Visions of Armageddon in Hartford

Here we go again.  Another orchestra-related labor dispute.  Over the same old issues, being fought via the same techniques.

A huge, above-the-fold article in the Hartford Courant balefully warns that “Hartford Symphony Could Shut Down Without Union Concessions.”

[…]

I’m losing the last vestiges of patience I have for this kind of thing.

Let me be clear that I am not a part of the negotiating committee in Hartford.  I bear no personal stake in this fight, nor do I have any insider information.

That said, and as long-time readers are well aware, I’ve worked in nonprofit management for many years, primarily in the arts. I’ve served in public relations for several arts groups.  I’ve published papers on nonprofit management.  I have the privilege of serving as board president of an important arts nonprofit here in Minneapolis.  And of course, I’ve been at ground zero of one classical music labor dispute, and had ringside seats for several others.

Based on this accumulated background, I have a few things to say about the dramatic news coming out of Hartford.

* * *

“The board of directors of the Hartford Symphony Orchestra said this week that the symphony could cease operations as early as next month unless the union representing musicians makes significant contractual concessions.”

Fascinating… from the standpoint of both the content and the presentation.

As written, the board makes a few clear implications:  1) union contracts are crippling the institution, 2) the damage is so grave that the organization has only a month to live, and 3) the only thing that can save the orchestra is immediate union concessions.

Let’s unpack this.

Over the course of several classical music labor disputes, several managements have made similar pronouncements.  Perhaps the most vivid came from Peter Gelb, General Manager of the Metropolitan Opera, who last fall warned that without sacrificial union concessions the Met was facing bankruptcy.  Ultimately Mr. Gelb was forced to back down, and the union cuts that he warned were so critical to the organization’s survival never went through.  He did, however, rein in his own administrative spending, and voilà!  This year, the Met posted a $1 M surplus.

So I’m a bit skeptical of sweeping statements like this one coming out of Hartford, especially when these statements are made in the midst of contentious labor negotiations. Of course there are real problems out there… but too many organizations have cried “wolf!” already.

I’m also curious that if the HSO really is in immediate crisis, that this is how it responds. This isn’t a call for action, it’s a call for panic—and specifically, scapegoating.  No call for a last-ditch campaign, no challenge grant from board members, no call for a community forum… nothing.

In my experience, if an organization is at a crisis point, there is usually a broader press conference that doesn’t assign specific blame, but lays out the particulars of the crisis and asks the community for support.  Specific support. Leadership then assembles a crisis team and does a lightning round of questions and answers of what can be done, how to meet the immediate need and what steps are necessary to make them happen.  Standing and pride go out the window as all the stakeholders roll up their sleeves and run down every possibility.

Indeed, this is exactly what happened with the San Diego Opera—whose example provides a stark counter-example to what an organization does when it really is facing its imminent demise.  There was a quick coup on the board, as those committed to the Opera’s survival forced out those who were fine with its closure.  The new leadership team gathered everyone on board, and ran through every possibility.  All stakeholders were part of the conversation, and were consequently part of the solution.  The result is that the San Diego Opera survived, and is very much with us today.

This isn’t what seems to be happening in Hartford.  While I certainly could be wrong, this announcement feels more like a garden-variety version of negotiating through the press.

And finally, I’m intrigued that the board seems to be placing the entire blame for the HSO’s financial woes on the union contracts.  Back in 2007, the HSO brought in an outside consultant—Tom Morris, former CEO of both the Boston Symphony and Cleveland Orchestra—who looked at the organization’s finances.  Mr. Morris concluded that the union contracts were not the real problem; he advocated a variety of solutions that would more systematically and holistically improve the HSO’s financial health.  He specifically stressed the need to build the HSO’s endowment.  Curiously, the board has not followed up on this plan—specifically the plan to bulk up the endowment.

Thus, it is somewhat surprising that the board is so definitive in calling out union contracts as the source of the HSO’s problems.

More than that, if the HSO’s own analyses reveal that union contracts are not the real problem… how can greater and greater cuts to those contracts be the real solution?

“‘We are going to spend the next few weeks analyzing all the options and assessing things as they unfold,’ Stephen Collins, the symphony’s director of artistic operations and administration, said Wednesday. ‘And by late January at the latest, we need to have stability in our financial position or we’re going to have to make very difficult decisions.’”

The “nearing bankruptcy” statement is one that you make when trying to either galvanize outside support, or scare your negotiation partners.  Being that there are no calls to action for the community, or even a specific list of what is needed for the HSO to survive besides union concessions, it’s hard to shake the feeling that this falls into the category of “scare tactics.”

