Symphony lockout has long-term effects
Published by Florida Times-Union on December 30, 2007.
Alan Hopper had planned to spend this past week in the mountains of North Carolina, celebrating the holidays away from the hustle and bustle of Jacksonville.
The people who work for Hopper had hoped to enter the new year knowing their jobs as musicians for the Jacksonville Symphony Orchestra were secure.
Plans on both sides were dashed, however, as the lockout of the musicians dragged through December. Management and musicians remain locked in a staring contest over the future of the business, a business that Hopper, who is executive director, said runs an annual deficit it can no longer afford.
And have no doubts about it, for all its cultural importance, the Jacksonville Symphony Orchestra is a business, currently with $14 million in assets and an $8 million budget. But the symphony does depart in some important ways from traditional businesses - such as relying on fundraising - and that impacts two important issues: How long the lockout can continue, and what the fallout will be once it's over.
One of the main differences between the symphony and a traditional business is that, unlike dealing with locked-out workers at, say, a widget factory, the symphony actually saves money each time an otherwise-money-losing performance is canceled.
"In the short term, management can save a significant amount of money, " said Drew McManus, an orchestra consultant who is both trained as a musician and has led nonprofits. "Their major expenses are gone, and they continue getting money from the endowment. From a cash-flow perspective, the orchestra can do pretty well."
In Jacksonville, the next endowment disbursement was scheduled to come at the end of December, giving management another $58,000 to work with for the next month.
The money comes from two funds, one controlled by the Symphony Association's 60-plus member board and the other controlled by five people, including three of the association board members. Each fund has about $7 million in it.
The $700,000 disbursed this year is the orchestra's major source of money, Hopper said, with ticket sales covering only about half the cost of each production. On top of that, the symphony has fixed costs, including executive salaries and the office and performance space it rents for about $100,000 a year from the city.
DRAWING FROM THE ENDOWMENT
To pay for those costs - as well as the musicians' salaries - the union suggests upping the amount of money that's drawn from the endowment. Under the current setup, the board estimates how much will be in the endowment at the beginning of the fiscal year and makes a budget drawing down 5 percent of that. For four of the past five years, however, the endowment turned out to contain more than was projected, meaning the symphony took out slightly less than the 5 percent it's allowed.
"The difference between a 4.5 percent and a 5 percent draw is $72,000, " the union said in a letter to the board, "more than enough to bridge the difference between our two positions."
Upping the amount would solve the problem without putting the symphony further into debt, union spokesman Kevin Casseday said, "which no one wants."
"We look at that endowment as a way of helping us out of this mess, " he said.
But such changes don't solve the underlying problem, Hopper said.
"This debate is about what we can afford, " he said. "We're not making a commitment to something the board doesn't think it can afford."
The organization lost $650,000 in government money, he said, including what it usually received from the city and the Duval County School Board, which has been cut in anticipation of changes in the way property taxes are created.
FIGHT BUT DON'T ALIENATE
Of course, for the board to think it can afford any sort of increase, the endowment needs to continue to grow - something that could be problematic if the lockout continues for too long. The worst-case scenario has this year's dispute setting the stage for fundraising problems that lead to even more dire, long-term financial straits.
"When you have something as high profile as a symphony, you're talking about image and the psychic payout of being a provider, " said Trent Stamp, president of Charity Navigator, an organization that provides free financial analyses of nonprofits. "If you do something that will alienate your funding community or just generate some bad press, you run into problems."
For now, Hopper said, the symphony's financial staff is crunching the numbers, trying to figure out the financial impact of the lockout and its long-term effects, including what might happen to management if the situation drags on.
It's too soon to say what the impact will be on fundraising, he said, but the dispute might make some potential patrons realize how high the stakes are.
"I think it can have a positive spin that people are aware of the orchestra and knowing that if they want to keep it, they need to support it, " he said. "I hope people love the orchestra, and even if they're upset with us, with the situation, I should say, it will bring them back."
The other lingering effect may be seen among the musicians, said McManus, the management consultant.
"It takes a long time to build that unique artistic sound, " he said. "It takes one single event like this to shatter that, if it goes too far."
Symphony management is aware of such concerns, Hopper said, and will work on mending fences once the musicians are back in their seats.
"We will be very careful, " he said, "about managing all those relationships."
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