The Economics Of The Symphony: Why Do So Many Struggle?
October 2, 2014
Tom Smith, an economist at Emory University’s Goizueta Business School, says to think of an orchestra player like a professional athlete.
“You have these uniquely talented people, and they deserve more money,” he says.
Smith says just like sports teams, orchestras depend in part on ticket sales to pay their players.
But whereas pro-sports teams usually have packed stadiums, orchestras are struggling because of aging audiences and lagging ticket sales.
So that’s the problem, right?
Well, sure, says Smith, but it’s more complicated than that.
“A team like the Chicago Bulls, or the Atlanta Hawks or whoever else, maybe 35 percent of their revenue comes from ticket sales,” he says, “so just filling the seats doesn’t help the Hawks pay for their salaries on their players.”
The Atlanta Symphony Lockout Continues, Musicians Picket On Peachtree Street | September 28, 2014 7:35 AM ET by Adam Ragusea
A stingy market, unsupportive politicians — to the musicians on the picket line, these sound like the excuses of a symphony management that just hasn't tried hard enough. Principal flutist Christina Smith is on the union's negotiating committee.
"The musicians refuse to accept the premise that everything has been done to excellently fundraise for this institution," Smith says. "When you look at Atlanta, the size of this city — drive around this city, there is money everywhere."
Smith points out that, despite the deficits, Romanstein has been awarded bonuses by the Woodruff Arts Center. The symphony's parent nonprofit also includes an art museum and a theater company. Smith thinks the Woodruff's real goal is to shrink the Atlanta Symphony from an international powerhouse to a less expensive regional orchestra, like it was before legendary conductor Robert Shaw took over in 1967.
Downsizing could cause musicians to leave for better-paying, more prestigious gigs, as could the lockout itself, says Drew McManus, an orchestra consultant in Chicago.
"Some of the other labor disputes in the country have demonstrated that, yes, musicians can and will leave to get different jobs," McManus says. "And [the orchestras] do have a harder time attracting and maintaining quality musicians of the level they had previously established."
That may explain why the ASO's current conductor, Robert Spano, and its principal guest conductor, Donald Runnicles, wrote a letter urging management not to balance the books on the backs of players. Conductors traditionally stay out of labor fights, but the maestros felt they had to, they write, "speak out lest we fail in our duty to preserve the extraordinary legacy that has passed into our hands."
Woodruff board leader discusses Atlanta Symphony crisis
Posted: 1:43 p.m. Friday, Oct. 3, 2014
By Howard Pousner - The Atlanta Journal-Constitution
Instead of making soul-stirring music to start its 70th anniversary season, the Atlanta Symphony Orchestra has produced mostly sour notes for the last four weeks.
The musicians were locked out by management for the second time in two years on Sept. 7 when the two sides could not reach accord on a new collective bargaining agreement, and a war of words commenced.
Management may control the purse strings, but the musicians have commandeered the social media. Constant posts and comments by the players and their supporters on their Facebook page and Tweets on their Twitter account have pushed management back on its heels. The barbs got so brutal on the ASO’s own Facebook page that management turned off commenting.
The ASO Players’ Association has issued multiple strongly worded statements to the media — accusing leaders of the ASO and its parent non-profit, the Woodruff Arts Center, of poor fund-raising, weak management and even malfeasance. Classical music blogs, some more opinion-oriented than journalistic in nature, have spread the accusations across the virtual universe. The ASO has released scattered statements of its own, usually with figures the other side immediately disputes.
A target of some of the harshest musician critiques, ASO president and CEO Stanley Romanstein, resigned on Monday, saying in a statement that he didn’t want to be an “impediment” when the sides restart negotiations.
The musicians considered Romanstein, who served as lead negotiator, a figurehead to start with, and have said in statements and posts that the real power resides with the Woodruff’s Governing Board.
Douglas Hertz, that board’s chairman, has not actively participated in the negotiations and was content to stay out of the media glare. But the steady stream of Players’ Association accusations, including that Woodruff leaders have engineered ASO deficits so as to extract more concessions from the locked-out musicians, have sparked him to speak publicly about the debacle for the first time.
In an exclusive interview with The Atlanta Journal-Constitution, Hertz firmly denied allegations that the Governing Board is willing to permanently damage the ASO for the sole purpose of halting its losses.
He said he was anxious for both sides to return to the business of music, and that one reason he was coming forward was to push the Players’ Association to accept federal mediation. In fact, an announcement that a mediator will restart negotiations is expected imminently.
Hertz, an Atlanta native and president and CEO of United Distributors, a beverage distribution company, grew up in a family grounded in philanthropy and arts patronage. The Alliance Theatre’s Hertz Stage was named for Hertz’s father, Jennings Hertz Jr. With a gift of $1 million, Doug Hertz endowed the ASO’s Jill Hertz Chair, named for his mother, who herself was an orchestra volunteer.
But while saying he believes the musicians and ASO and Woodruff leaders can forge a harmonious agreement with the mediator’s help, he also took some hard stands in the recent AJC interview.
