Grammy Chief Seeks to Restore Harmony

The Grammy Awards are returning to Manhattan on Sunday night for the first time in five years -- and that is no small victory for corporate governance reform.

After all, the National Academy of Recording Arts & Sciences, which runs the show, helped ease its return by ousting a president whose behavior once prompted New York officials to send the ceremony back to Los Angeles.

And whatever may occur on stage, new Grammy President Neil Portnow is promising that his organization will make its long record of fiscal antics a thing of the past.

“In an Enron world, nobody is signing off on financials knowing there might be issues,” Portnow said in an interview with The Times. “There’s a different environment now regarding how numbers are reported, and we certainly are very sensitive to that. There will be no more secrets -- or controversies -- at the Grammys.”

The new openness has a lot to overcome: After taking charge officially last month, Portnow found an organization so divorced from its members that many didn’t know its Santa Monica headquarters existed.

“When I landed this job, I got a bunch of calls from industry executives who said, ‘Congratulations, man. So when do you start and where is the office?’ ” Portnow said. “It was troubling to realize that so many people in our business have never set foot inside the recording academy -- a building they bought and paid for with their own membership dues.”

Since then, the 54-year-old former music executive has been working to reconnect with members, ferret out boondoggles and make sure the group’s $20-million-plus annual take from its trademark awards show becomes something more than an embarrassment to the 17,000 musicians, executives and others who make up the academy.

“Every executive in the record industry wants him to succeed,” said Hilary Rosen, head of the Recording Industry Assn. of America, which represents the five largest music corporations. “We don’t need to compare it to the past. Everyone now is just pleased about the direction Neil has set.”

The 46-year-old professional organization has come a long way since the late 1990s, when IRS agents descended on Grammy headquarters and seized records as part of a federal probe into the nonprofit group’s spending practices. No charges were filed, but sources said the government investigated a number of transactions.

During C. Michael Greene’s 14-year reign, the feared Grammy president was criticized for his lavish style, erratic behavior and inclination to treat the organization as a personal fief.

The last time he staged the awards show in New York, Greene, in a widely reported incident, threatened a deputy of then-Mayor Rudolph W. Giuliani, who said he would be happy to see the ceremony leave town.

After Greene’s departure in April, the nonprofit’s governing board quietly reduced the compensation package for its new president to about a quarter of the $2 million-plus it had paid his predecessor and eliminated lavish perks that included a country club membership and a Mercedes sedan.

More recently, the academy killed plans for a Grammy Hall of Fame and a Grammy restaurant chain, which were Greene’s pet projects. It also scaled back a proposal to build a massive musicians’ retirement home in Hollywood. Encore Hall has been jokingly referred to among the organization’s trustees as “Enron Hall.”

Portnow credits Greene with helping the academy achieve tremendous growth. The nonprofit’s assets grew to about $50 million from just $4.9 million under the Greene regime, as membership quadrupled and revenue from the annual Grammy broadcast rose sharply.

But the new Grammy president says his organization’s future will depend heavily on changing an internal culture that long has kept the music academy from achieving the stature of the film industry’s Academy of Motion Picture Arts & Sciences.

“Mike may have alienated a number of people with his management style,” Portnow said. “He was not inclusive with the elected leadership or the fiduciaries here. Not many people want to work somewhere that is unpleasant, disrespectful or intimidating.”

Greene, who recently visited China pursuing new business opportunities, declined to comment Friday.

Portnow, a native New Yorker, is known as a quiet consensus builder who developed his executive skills working at several labels over the last three decades. He broke into the music business as a bass player and worked his way up from talent scout to senior executive under some of the industry’s most savvy entrepreneurs, including Zomba Group head Clive Calder.

He also worked behind the scenes as a volunteer in the Grammy organization for more than a decade before the board hired him to replace Greene.

After taking over, Portnow quickly dumped two law firms associated with his predecessor, ousted several executives and cut dozens of music symposiums and other small-scale programs initiated under the old regime.

He also installed a financial controller over each of the organization’s two main charities, the MusiCares fund for needy musicians and the Grammy Foundation, created to promote music education for youth.

Those charities, financed primarily by private donations, have given away hundreds of thousands of dollars annually. The academy takes in far more from the license fee CBS pays for the Grammy telecast, but most of that money has gone to the cost of producing the show, administrative expenses and investments.

According to Portnow, the group’s biggest challenge is to spend charity dollars more wisely.

“We need to strip away the veneer from all of these programs and get down to the core of our mission, which is to serve members of the recording community,” he said.

To that end, Portnow last month buried the hatchet with Musicians Assistance Program founder Buddy Arnold, a leading substance abuse expert with whom Greene had been feuding for years. Portnow said he hopes to convince MAP to join forces with MusiCares’ staff to ensure better medical attention for needy musicians with drug and alcohol problems.

Portnow said he also expects the academy to invest in educating indigent artists about its programs to help pay for rent, food and clothing and detox. Charitable funds often have been unused because many potential beneficiaries didn’t know they were available.

Portnow also said the academy must educate donors about its Encore Hall project. In the planning for at least four years, construction could begin as early as this year, but only if state and federal officials approve the site and provide most of the funding.

The group’s past fund-raising campaign often characterized the project as a musicians’ old folks home -- a sales pitch that Grammy insiders say wasn’t exactly candid.

According to Portnow, the project is actually “a new kind of rest home” with a practice room and recording studio intended to serve a wide population of senior citizens, not just musicians. Federal funding rules forbid limiting occupancy to a particular professional group.

More than just clearing up the record with donors, Portnow also hopes to eliminate some of his group’s more unusual philanthropic habits, such as the policy of charging its charities a licensing fee to use the Grammy logo in fund-raising.

“I plan to look into that practice as soon as the show is over,” Portnow said.