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Brian Mark Peterson, Star Tribune

Orchestra Hall’s $52 million renovation, completed in September, has been a source of contention in the labor dispute.

Brian Peterson, Star Tribune

Dec. 11: Minn. Orchestra reports $1.1 million deficit

  • Article by: Graydon Royce
  • Star Tribune
  • December 11, 2013 - 2:00 PM

 

The Minnesota Orchestral Association reported an operating deficit of $1.1 million for the fiscal year ended Aug. 31, when not a single concert was performed because musicians have been locked out in a contract dispute. Earned revenue totaled just $14,000.

The loss contrasts with a record $6 million deficit in 2012, when the orchestra was performing. The board had cited what it called structural deficits in seeking pay concessions from musicians.

Board Chairman Jon Campbell interpreted the results as an indication that the orchestra’s business model is askew.

“The fact that the organization’s deficit is substantially smaller in a year without any performances indicates the degree to which this business model is out of alignment,” Campbell said in a statement.

The results were announced Wednesday at the association’s annual meeting — which was closed to the public for the second consecutive year.

“It is of great concern to the musicians that the leadership of the MOA managed to spend $13 million and run a $1 million deficit while producing no concerts,” the musicians said in a statement. “This begs the question as to whether the MOA’s new business model will truly lead toward sustainability or success.”

Significantly for the course of labor negotiations, the board re-elected Campbell as chairman. Richard Davis remains as immediate past chairman. Those two — who have spearheaded the board’s efforts to secure pay cuts from musicians — will remain in office until a settlement is reached. They then will step down and new leaders will be elected, spokeswoman Gwen Pappas said.

There was no talk at Wednesday’s meeting as to whom might be tapped to succeed Campbell.

“The only discussions were around the intention for Jon Campbell to remain in the chair role until the negotiations are complete,” President and CEO Michael Henson said.

Ten DFL state legislators issued a letter Tuesday calling on the board to dismiss Henson, Campbell and Davis.

Concerning his own future, Henson would only say, “That’s the board’s decision. We’re committed to resolving this dispute and then looking to the future. We all need each other. The board needs the musicians, and the musicians need the board, and we all need the community.”

The association reported total revenue of just under $12 million, all but $14,000 coming from contributions, draws and distributions from endowments and trusts. The $14,000 came from ticket sales that buyers essentially donated to the orchestra.

Total investments — which are broken into six funds — rose to $146.9 million, up from $137 million in fiscal 2012. Treasurer Patrick Bowe attributed the increase to “investment returns, new contributions totaling $5 million and a commitment to reduce draws from the unsustainable levels of recent years.”

The board took about $3.7 million from the Orchestral Association endowment, which ended the year at $58 million. That draw percentage, roughly 5 percent, compared with previous years when the endowment draw was as high as 13.6 percent (in fiscal 2010).

In addition, the organization received a contribution of $3.1 million from the Oakleaf and St. Paul Foundation funds. Another fund, Building for the Future, was left untouched.

Donations from individuals, corporations and foundations fell to $2.6 million, from $4.1 million in the previous year. Sixty-eight percent of all donors maintained their support from 2012 levels. Revenue was also lower because the Symphony Ball, the orchestra’s annual fundraising gala, was moved to September, which is in fiscal 2014.

Expenses were just more than $13 million, down from $31.5 million in fiscal 2012, which was a normal operating year. That included $2.2 million for musicians’ salaries (the lockout began on Oct. 1, 2012, one month into the fiscal year), and reimbursements to the state for unemployment compensation for musicians, who can draw up to $585 in weeks in which they are not actively finding other employment.

Also listed as an expense was the $961,000 grant the association returned to the Minnesota State Arts Board at the end of June. The orchestra had said it would return the money if there was no contract resolution at the end of the state’s fiscal year. Administrative salaries were cut 24 percent from 2012. Expenses also included $885,000 for costs related to the negotiations.

 

Graydon Royce • 612-673-7299

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