And I’m curious about the artfully worded “we’re going to have to make very difficult decisions.”  Difficult for whom?  I note that it is easy to make “difficult decisions” when the consequences of those decisions affect other people.

“It is conceivable that we could be forced to close our doors at the end of January.”

It’s curious that Mr. Collins uses this construction.  So… the imminent closure so prominently announced just a couple of seconds ago is not assured, but only “conceivable?” Well… with respect, it is also conceivable that an asteroid could crash into Hartford and obliterate the entire city.  It is conceivable that a crazy eccentric will die and bequeath his entire fortune to the HSO.  A lot of things are conceivable.  Are they likely? Certain?

Apologies, but I can’t get a certain scene from The Princess Bride out of my mind.

Of course, it is possible that the HSO management is using this particular weasel-word construction so as not to spook donors and sponsors—fair enough.  But the simple existence of this news story has mostly likely already spooked them, so the damage is already done.  Plus, there are rumblings that management has been actively encouraging donors to withhold donations in the short-term, to help make the current situation appear more dire; as a result, I’m forced to wonder if the HSO management is using that specific phraseology to ensure a bit of plausible deniability rather than to calm the waters.

I’m also forced to wonder if management uses that same weasel-word construction when communicating with the musicians… or if they use more straightforward language.

“The orchestra’s contract with the union, which represents approximately 86 part-time musicians, stipulates that performers are paid for a certain number of performances and rehearsals. Putting on that many events — which number 180 for the orchestra’s roughly 33 core musicians – is unsustainable, Collins said.”

Oh boy.  First let’s look at the theoretical.  What on earth does Mr. Collins mean by “unsustainable?”

This is a tired buzzword that I’ve written about extensively, including this blog post which was cross-published in several trade journals such as Nonprofit Quarterly.  As a reminder, the HSO is a 501 (c) (3) not-for-profit, as recognized by the IRS.  It does not exist to turn a profit or to bring returns to shareholders—the entire reason it exists is to perform orchestral music.  That is why it is classified as a nonprofit.  Yes, of course it has to secure and manage financial resources in a responsible manner, but blithely making cuts like this undermines the stated purpose for the HSO’s existence.

Plus, blithely making cuts to its season will almost certainly lead to financial disaster, too. During the Minnesota Orchestra lockout, the group Save Our Symphony MN did a financial analysis of the Orchestra’s finances and found that reducing the number of concerts led directly to a loss of revenue.  In short, fewer concerts, less money.  Period. And it caused a mounting death spiral—faced with a reduction in income, the Orchestra tried to save money by cutting further concerts, and the losses continued to mount.

This clearly showed that can’t cut your way to financial health.

But the HSO seems determined to try.  Another analysis of the HSO situation included this little nugget:  that “30 – 40% of the services the core musicians were paid to do never happened, because the symphony can’t schedule or afford to mount that many events. Just cutting out the unused dates would save $400,000, Fay and Collins said.”

This is a case of circular logic.  First, it’s clear that the HSO is already paying the musicians whether they’re performing on not.  But instead of actually using these services—again, services they already paid for—to schedule events that would actually generate ticket sales and other revenue, the HSO leadership chose to do nothing, simply wasting the money.

This is like paying a consultant for 10 hours of work to help you improve productivity, but not giving anything him or her any work to do. It is a waste of money… and a waste of an opportunity.

And again, the case of Minnesota showed definitively that this approach is dangerous and self-defeating.

“‘We are not the problem,’ said Michael Pollard, principal second violinist in the HSO’s core orchestra and a member of the union’s negotiating team. ‘We are willing to be part of the solution. Even if we accepted everything they are asking of us, that doesn’t take care of the problem.’

Pollard said the board is asking the musicians to take a 30 percent pay cut. He blamed the orchestra’s financial problems on several things, including a failure to aggressively build up its endowment.

‘They don’t believe in shared sacrifice,’ Pollard said.”

Again, curious.  This all-too-brief recap seems to leave out a few details.  Other sources have pointed out that the board originally demanded a 40% cut; the 30% cut is their current negotiating position.  Also, I could point out that part of management’s proposal was that musicians would now be required to be available for day-time rehearsals.  Given that the current salary (before any cuts are made) is approximately $23,000 per year, most musicians are forced to take other jobs to make ends meet. So the new demands that they be available during the day would force players with day jobs to quit the Symphony altogether.  Given that the HSO proposal would pay musicians $15,000 and make it impossible to have any other job, I’m not sure who they envision hiring.

