Orchestra Board Isn’t Seeing Red Anymore : Music: The L.A. Philharmonic wipes out a $1.9-million deficit with staff and salary cuts, despite a 6.3% salary hike for musicians.

As the Los Angeles Philharmonic opens its 71st summer season at the Hollywood Bowl on Tuesday night and closes out on the old fiscal year, the orchestra’s management is beginning to sound notes of guarded optimism about the company’s financial health.

According to board president C. Joseph LaBonte, the company’s $1.9-million deficit, which surfaced last summer primarily as a result of the parent Music Center’s surprise fund-raising shortfall, has been wiped out, and the Philharmonic’s budget will be in balance.

The deficit--the company’s first in five years--turned out to be $750,000 more than originally reported by the orchestra last August. “I’m telling you, we were shaking in our boots . . . ,” stressed LaBonte, chairman and founder of the Vantage Group Inc., an investment and financial advisory firm. “It was devastating. It knocked out every reserve we had.”

Despite a 6.3% union-negotiated salary increase last October for the 106-member orchestra, LaBonte predicted that when the final budget numbers are in, “we are going to be coming in at a little better than break-even . . . but we are not going to be fat.”

Although the Philharmonic is soon to embark on an estimated $1-million-or-more trip for an August residency at the prestigious Salzburg Festival in Austria, LaBonte insisted that the new fiscal 1992-93 budget beginning Wednesday will “still come in a little better than break-even.”

Currently the Philharmonic’s budget is $33 million, the third highest in the nation behind the Boston Symphony Orchestra and the Chicago Symphony Orchestra. The new budget is projected at $34.5 million, primarily due to Salzburg, “and the following year it will drop back again,” LaBonte said.

LaBonte, who has been president and chief operating officer for Reebok International in Boston (1987-90) and president and chief operating officer of 20th Century Fox Film Corp. (1979-83), was elected board president in March. He had served in the same post during the 1986 season before moving to Boston.

He blamed the crisis on a trio of occurrences--”two of which I like to classify as what was done to us versus what we did to ourselves.”

Done to the Philharmonic were lowered interest rates, which cut interest income from the Philharmonic’s $17-million endowment fund and subscriber ticket sales, as well as the “disaster” of the Music Center’s out-of-the-blue fund-raising shortfall. “It happened in the twelfth month (last June), so we knew nothing about it. . . .”

Last summer Music Center officials, after publicly announcing that they had met their 1991 Unified Fund goal of $17.6 million, suddenly found themselves projecting a shortfall of $3 million. By October, they released figures showing they had fallen $1.3 million short but nevertheless had borrowed $3 million to make up for the deficit as well as other capital needs.

The fund helps support the various resident companies at the downtown complex. In 1990-91, the Philharmonic was scheduled to receive $5.4 million. The money comes in increments. So when the crisis occurred, the fund allocated a total of $4.2 million, which was partly offset by an extra $280,000 “in ‘90-91 to help make up for the hit.” Now and for the foreseeable future, however, the Philharmonic will be receiving $4.2 million.

As for its own mea culpa, LaBonte said the Philharmonic had a deficit from a trip to England, Scotland and Germany in May, 1991. “Not a big (deficit) but $200,000 (or) $150,000 we could have handled ourselves.”

Sitting in the office of executive vice president and managing director Ernest Fleischmann, who was on vacation, flanked by marketing chief Stephen Belth and public relations director Norma Flynn, LaBonte said the Philharmonic had to “take some dramatic steps,” undergo some “excruciating” analyses and do “a lot of things we didn’t want to do” to achieve budgetary balance.

Last October, 15 full-time employees and 20 part-timers, including Hollywood Bowl maintenance personnel, were cut. There are now 72 full-time staffers, some interns and seasonal Bowl employees. “That’s cutting to the bone,” LaBonte said. And it’s not just employees who were affected, he added, “it’s (their) families.”

At the same time, 5% salary cuts were taken by staffers earning $60,000 or more a year, a 3% cut was taken by staffers earning $40,000 to $60,000, and a wage freeze was put in effect for those earning less than $40,000. The cut was also taken by Fleischmann, whose last reported salary was $286,577 in fiscal 1989-1990.

A hiring freeze was also imposed, although that does not exclude a key position like a new development director. Nor does it apply to the musicians. The orchestra is currently down six positions--three second violins, a viola, a cello and a bass.

In December, Fleischmann announced that the 1992 Los Angeles Philharmonic Institute, a summer-training program for instrumentalists and conductors, was being eliminated.

LaBonte now projects that the deficit from Salzburg will be about $200,000. This is down because of $250,000 contributed by Philharmonic board members and patrons who are going to Salzburg to “cheer the orchestra on,” noted Flynn, attend key performances and, among other swank activities, dine at a hunting lodge of a princess. Mercedes-Benz is a key sponsor of the trip, she said.

Meanwhile, a new round of union negotiations will begin this fall with the orchestra members who belong to the American Federation of Musicians. The current contract, which goes according to the orchestra season, ends in September, 1993. Last October’s 6.3% increase came at the start of the second year of a three-year contract. “It was a lot ,” LaBonte said, emphasizing that despite staff rollbacks and the fiscal crisis “we didn’t try to violate the agreement.”

But he added: “If this was a business (instead of an artistic organization), we would have been (back) at the negotiating table opening that contract. Ultimately we’ve got to have some relief.”

“There’re no secrets,” LaBonte went on. “We’ve given them all our budgets. They know exactly what the line items are. We’ve invited them into meetings, to our annual retreat and now I’m saying, ‘C’mon folks, you’re smart, you’re intelligent, you understand mathematics and numbers, help us figure a way out . . . .”

Key Philharmonic representatives, who are on vacation, could not be reached for comment.

Cost-saving measures include cancellation of Upbeat, a monthly magazine for subscribers, whose last issue appeared in the spring of 1991; a batch of “run-out” or Philharmonic concerts around Southern California; the three-concert Philharmonic Style series inaugurated in the fall of 1991, featuring a pre-concert party at the Museum of Contemporary Art and a post-concert dance bash, designed bring in a younger, more yuppy crowd.

Cost-cutting also has affected the music. Several months ago, Esa-Pekka Salonen, speaking of his arrival next season as music director, said it was “very embarrassing that my first season does not contain as much contemporary music as I hoped.”

Indeed, noted LaBonte, three out of seven contemporary music programs were cut because they don’t draw crowds. Certainly not like Beethoven.