On public support of the musicians and rebukes of ASO and Woodruff leaders in media coverage and blogs: “I disagree that the public has sided with the musicians. I think the artists’ friends have sided with the artists. But I think the corporate community and the philanthropic community understands, like any businessperson would, we’re not going to make an investment in a business that keeps losing money.”
On charges that Woodruff leaders want to turn the ASO into a minor-league ensemble to save money: “It’s frustrating, because the whole allegation, whether it’s by musicians or supporters of musicians, or journalists who want to take the musicians’ side — I’m using ‘journalists’ pretty loosely … for them to allege that the WAC doesn’t want a fantastic symphony orchestra, or the governing board doesn’t want to take care of the musicians, is so far off base if they looked at the facts.”
As evidence, Hertz mentioned the work of other Woodruff governing board members including retired BellSouth executive Jere Drummond, “whose raised millions of dollars for the ASO’s endowment” and Paul Garcia, the recently retired Global Payments chairman and CEO, who along with Delta Air Lines CEO Richard Anderson raised nearly $1.5 million over the last two years to reduce the orchestra’s deficit.
“It makes you wonder, you know,” Hertz said, “are we supporting a bunch of crazy people.”
On a major point he feels is lost in the contract issues: “The sad part of it is … there are not enough people that care. If the public cared maybe we wouldn’t be in this situation. When you’ve got less than 5,000 donors in a metropolitan area of 5 million, that’s my concern. We (board, administration and musicians) need to be getting together and figuring out together how do we grow support for the symphony.”
On the musicians’ response that management’s “last, best and final” offer before the lockout left them no room to negotiate: “Well, we are very interested in exploring alternatives. We are not, cannot and will not move from ending up with a balanced budget moving forward. But there are a lot of ways to get there, and if we were to do it together, we may be able to find a way.”
On if that means that leadership would reconsider its position ongiving management power over filling positions — essentially ultimate control of the size of the orchestra: “Sure. We’re not stuck on anything other than a balanced budget. We would love to protect the integrity of the art, and we want to do it in a financially responsible way.”
(The ASO Players’ Association issued a statement Friday afternoon charging that Hertz is more interested in cutting positions than he is “in securing financial stability or in preserving the high artistic standards of the institution he has a duty as a steward to serve and protect.”)
On feedback from the musicians, seconded by Spano and Runnicles, that management controlling the number of full-time players would destroy the ASO’s sound: “Well, it’s my impression that our symphony orchestra got the same artistic reviews over this past year as they have had in previous years. We had 116 separate musicians that played with our orchestra (who were) not part of our (88-musician) complement — 116 additional musicians who sat in just last year. Yet no one’s told me that artistically that we were any better or worse.”
On music director Robert Spano showing support for the musicians when maestros are typically neutral in labor disputes:“Again, we’re criticized for not wanting a great symphony, right? But we signed Robert to a five-year contract (that’s just beginning) with a raise. And Robert’s getting paid. And we signed (principal guest conductor) Donald Runnicles to a three-year contract. He’s getting paid. So don’t criticize WAC management or the WAC governing board for not wanting to put our money where our mouth is. Maybe Robert’s feeling a little bit guilty because he’s getting paid and the musicians aren’t. But he could be a big help in solving this.”
On how Spano could help: “Ideas (for developing a more sustainable model for the ASO). Encouragement of the musicians to come back and talk. But he hasn’t been particularly constructive to this point.”
On the governing board’s fiduciary responsibility to all four Woodruff divisions: “We’ve got a division of the arts center that threatens the ability of the other divisions (the Alliance Theatre, High Museum of Art and Arts for Learning) to produce the great work that they’re doing. We owe it to everybody to make sure that everybody is pulling their weight.”
On if he’s concerned that negative coverage of the lockout will set back fund-raising in the long run: “Sure, I mean if it lasts too long it will. (But) a contract ended. We lost over $2 million (in fiscal 2014). Don’t forget, when you have earned ticket revenues of only $5 million and have salaries and benefits just for the musicians of $10 million to $11 million, you’re losing money from the very beginning. …
“Every day, we lose money.”
The story so far
· The Atlanta Symphony Orchestra has racked up deficits for 12 consecutive years, but the push toward a sustainable model took new urgency when the accumulated debt rose to $23 million by the end of fiscal 2012, including $18 million borrowed against earnings on the orchestra’s endowment.
· Seeking significant concessions to halt the red ink, management locked out the musicians during tense 2012 collective bargainingagreement negotiations. After a month without pay, the players agreed with great rancor to a $5.2 million wage reduction over two years (an average of $14,000 annually for each) and other cuts.
· In 2013, Moody’s Investors Service downgraded the Woodruff’s credit outlook from stable to negative, largely because of the ASO debt.
· The orchestra finished the 2014 fiscal year with a $2 million operating deficit on a budget of $37 million.
· Eight months of negotiations for a new collective bargaining agreement this year proved unsuccessful. Management said its final proposal was for a four-year deal with an escalating salary increase topping out at 4.5 percent in the final year. The musicians propose a roughly 15 percent salary increase over four years —- basically the amount the players gave up 2012. Another point of division was health care, with the musicians being asked to shoulder a greater share of the cost, which they said would turn management’s raise offer into a net decrease.
