Bankruptcy Hits A “Big Five”

What do the Philadelphia Orchestra's financial woes mean for the future of American orchestras?

Philadelphia Orchestra

Photo: Public Domain

Leopold Stokowski conducts the Philadelphia Orchestra in the United States premiere of Gustav Mahler's 8th Symphony. The orchestra has a history of over 100 years that also includes recording the music for Disney's "Fantasia."

Unable to close a deficit of $5 million even after emergency fund-raising efforts, the Philadelphia Orchestra announced in April a move to file for Chapter 11 bankruptcy. The orchestra’s management called the decision the only way for the orchestra to survive financial disaster, according to the New York Times.

The symphony’s board of trustees voted strongly in favor of the move. Of the 65 members, only the five musicians on the board stood opposed to filing, according to the Huffington Post. The musicians cited concerns for the quality of the orchestra and the prospects of future donors as their main reasons for objecting, says the Times.

Union officials have also raised questions about the usage of the orchestra’s $140 million endowment, but according to the Huffington Post the orchestra contends that the funds are off-limits in regards to the decision.

In a letter posted to Philly.com, however, Louis J. Mayer, vice-president for financial affairs and treasurer at Saint Joseph’s University in Philadelphia, praises the orchestra’s management for taking a “bold step.” Mayer contends that filing for bankruptcy will provide the avenues necessary to restructure the orchestra to prevent it from ultimately going out of business.

The Philadelphia Orchestra is the first orchestra of its standing — it is one of what critics and enthusiasts refer to as the “Big Five” American orchestras, along with Boston, Chicago, Cleveland, and New York — to file for bankruptcy, but it is not alone in experiencing financial hardship. Last year, the Cleveland Orchestra missed a lengthy stay at Indiana University due to a musician strike in reaction to unfavorable contract negotiations brought on by declining ticket sales and donations, and Chicago Symphony Orchestra musicians took pay cuts in 2009. The Detroit Symphony Orchestra, in addition, just settled a six-month, season-ending strike in April.

But Philadelphia Orchestra president and CEO Allison Vulgamore remains hopeful. “We’ve been through this before; we’ve been through two world wars and a depression,” she told the Huffington Post.

Indeed, this recession is not the first time orchestras have faced general money woes. Consider a 1969 article in Time magazine that lamented, “Today [the orchestras of the U.S.] are in trouble —loud, unavoidable, cymbal-crashing financial trouble,” citing, among other concerns, an increase in the Big Five’s collective annual operating budget deficits from $2.9 million in 1964 to $5.7 million in 1968 and a decrease in the Chicago Symphony Orchestra’s endowment from $6.2 million to $1 million, all of which, it contended, could drive them into bankruptcy. But the Big Five and all the other orchestras mentioned in the article have survived the more than forty years since then.

On The Other Hand

Not all major orchestras are sinking deeper under the current economic conditions, either. Two weeks ago the Colorado Symphony Orchestra announced a new contract that will give players a 4.5 percent salary increase by the 2012-2013 season and restore several weeks of work lost to furloughs (in other words, the orchestra will be expanding its season), according to the Denver Post.

The new contract was made possible by the orchestra’s recently optimistic financial picture. The Denver Business Journal reports that the orchestra has enjoyed a 4.8 percent increase in concert attendance, a 46 percent increase in subscription revenue, and a 110 percent increase in individual contributions compared to its 2009-2010 season.

Still, the orchestra’s new contract does not fully restore the 12.5 percent pay cuts that, according to the Denver Post, went into place as a result of its one-year 2009-2010 contract, and the Philadelphia Orchestra’s struggles – which seem to be more indicative of the current state of affairs for orchestras – leave open the question of whether orchestras can continue to survive under a demand for tickets that cannot recover the high costs of paying a large group of skilled musicians.

Stefan Scherer-Emunds

Oak Park, IL native Stefan Scherer-Emunds is a junior at Indiana University pursuing a BSOF degree in trumpet and business. During his free time, Stefan enjoys singing and playing racquetball and chess.

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