Symphony to File for Bankruptcy if Fund Drive Fails
The heavily indebted San Diego Symphony admitted Thursday that the fiscal handwriting on the wall spells bad news.
At a morning press conference, the orchestra divulged that it can no longer sustain operations and will file for protection under Chapter 11 of the U.S. Bankruptcy Code if it does not raise $1 million by March 10.
The 76-year-old orchestra will fold that day rather than operate at a reduced level, should it not reach the $1-million figure, said M.B. (Det) Merryman, president of the board of directors. The symphony also did not meet its Thursday payroll and immediately quit paying bills, pending the results of the next 11 days’ fund-raising efforts.
“It’s way past the Band-Aid stage. We need a total solution,” Merryman said of the orchestra’s long-term financial malaise.
A “total solution” requires wiping out all of the symphony’s $1.8-million debt, which is expected to grow to $2 million by the end of the orchestra’s 45-week season in September. But Thursday’s announcement left no doubt that there will be no performances beyond March 9 unless the money is raised.
The directors’ main hope to save the symphony focuses on a patron’s offer to donate $500,000, providing the board can raise the other $1.5 million. So far, the orchestra has raised $500,000--$100,000 of it this week--in “ironclad” pledges, Merryman said.
While the orchestra could be heard rehearsing a Haydn symphony at Symphony Hall, Merryman explained how time had run out. The burden of the debt has made the biweekly $250,000 payrolls increasingly difficult to meet. While paying the 90-member orchestra and 28-member support staff is the largest slice of the symphony’s operating obligations, there are others. “If all you do is meet the payroll, eventually SDG&E; and PacTel are going to turn off the lights and pull the telephone,” Merryman said.
He insisted, however, that overhead is not the problem. “Our inability to deal with the deficit is the problem,” Merryman said. “That’s why we’re not going to operate on a scaled-down basis.”
The vote to file for Chapter 11 protection came at a special Wednesday-night meeting of the orchestra’s directors. There were no other alternatives, a board member indicated. “We have the Symphony Hall, we have this fabulous orchestra and we have the debt,” said the board member, who asked not to be named. “It was not so much being surprised as coming to terms with reality.” The board member said Symphony Hall, which was renovated last year, might now be named for whoever contributes the needed $1 million.
Symphony orchestras from New Jersey to Long Beach and from Dallas to Seattle have suffered financial difficulties in recent years. John E. Graham, general manager of the Oregon Symphony, said: “It is a crime what’s happening in San Diego,” but Graham finds himself hustling to fill seats lost after last year’s first season in its renovated hall.
“We had a 20% drop in subscriptions after moving in,” Graham said. When the hall, renovated by the City of Portland, opened, it did not seem ideal for symphony concerts, he said. “That’s all fixed now, but we’ve lost a lot of longtime subscribers. We went from around 87% to 67%. Those were people who bought the whole 13-week season. We find that the new people are not available for that many concerts.”
The Oregon Symphony is similar in size to the San Diego Symphony. It has a 42-week season and a $5.7-million budget, compared to San Diego’s 45-week season and $7.9-million budget. It also has a $7-million endowment. San Diego’s endowment is much smaller.
Thursday’s action followed a 10% retroactive pay cut for both orchestra and staff that was announced Monday by Merryman in a move to reduce the chronic cash-flow problems. The response of Local 325 of the American Federation of Musicians, to which the orchestra players belong, was to file an unfair labor practice charge with the National Labor Relations Board. The charge cited the symphony’s “unilateral” changes in an existing labor contract and included an injunction asking that the musicians continue to be paid at the contracted rate until the matter is decided.
C. Patric Oakley, the local’s secretary-treasurer, was “floored and shocked” at Thursday’s revelations. He said the symphony did not appear to be willing to negotiate in good faith.
“If the symphony is indeed facing a serious financial crisis, we would be more than willing to sit down with the management in an attempt to solve the problems facing us,” Oakley said in a prepared statement.
The impending bankruptcy also surprised violinist Randall Brinton. Brinton, who chairs the symphony’s orchestra committee, said that although the symphony forwards financial reports to the committee, the latest report he had received was in mid-January.
Should the symphony fold, it could affect next month’s American Ballet Theatre concerts, which are co-sponsored by the symphony and the San Diego Arts Foundation. “We’ve just about sold out the Saturday-night concert,” said the foundation’s director, Suzanne Townsend. If the symphony is no longer in existence, the foundation will have to pay for the musicians as well as the dancers, a total budget of $500,000.
Members of the board of directors attended the Thursday-morning rehearsal and presented the orchestra members with their plan. They requested that the players continue to play the concerts set for the next two weeks “to show San Diego what a dynamite orchestra you are,” a board member said. “Their response was amazing. (Music director) David Atherton said that they didn’t have to play, but that he was going ahead with the rehearsal. They all stayed.”
Merryman said the orchestra’s management could “make a good case that they could operate successfully, starting with zero deficit,” if the $2 million is raised.
Once news of the impending demise got out, the “telephones began ringing off the hook,” a staffer at the symphony’s offices said.
“The community response has been amazing,” spokeswoman Nancy Hafner said. “People have been calling asking for our address, and creditors have called, saying, ‘Put my name at the bottom of the billing list.’ Tickets for this week’s concerts are selling full speed.”
Hafner said a 2 1/2-hour fund-raising radiothon will be broadcast at 4:30 p.m. on KFSD-FM (94.1), after Sunday’s live symphony concert broadcast. Atherton will try to raise funds through public appearances, such as co-hosting the 8 a.m. to 9 a.m. “morning drive” segment today on KJOY-FM (104). Telephone solicitations to the public will be made throughout the next 11 days.
In addition, next week’s concert programming has been changed. Composer Jacob Druckman will not conduct his “Auriole.”
“Since we are not paying any bills, we gave (him) the option of backing out of the concert,” Hafner said. An all-Beethoven concert will replace the originally scheduled program. Symphony No. 5 (“V for victory,” Hafner said.) will be included in the program.