In response to the current negative economic environment that has impacted many symphony orchestras, the AFM held a one-day conference for local officers and symphonic musicians in Chicago on July 21.
In attendance were approximately 31 musicians representing 25 orchestras throughout the U.S. and Canada, 19 local officers, leadership of both the ICSOM and ROPA player conferences, AFM officers, and staff of the AFM’s symphonic services division.
Key presentations were given by: Ron Bauers, a certified public accountant; Leonard Leibowitz, 802’s legal counsel who also serves as legal counsel for ICSOM and the AFM’s symphonic services division; Roger Pollak, counsel for Bredhoff & Kaiser, the AFM’s firm.
Specific reports were also given from musicians representing some of the most troubled orchestras. The discussions brought focus to the following issues:
- Determining if a real financial crisis exists and how such a determination can be anticipated;
- Dealing with an employer’s demand for concessions;
- Understanding the legal aspects of bankruptcy;
- The importance of sharing information with each other.
Bauers started the day with a thorough presentation on how to read a financial spreadsheet, what to ask for in a financial statement, how to compare your orchestra’s finances with those of other orchestras and how to determine community support.
He also stressed the importance of knowing when such financial assessments should be initiated. He indicated that early detection of the warning signs of a financial crisis was crucial if pre-emptive measures were to be taken. In addition, particular emphasis should be given to operations (revenue or support), finances (endowments) and management (purpose, objectives and attitude). Also, a third party should verify all information.
Leibowitz followed with a presentation and discussion directed at what to do once a financial crisis – real or exaggerated – exists and how to deal with the onslaught of requests for concessions. Key questions should be asked:
- Do orchestra administrators have some kind of plan?
- What are they going to do differently so they won’t have to be coming back to musicians for more concessions?
- Is there an equality of sacrifice from the administrative staff?
- What is the board doing to raise funds?
- Can a loan agreement be worked out so the musicians are repaid what they temporarily concede?
- Are there non-economic gains that can be made at this time?
Leibowitz also pointed out, however, that concessions by the musicians are virtually irrelevant and often do not solve the greater problem of gross mismanagement. For example, even though the musicians in the San Antonio Symphony gave many concessions last year, one year later management filed for bankruptcy and invoked its financial emergency clause.
Likewise, in the case of the Florida Philharmonic, also in bankruptcy, management came back to the musicians asking for further concessions once they had already been made a year earlier.
Clearly, an organization cannot be turned around on the concessions and backs of the musicians. Management has to have a viable plan of organizational recovery; otherwise there is no point to concessions. The musicians have a right to question whether or not management has the people who know how to run the organization. Helping a competent employer through a difficult patch must be weighed against the slippery slope of repeated concessions to an organization that is incompetently run.
Leibowitz also suggested that we might have to revisit some of our own long-held principles in order to deal with the current economic challenges we all face.
Following Leibowitz, Roger Pollak, legal counsel with Bredhoff & Kaiser, walked through the legal aspects of bankruptcy. Although the threat of bankruptcy is often held over our heads and there is some ambiguity in the law (the federal government leaves much interpretation up to the state courts), it is not so easy for an employer to make a motion to reject a collective bargaining agreement. Several conditions must exist in order for a bankruptcy court to consider such a motion:
- The debtor must make a formal proposal to modify the contract.
- Financial statements must also be verified.
- The proposed modifications must be necessary to the reorganization and the employer’s proposed changes must be fair and equitable to everybody.
Lastly, and most poignantly, reports were given from musicians representing some of the orchestras that have been hit the hardest. A commonality among all was that musicians are willing to do whatever they can to insure the financial health and future of their orchestras provided that the organization itself demonstrates an equally proactive commitment to implementing a meaningful plan of recovery.
Internally, the musicians expressed a need for sharing information and communicating with each other to strengthen future strategies. To that end, the conference was a good start to such an initiative.