A Response to Virginia Hepner

While I was in London, I missed a curious tidbit from the labor dispute between the musicians of the Atlanta Symphony Orchestra (ASO), and the management of the Woodruff Arts Center (WAC) who have locked them out.

In brief, the musicians had raised questions about the actions of WAC Chairman Doug Hertz while he was serving on the Board of Administrators for Tulane University.  The musicians noted that Hertz was involved in a series of controversial cost-cutting actions directed against Tulane’s tenured faculty, and compared these actions with his similar cost-cutting plans at the ASO.

The curious point is that WAC President Virginia Hepner gave a strongly-worded defense of Hertz’s actions, as well as the actions of the WAC as a whole.

Her full quote reads:

The protracted financial challenges at the Atlanta Symphony Orchestra are very serious and threaten the health of the entire Woodruff Arts Center.   The ASO has had 12 years of accumulated deficits, a severe reduction in its endowment and an annual operating gap that we cannot afford to continue. Over the last eight months, ou team has proposed many potential scenarios to the musicians in an attempt to find a solution to the problem. We continue to ask the musicians for constructive ideas to help us address these challenges and we are frustrated that they have turned a deaf ear to the situation. We are saddened that they are attempting to disparage the reputation of Doug Hertz, our chairman.  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 at The Woodruff Arts Center. Our fervent hope is that a federal mediator will bring calm to the protests, picketing and petitions and get us back to meaningful progress at the negotiating table.

I take great issue with this statement, and want to post a quick rebuttal.

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“The protracted financial challenges at the Atlanta Symphony Orchestra are very serious and threaten the health of the entire Woodruff Arts Center.”

With respect, the WAC’s tax documents (the 990s) suggest a completely different story, one that is bolstered by information provided by the musicians. For one, it appears that the ASO is not the poorest performer at the WAC.

More to the point, there is also credible evidence that the WAC has systematically starved the ASO for funds over the past few years. The ASO musicians have pointed out that in both 2012 and 2014 the WAC received substantial funds from the sale of two properties and gifts that could have “mitigated or eliminated completely” the orchestra’s annual deficit in those years. After receiving a $15 million gift from the Woodruff Foundation in November 2011, the musicians noted, the WAC gave $5 million to the Alliance Theatre and the High Museum to retire debt. No funds were allocated to the ASO, which had an accumulated debt of $20 million. Perhaps the most curious fact that when the WAC sold off property, the proceeds were not shared with the ASO at all—in one case, the proceeds were donated to another non-profit.

There may be a perfectly benign rationale for all this, but I am skeptical.

Even so, this pattern of activity clearly demonstrates that the WAC’s revenue and expense streams are so intertwined, and so convoluted, that it is impossible to put all the blame on the ASO for the financial troubles of the entire organization.

Ms. Hepner, you would need much more evidence to make such a statement. And given the numerous opportunities for you to have done so, in response to many, many requests that you do so… well, I find it telling that you have not.

“The ASO has had 12 years of accumulated deficits, a severe reduction in its endowment and an annual operating gap that we cannot afford to continue.”

So you say. As I’ve argued, we saw similar strong, declarative sentences like this made by the leadership of the Minnesota Orchestra during the lockout in Minneapolis. But upon closer inspection, they turned out to be less than truthful.  In the case of Minnesota, it became clear that money was systematically, and deliberately, moved around the organization so that different “results” could be shown to different audiences.

Plus, the Minnesota Orchestra’s posted deficits were artificial.  As the minutes from the board meetings revealed, a PR firm was contracted to come up with a deficit number that would look serious enough to support management’s claim that substantial budget cuts were necessary, but not so severe that investors and donors would be spooked. The PR firm in question suggested a $6 million deficit; the Orchestra’s management subsequently manipulated its fundraising efforts and endowment draws to achieve this number.

With this sordid history in mind, I approach Ms. Hepner’s statement with a healthy degree of skepticism.

As I noted above, the ASO musicians have shown that the WAC received significant assets over the last two years, but chose not to allocate those resources towards the ASO. These actions have raised significant questions about priorities of the WAC leadership that have not yet been satisfactorily answered—is the WAC financially starving the ASO as part of a strategy to break the musicians’ union?