· Management locked out the players on Sept. 7 after the the collective bargaining agreement expired without a new one in place, and canceled concerts through Nov. 8. Four days later, the ASO Players’ Association issued a statement that charged: “The Symphony has been placed in the position of turning deficits that have been engineered by the WAC with the intention and for the purpose of extracting more concessions from the Orchestra’s musicians.”
· ASO president and CEO Stanley Romanstein resigned Sept. 29, saying in a statement that he didn’t want to be an “impediment” to management reaching a labor agreement with ASO musicians. Management has pushed to bring in federal mediator to help restart negotiations, an idea to which the musicians said they are receptive, but an announcement has not been made.
Woodruff board chief Hertz willing to ‘break the backs of employees’ October 3, 2014
by Howard Pousner
The heated words between leaders of the Atlanta Symphony Orchestra Players’ Association and ASO and Woodruff Arts Center management took a harsh turn on Friday, with the musicians’ union releasing a statement sharply critical of Woodruff Arts Center Governing Board Chairman Douglas Hertz.
The statement, included in its entirety below, charges that Hertz is more interested in cutting full-time ASO musician positions than he is “in securing financial stability or in preserving the high artistic standards of the institution he has a duty as a steward to serve and protect.”
The Woodruff responded shortly with a statement by its president and CEO, Virginia Hepner. “We are saddened that they are attempting to disparage the reputation of Doug Hertz, our chairman,” she said in the statement, also included in its entirety below. “He is widely recognized as one of the most successful and generous leaders in Atlanta and we feel extremely fortunate to have his ongoing support.”
In addition to his Woodruff role, Atlanta native Hertz, president and CEO of United Distributors, a beverage distribution company, is a board leader or member for organizations including Camp Twin Lakes, Children’s Healthcare of Atlanta and the Westminster Schools.
The volley of statements could be the final dissonant notes between the two sides for a while.
The U.S. Federal Mediation and Conciliation Service announced later Friday afternoon that it would provide mediation services in the contract dispute and musician lockout that has spanned four weeks.
Typically, mediators move quickly to make both sides save their words for the negotiating table and to stop staking positions in the press and on social media.
Lockout exposes rift between ASO and Woodruff board members over direction | October 3, 2014 By Jenny Jarvie
Ever since Atlanta Symphony Orchestra musicians were locked out of Symphony Hall a month ago after failing to agree with management over the terms of a new collective bargaining agreement, critics have wondered who is calling the shots.
While ASO president and CEO Stanley Romanstein, who resigned last week, bore the brunt of musicians’ and the public’s ire, many have suspected his moves were dictated by the orchestra’s parent company, the Woodruff Arts Center (WAC).
Criticism of the WAC is now mounting as the stalemate between musicians and management reaches its second month. In an interview with ArtsATL, a longstanding ASO board member voiced his anguish at the WAC’s “takeover” of the orchestra, claiming WAC officials seemed more interested in balancing the budget than maintaining the ASO’s reputation as a world-class ensemble.
“I am very disappointed to see the Woodruff Arts Center so glibly and so willingly allow the quality and prestige of the Atlanta Symphony Orchestra to go down the tubes,” said Dr. John W. Cooledge, a retired pediatrician who joined the ASO board in 1976 and now serves on the board of counselors, an advisory tier of the body. “Right now the feeling of the symphony board is frustration and anger and sadness. The ASO board no longer seems to have any power,” Cooledge said, noting that he had very little input in the lockout negotiations. “WAC is calling all the shots.”
The makeup of the ASO board has evolved over the years, Cooledge said. In 1976, when Cooledge joined the board, he said it consisted largely of ardent music lovers, “people who knew each other and worked in harmony.” Now it comprises corporate executives from Atlanta’s leading businesses: Delta Airlines, Coca-Cola, King & Spalding, Alston & Bird, Verizon Wireless, the Atlanta Hawks and Philips Arena.
“There was some lamenting a few years ago that some people were taking positions on the board primarily to put on their resumes,” Cooledge said.
While he acknowledged that the ASO board could have been proactive in asserting control — or, as he put it, “preventing a final takeover” — he said there had never, until recently, been any clear realization that WAC could move the orchestra into a second-rate organization.
“We thought the WAC was acting in the best interest of all its divisions,” he said. “We were caught napping.”
While there has been some discussion among board members, Cooledge said, that ASO separate from WAC and become an independent entity, the consensus is that there is no easy way out. The WAC has complete control of the symphony’s endowment. “I’m pessimistic about finding an easy solution,” Cooledge said. “We’ve sold ourselves to Woodruff.”
Maybe Atlanta Symphony Should Lock Out Its Marketing Department Instead
Presumably, the Atlanta Symphony Orchestra’s labor issues are the result of the same underlying forces that are affecting orchestras everywhere: diminishing audiences and diminishing community support. But if the organization is using amateur, old-fashioned, self-centered marketing practices that fail to produce desired results, it seems counterproductive to lock out the artists when locking out the administrators who make bad marketing decisions would probably have more productive long-term consequences.