of $30+M should be supported by the endowment which I believe is probably closer to $150M today based on the 2009 filings. BTW, almost every other organization has filed their 2011 Federal 990, they still only list the 2010 (reflecting the FY2009). But there is no question that their endowment is too small in relation to the annual budget.

          For example: A major music school (a household word like Coca-Cola) has an endowment of about $800M with an annual budget of about $80M. The endowment supports 50% ($40M) of the annual budget with the remainder ($40M) coming from earned income (tuition, fundraising, fees, etc.). THAT is a healthy situation.

          I have a very dark thought here coming from innermost evil soul. The Hall won’t be ready until September 2013. They are renting space for 2012-2013. Every concert cancelled ultimately saves a load of money. Are they trying to position themselves for “a brave new world” when the renovated Orchestra Hall opens? With work rule changes they will have greater flexibility to manage future budgets. But then, I’m just a cynic at heart. i hope I’m wrong.

          • MO Sustaining Patron says:

            Robert: In your final paragraph you touch on a point that has haunted me as well. It seems more than a coincidence that these contract talks are blowing up just as the Orchestra prepares for a season in a less-than-ideal substitute hall (Mpls Convention Ctr). It also seems extraordinarily dangerous timing, as there could be a double-loss of audience because of a sub-standard venue AND dismay over a reduced/cancelled season (even without considering contract issues, the current season is already greatly reduced and the programming is noticeably less interesting).

            And as to the lobby, as a life-long patron of the Minnesota Orchestra, I spend little time in the lobby – I’m there for the music. That said, the scope of the project is much more than the lobby, the backstage area is being improved (as a former chorus member, I can testify that it really was dire), and the stage area is being modified, the hall itself is getting refurbished, and the exterior public park is being totally revamped as well. So the $52 million is for the entire building and city block, not just the the lobby.

          • Suspicious patron says:

            A little digging, and I’m afraid I think you are on to something here, Robert. Having followed this project for a while, I recalled that it originally was planned for earlier.
            http://minnesota.publicradio.org/display/web/2009/06/19/minnesota_orchestra/
            This 2009 article shows a timeline where the project would be complete by now.

  7. Silvio Interlandi says:

    Between being well dressed and being healthy, I choose the second option.
    Music is more aural than visual.

  8. William Safford says:

    Buildings are important, of course.

    That said, it is a shame that money can always seem to be raised for buildings, but not as reliably for the institutions that use them.

    Exhibit A: the New York City Opera.

  9. It isn’t fair to use money for the lobby renovation as an example of a pool of money they could use to pay musicians. That $52 million was raised specifically for the lobby, therefore it is put into restricted funds only to be used for that purpose. It was the donors’ right to place that restriction (just like a donor could say they only want their money supporting education programs or production costs or musician’s wages) and the organization legally cannot use it for anything else. Period.

    Now, if you want to argue that maybe they should have focused their fundraising efforts elsewhere and they are exhibiting sketchy priorities, that’s valid.

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