Could Miss Payroll Thursday : San Diego Symphony Teeters on Bankruptcy

The San Diego Symphony divulged Monday that it has been operating near the edge of bankruptcy for more than two months and “potentially” could miss Thursday’s payroll.

Symphony President M.B. (Det) Merryman said the orchestra is suffering from critical financial problems and requested that orchestra members agree to a plan to drop four weeks from the symphony’s 45-week season. Although the move would not affect scheduled concerts, Merryman said, it would amount to a monthly pay cut of 10% for orchestra members. The reduction would come by eliminating a special three-week Mozart festival, initially planned for late spring, and one week’s paid vacation.

The monthly payroll is $250,000, Merryman said.

Monday’s action was designed to put a halt to a large and growing deficit the orchestra has been operating under since 1981. In November, the symphony began the winter season in a new hall with a $1.8-million debt that Merryman said had accrued over eight years. He estimated that, based on past experience, current operations would add $250,000 to the debt.

Merryman characterized the prospects for another season as bleak if the orchestra’s board of directors is unable to raise $2 million to eliminate the deficit. “If unchecked,” Merryman said, “the deficit could ultimately bury the symphony. I do not believe we can sustain the orchestra at the current level. We need to cut four weeks out of the current contract.”

The directors’ efforts to reduce the long-term debt have focused on a patron’s offer to donate $500,000 if the board can raise the remaining $1.5 million. An additional “ironclad” $400,000 block has been pledged, dropping the symphony’s total for fund raising to $1.1 million.

The pay cut proposal, which involves changing the musicians’ contract, is subject to a vote Wednesday by the 88 members of the orchestra. Pat Oakley, business secretary of Local 325 of the American Federation of Musicians, said Monday’s request came as “a complete shock.” Beyond that, neither he nor any musician contacted would comment. The pay cut would save the symphony about $750,000 in salaries and related expenses.

All of the orchestra members belong to the the musicians union, which negotiated the current contract that calls for a season of 45 weeks, an increase from 38 weeks last year. Monday night, the members of the Orchestra Committee, composed of five orchestra members and union representatives, were at the union hall canvassing orchestra members by telephone.

The pay cut would affect all employees, Merryman said, including the office staff and music director David Atherton. Merryman, a publisher who serves as the board’s volunteer president, said the symphony staff has managed the orchestra satisfactorily. He said the budget projection made for last year was off by only 4%. Actual costs of $5.7 million resulted in a $250,000 shortfall.

Merryman blamed several factors for the mounting debt: the symphony’s failure to reach its $6.5-million goal in its capital campaign to raise money for renovating the Fox Theatre; insufficient fund-raising to reduce the long-term debt, and the inability to find a $2-million or $3-million donor (for whom the new Symphony Hall would be named).

He said the acquisition of the hall is not a factor in the current financial crisis. In fact, he said, had the orchestra not acquired the hall, this season would not have opened.

Nevertheless, Merryman praised symphony fund-raisers, whom he said brought in almost $10 million in 1985. The orchestra’s annual budget for the current fiscal year, which began Oct. 1, is $7.9 million.

The symphony has found itself in similar straits before. In 1981, it was on the verge of bankruptcy and was nearly unable open its winter season. Determined efforts by the board of directors helped prevent that from happening. The symphony canceled one season of the summer pops concerts, which were losing $500,000 a year. Merryman entered the picture, as president of the pops, in 1982. He revised the format and turned a money loser into a modest moneymaker.

In an audacious move, the board of the debt-burdened orchestra bought, then sold, a block of prime downtown property in some fancy real-estate wheeling and dealing. The result was that the symphony was able to acquire the Fox Theatre for a bargain price of $500,000.

Under music director Atherton, the orchestra has played concerts in the renovated theater since its season opened Nov. 2. Attendance at the 2,200-seat hall has been disappointing, drawing audiences averaging about half of the capacity. However, General Manager Richard Bass reports that ticket sales are up from 1985.

Several board members would not comment about the symphony’s financial condition, although one who asked not to be identified described it as “a crisis situation. We have almost not made every payroll since December.”

In the last six weeks, Merryman said, the board’s executive committee has held six special meetings in which, he estimated, individual members contributed $200,000 to meet obligations.

The board’s chief hope is to raise the remaining $1.1 million to eradicate the $2-million debt. one board member said of the promised $500,000: “That carrot has been there since the middle of December. It has kept everyone going. It would retire the debt and make everything all right.”