This synopsis also conveniently overlooks the fact that the HSO management is under several investigations by the National Labor Relations Board for unfair labor practices, and in fact just settled a claim last month.

And on the issue of shared sacrifice… I took this issue on last month.  To be brief, I cannot fathom why the leadership hasn’t already agreed to solidarity cuts, especially if the organization is facing imminent closure.  In every other classical music dispute over the past couple of years, leadership at least paid lip service to sharing in the sacrifice, even if they worked behind the scenes to avoid feeling any financial pain themselves.  Demanding massive sacrifices of others, while refusing cuts for themselves, is astonishing—a case of bad optics, bad tactics, and bad management.

Also, I will also point out that Michael Henson of the Minnesota Orchestra, Stanley Romanstein of the Atlanta Symphony Orchestra, and Peter Gelb of the Met all received substantial bonuses before and during the labor disputes at their respective organizations—at a time when their respective organizations were crying poverty.  I’m curious to look over the HSO’s financial records to see if this trend holds true in Hartford, too.

“The HSO faces the same structural problems that many legacy arts organizations are grappling with: an aging audience, changing cultural tastes and intense competition for corporate support.”

Oh, for the love of God.

Yes, there are some arts organizations that are in trouble.  There are some orchestras in trouble.  But the “classical music is dying!” meme is a tired cliché with limited basis in reality.  Many groups are doing well.  The Minnesota Orchestra, which just two years ago was deep into its own labor dispute, just ended the year in the black—and with a huge gift from its formerly locked out musicians.  The Met Opera ended its fiscal year with a $1 M surplus.  International Conference of Symphony and Opera Musicians (ICSO) Chair Bruce Ridge has recently provided a run down for 2014-2015:

  • The Atlanta Symphony announced that it ended the season with a surplus, and raised $13 million [see Orchestra Newslets]
  • The Arizona Opera exceeded its fundraising goals
  • The Buffalo Philharmonic saw record season ticket sales and subscription revenues for the third consecutive year
  • The Charlotte Symphony received a $2 million gift
  • The Cincinnati Symphony raised over $26 million and signed a new contract that adds 15 new musicians over the next five years [see the July 2015 Senza Sordino]
  • The Dallas Symphony achieved a balanced budget and received a $5 million gift
  • The Detroit Symphony raised $1.4 million in one evening
  • The Houston Grand Opera exceeded its fundraising goal, raising almost $173 million
  • The Houston Symphony received a $5 million donation, the largest gift in nearly a decade
  • The Indianapolis Symphony saw ticket sales increase 15%, and subscriptions rose 24%.
  • The Memphis Symphony received a $1 million gift for education programs
  • The Minnesota Orchestra received $6 million in special gifts and embarked on a historic tour to Cuba [see the July 2015 Senza Sordino]
  • The Nashville Symphony set fundraising and ticket sales records [see Orchestra Newslets]
  • The Omaha Symphony saw record attendance
  • The Oregon Symphony set records for ticket sales and contributions, and its gala raised a record $700,000 [see Orchestra Newslets]
  • The Pacific Symphony’s gala raised a record $1.6 million
  • The Richmond Symphony received a $1 million gift for outdoor concerts
  • The Rochester Philharmonic reported a 19% increase in single ticket sales
  • The St. Louis Symphony received a $10 million gift
  • The St. Paul Chamber Orchestra saw its highest attendance in 20 years

I get it—the fact that one restaurant, hotel, boutique, or farm is thriving isn’t a guarantee that all such establishments will thrive.  But the fact that HSO seems to be facing such enormous problems when so many peer organizations are thriving seems more of an indictment of management than the musicians.

* * *

All in all, this announcement raises many, many questions.

I realize that the HSO has financial struggles.  But the HSO’s credibility on this matter is, to put it mildly, in tatters.  The timing of this announcement, fact that the HSO has already settled one unfair labor suit with several more still pending, its questionable actions and the fact that it is pursuing “solutions” contrary to the recommendations of its own analyses raise some serious questions about the HSO’s motives.

Yes, the financial problems can be real, but the organization doesn’t seem to working to solve them.  I hate to say it, but the evidence suggests this is an ideological struggle, rather than a financial one.

.

Xochipilli

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6 thoughts on “Visions of Armageddon in Hartford

  1. We need our professional Hartford Symphony Orchestra in Greater Hartford.
    They deserve to be compensated and treated well.
    We all benefit from the elevated cultural climate they generate.
    Let’s resolve the various issues and get back to making music.