But there’s another thing I’m curious about. This is nearly the identical argument the WAC made two years ago during the last lockout. Logically, the WAC leadership would have had to have known about the financial problems the organization faced, and laid plans to address them. After all, the rationale for the previous round of concessions was that they would buy the ASO some much-needed time to get its financial house in order.

So what did the WAC do to right the ship?

Where was the capital campaign to grow the endowment, or at least support programming? Where was the boost in annual fundraising efforts? Where were the increased “good faith” gifts from major donors and corporations? Renewed marketing pitches? Audience building initiatives? Streamlined operations? Has the WAC done anything to improve the ASO’s finances?

It isn’t just me asking these questions… many are wondering the same thing. And we’re still waiting for answers.

It seems odd, then, that Ms. Hepner would bring up this point to bash the musicians—the financial failures of the past few years are a far bigger indictment of her administration than of the musicians.

And if the WAC hasn’t tackled the much bigger, much more pervasive financial problems within the organization, why on earth would simple pay cuts to the musicians make any difference?  All that will do is, again, buy a couple years’ time… and the situation will be identical to the one today.  We’ll all still be in the exact same place.

“Over the last eight months, our team has proposed many potential scenarios to the musicians in an attempt to find a solution to the problem.”

This statement is mendacious, at best. No, the WAC has only proposed one scenario: massive cuts on the part of the musicians. Granted, there are many ways that the cuts could be implemented, but the WAC leadership has made it clear that the total, aggregate amount of cuts is non-negotiable. As I’ve said before, a cashier asking you if you wish to pay for an item by cash, check, or credit card does not mean you are negotiating about the item’s price. Plus, these “negotiations” don’t change the fundamental fact that no one else is asked to make any sacrifices or come up with new ways of doing business.

I’m sorry, but the WAC is not negotiating solutions—it is demanding concessions.

“We continue to ask the musicians for constructive ideas to help us address these challenges and we are frustrated that they have turned a deaf ear to the situation.”

It’s a bit embarrassing to read this, as it is demonstrably untrue. The WAC negotiators dragged their heels for months leading up to the lockout, and refused to meet with the musicians at all in the final days before the contract expired. The WAC has also engaged in delaying tactics as the two sides entered into mediation, and launched a public relations campaign against the musicians. As a labor negotiation tactic.

And Ms. Hepner states the musicians have turned a deaf ear to the situation?

“We are saddened that they are attempting to disparage the reputation of Doug Hertz, our chairman.”

In two separate interviews (here and here), Mr. Hertz insulted every writer covering the ASO lockout, the much-loved artistic leadership of the ASO, and the musicians themselves by suggesting they were “crazy people.” No… I think Hertz is disparaging his own reputation, quite without the help of anyone else.

Plus, his previous actions at past organizations are public knowledge, and obviously germane to this labor dispute. The musicians are right to bring them up.

“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 at The Woodruff Arts Center.”

Interesting. Three things here. First, one could point out that the musicians of the ASO have won 27 Grammys, and give greatly of their time and talents to their community. Are they not also successful and generous? Why no comparable praise for them?

And just a few sentences ago, Hepner stated that the organization is in dire financial straits, racking up deficits and seeing a collapse in the endowment. But Doug Hertz is the leader of the organization, and presumably presiding over these troubles. With respect, doesn’t he bear any responsibility for them? By Hepner’s own statements above, it seems that “extremely fortunate” is a bit hyperbolic.

Which brings up the final point. Hertz may be successful in his for-profit business. But does he have expertise in non-profit management? These are very different things. In the same way that a manufacturing magnate will not automatically be successful at running a healthcare facility or a hotel chain, a for-profit leader might not have the necessary skills to run a non-profit. There is a completely different skill set involved, and each area requires an entirely different business model.

“Our fervent hope is that a federal mediator will bring calm to the protests, picketing and petitions and get us back to meaningful progress at the negotiating table.”

Fascinating that your “fervent hope” is for a “calm to the protests,” rather than a resolution to the dispute. Or for that matter, a strong, unified organization ready to face the financial and artistic challenges of the future.

I’d also point out something. Ms. Hepner, you could calm the protests right now by stopping the lockout and engaging in play-and-talk while negotiations proceed. Why don’t you, if calming protests is your fervent hope? Such power is entirely in your grasp, right now.

Astonishing.