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  2. Just thought I would chime in with some clarifications. I’m not involved on any side, but quasi-inside information is not hard to come by in a place as provincial as Hartford. All of the musicians know all of what is listed below, though they’ve been careful about what information they choose to present to the world in their advocacy campaign.

    – The admin side of the HSO is a shadow of its former self. As the Courant article notes, there were 28 admin staff in 2008, and that’s down to 11.
    – Again per the Courant article, the annual budget has been cut from $6.5 million to $4.8 million (a cut of more than 25 percent) over the same period.
    – The annual deficit is about $1 million. Payments to ‘core’ musicians (more on this below) for unused services are over $400 thousand. I know you might say this is just a dirty accounting trick, but to the board it looks as though more than 40% of the deficit can be accounted for by payments for unused services.
    – The only musicians who have been asked to take a pay cut are the 33 ‘core’ members, who are guaranteed 180 services. The other musicians are not being asked to sacrifice compensation, since they’re not being paid for unused services to begin with. Understandably, all members of the union have ‘circled the wagons’ around the minority group that has actually been asked to accept a cut. That’s part of what unions are for.
    – The point about daytime rehearsals would not, on its own, be a major stumbling block in negotiations. I suspect the musicians will immediately get their way on that if they compromise on the big stuff.
    – None of the musicians really believe that 180 services per year is feasible at this point. Hopefully a compromise can be reached, but everyone will admit (if only privately) that 180 is an unrealistic number. There needs to be a meeting point, perhaps somewhat above 130, but certainly well below 180.
    – How is the HSO supposed to perform more frequently without cannibalizing its limited audience? How would it help anyone to dilute the crowds? When pressed on this issue, musicians usually respond that management should focus on growing the audience, on engaging with the local population, on building more demand to match the contractually-guaranteed supply. But that’s hard, and no one really knows how to do it, or even whether it can be done in Hartford. It would be easier to focus on, at least, if the institution had a bit more breathing room fiscally. If only a big donor would step in to guarantee that things can keep running for a few years, then management and the musicians could join forces to try to make things better, rather than fight bitterly over how to avoid total collapse. Unfortunately, the people who might be in a position to do that for the HSO have gotten cynical (more on this below).
    – Many of the board members are lifelong residents of the Hartford area who love classical music, have been ardent supporters of the HSO for decades, and have personally given a lot of money to the institution. There are good people on there who no longer know what to do. (Seriously, what entitles you to imagine the board members as ideologically opposed to a symphony orchestra? Do you have any idea how many of them are serious musicians in their own right?)
    – The board is *constantly* looking to raise more endowment money. And they would love to hold an official endowment drive. As I’m sure you know, a nonprofit organization can’t really announce such a drive until it has private commitments amounting to most of the goal.
    – It’s gotten to a point where the major donors know too much about the budgetary and political problems of the symphony, and so they’ve lost some faith in its survival. Of course they don’t want to make a large gift if they think it would only keep the HSO on life support for a few more years. And so there are donors who won’t commit another cent until the negotiation of a musicians’ contract that better reflects current realities. You would at least need to admit that this puts everyone in a difficult position.

    I could go on and on, but I think I’ve hit most of the important points. The board is clearly looking to plug a smaller portion of the deficit (maybe a third?) by renegotiating the musicians’ contract, and then to try to bring in enough new endowment money to cover the remainder. There isn’t much left to cut on the side of admin staff. Ticket prices probably can’t be hiked any more without decreasing total revenue. And no one actually thinks that using more services would help the fiscal position of the symphony, unless new audiences could be brought in—a process that even optimists acknowledge would require time. (And time is the scarcest of all resources at the HSO!) What levers remain? The board will be in a tight spot even if it gets what it wants from the musicians. You can do the math yourself, using conservative assumptions about endowment interest. They will need to come up with about $10 million, which might already be unattainable, with some major donors having given up and walked away in recent years.

    Hoping for a deus ex machina…

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    • Hi, and thanks for the comment. Some replies of my own, as part of the conversation:

      For your first bullets, I think this is tied to the HSO’s absorption into the Bushnell Performing Arts Center. I know why folks advocate for such mergers—eliminating redundancies, being able to delegate administrative functions, piggy-backing on larger fundraising initiatives, etc.—but in practice they tend to cause more problems than they’re worth. What is gained in efficiency is offset by huge conflicts of interest and cannibalization of resources… e.g. the Bushnell has very different needs from the HSO specifically, and ultimately gets to make the call. This same thing has happened in Atlanta, too.

      I get that the board can look at the $400,000 in unused services, and simply say: “Whoo hoo! Instant savings!” But as I’ve argued many times here, and the SOSMN study I mentioned above amply demonstrated, this “common sense” approach is completely wrong. Music is the HSO’s product, and by not getting its product to market, it’s committing slow-motion suicide. Those unused services are a lost opportunity, a source of untapped potential… that they are paying for but not making use of. There are huge benefits—direct and indirect—to using those services. Directly, they provide the key mechanism to bring in earned revenue. Indirectly, they keep the community engaged with and aware of the HSO, which builds momentum to future ticket sales and contributions. Going dark for weeks at a time just lets the HSO drop off everyone’s radar, and it takes a much larger effort to engage ticket buyers and donors.

      I could see the issue of daytime availability being added in specifically so there is an easy line item to jettison. Not a bad negotiation strategy to strategically “lose” on minor items so you can “win” on the important stuff. The problem is that this item is so obviously, cartoonishly gratuitous that it simply makes management look like blood-sucking leeches. “We’re gonna cut your pay to $15,000 and make it impossible for you to have any outside job!” is inflammatory, and hands the musicians an easy PR weapon.

      I think we disagree on the issue of audience development. You ask how the HSO could possibly support the 180 services without cannibalizing its audience. Yes, it is hard. REALLY hard. But that’s the work of every nonprofit arts organization in the country. Yes Hartford has its own peculiarities, but that same question has been asked and successfully answered in a variety of places. For what it’s worth, I don’t believe audience development is a zero-sum game. On my blog I’ve argued there are three principal ways of doing so: broadening, deepening, and diversifying. These areas do not overlap; the mechanisms for broadening are diametrically opposed to those for deepening, for example.

      But deciding how much you think a community can support and preemptively cutting the organization down to that size is not a strategy for success in either for-profit or nonprofit world.

      To your question “Seriously, what entitles you to imagine the board members as ideologically opposed to a symphony orchestra? Do you have any idea how many of them are serious musicians in their own right?” Good question. My answer: experience. Experience with several classical music labor disputes, and experience in sitting on boards with people just like this. I’ve met and dealt with many ideologues in my time—folks who love music but cannot abide unions. I’ve also met and served with genuinely good people who were great successes in the for-profit business world and simply couldn’t make the leap to understand how different nonprofit management was. Indeed, this is a regular concern of every nonprofit I’m aware of… folks who blithely demand that nonprofits be more like a business. I’ve written extensively on that topic, and if you’re interested you may want to read my thoughts here.

      To your point about donors knowing too much. I get exactly what you’re saying, and again there are close parallels to other labor disputes. It is a delicate dance, but I will say that a small, dedicated group of board members and/or upper management leaders can lead donors to specific decisions. With the Minnesota Orchestra, for example, a small cadre had a specific understanding of “reality,” and selectively (and forcefully) presented this as an objective, universal reality to their peers. Suddenly this interpretation became entrenched as conventional wisdom. Same thing happened with the San Diego Opera, to the point that the CEO and a small group of board members was able to convince the board to shut down the organization outright. In both these cases, a backlash swept these cadres out of power and a new “reality” took hold. Framing the situation differently ended up bringing out a groundswell of support that had previously gone unnoticed or underutilized.

      And I have to say that in my experience, donors can have their own ideological positions and agendas that they are more than happy to share with the organizations that receive their money. The phrase, “not one more dime until you___” is a familiar one to most nonprofits. To be clear, many times this phrase is completely justified, and based on astute observation. Sometimes it just reflects personal bias or preference.

      Well, sorry to drone on. Again, thanks for your comments!

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  3. I think your points are terrific. And though I’m from the area, I have no inside knowledge here.

    But all of the arguments from management point to a failure of… management. As you say, you can’t downsize an organization to growth. And for nonprofits, it’s usually grow or die.

    Where’s the faith in the audience? In their donors? In their mission, for Pete’s sake!? Where’s the investment in better fundraising and marketing to build an audience and an endowment? Is it really unsustainable to perform 180 times a year – or unsustainable in their new (and expensive) home?

    Thanks – I hope this gets lots of attention!

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  4. If I may be allowed to make a somewhat indelicate analogy, cutting one’s way to prosperity as orchestra boards in Minneapolis and Atlanta have advocated in the past, and the HSO board is advocating at present, is rather akin to building a septic tank uphill of one’s own home. I’ve always thought William Schuman hit the nail on the head when he said that the one thing that any arts organisation should do with money is lose it wisely. The HSO board has so far proven to have lost it stupidly, and is now trying to save it equally stupidly. Just beggars belief…….

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  5. Pingback: 2015: A Year in Review | Mask of the Flower Prince

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