US orchestra cancels rest of the season
mainThe San Antonio Symphony, facing insolvency, has called off the rest of its season after wage talks broke down last night with its musicians.
The orchestra was to have been bought out by a new consortium but the purchasers backed off after finding an $8.9 million hole in the pension fund.
Prospects of survival look bleak. San Antonio has maintained a symphony since 1939.
Actually, there is no “hole” in the pension fund, and the notion that the new organization just recently “found” it strains credulity in any event.
The 8.9 mm “liability” is not a present debt. It reflects “withdrawal liability.” SAS is a participant in the multi-employer AFM pension fund. If an employer decides to stop participating in the pension fund, that choice would trigger withdrawal liability. If the employer continues to participate, there is no liability. Period.
The SAS transaction was structured as a transfer of assets, so the new organization would be considered a successor employer. That transaction would not have triggered any pension withdrawal liability. The ONLY way the withdrawal liability would kick in would be if the new organization decided to eliminate the musicians’ pension benefit.
The new organization has been receiving sophisticated legal advice from the get-go. There is simply no way that they just now “discovered” the pension issue, or that they don’t understand it. Instead, this is plainly an excuse — a made-up reason for tanking the transaction.
Thanks, Kevin.
This is an orchestral labor relations dumpster fire.
Thank you for setting the record straight Kevin.
The ONLY way the withdrawal liability would kick in would be if the new organization decided to eliminate the musicians’ pension benefit.
Ah. So perhaps that’s what they intended to do, and backed out when they found it would be expensive to do it. Sad, but not surprising.
Agree there is no “hole” in the pension fund so that should not be reported or repeated.
Commenters above are absolutely right. There isn’t a “hole” in the pension fund.
It was a completely manufactured excuse to shut down this orchestra.
Don’t know what they want in San Antonio…maybe a cheap, non-union band?
When the “new and improved” nonprofit was announced, I immediately smelled a rat. The city of San Antonio can not support an $8 million orchestra. Although the city is the 7th largest in America (metro population of 2.5 million people), it ranks #182 in per capita income, according to one source I located.
Amy Adams, you are quite right. They started the new nonprofit as a way to extricate itself from an expensive union contract, then either downsize drastically or go non-union. These [expletives] don’t give a [expletive] about the Symphony.
This is, once again, an enormous public relations disaster for the Symphony. I’ve lost track of how many times they have stopped operating, gone belly-up, had strikes and/or lockouts, etc., etc. It boggles the mind!
Kevin Case is quite right but do we know with certainty that they were up-to-date on their contributions to the pension fund? When I was there — early 2000s — they owed about $1.2 million to the fund which was eventually paid up in full. But how about now?
The pension Fund is good about making sure employers pay the required contributions these days. If SAS had substantial unpaid contributions outstanding, I think we’d know about it.
There is one slight sliver of hope. (Emphasize the word “slight.”) In every city in American except one (Miami), when an orchestra folded a new one was created and is doing very well. Think: Kansas City, Honolulu, San Diego, Orlando, Tulsa, Albuquerque, Denver, New Orleans. There may be others that I’m forgetting.
Of course, San Diego was helped by getting a $100 million endowment gift about 15 years ago!
Don’t forget Oakland. There is an excellent book titled “Autopsy of an Orchestra” that details how they went down the drain. But they are back now and seemingly doing well. In their case, they had become dependent on Henry J. Kaiser writing a check to balance the budget, and when he died they were left high and dry.
I was development director of a SA Symphony from 1989-93. The orchestra had gone under about a year prior to my arrival and the musicians even formed an orchestra “in exile” called Orchestra San Antonio. All the pieces were put back together again, but the organization has stumbled from one crisis after another ever since. The key for a better future is to determine what the community wants and what the community is willing to support. Obviously $8 million is too much, so downsizing/restructuring looks to be the only way to get this back on track. Rather than trying to resurrect an $8 million orchestra, best to test the market for one half that size with reality based budgeting.
I don’t know that the budget is necessarily too big.
It may be that their monies have been poorly managed. Some forensic work could bring that to light.
Also…just how hard have they been trying, in terms of fundraising?
The whole thing doesn’t smell right.
“an $8 Million orchestra”
What is that? The annual budget? The payroll? Something else?
What is a “half that size” orchestra? Half the concerts? Half the players?
He’s referring to the annual budget, currently $8 million.
To clarify: it’s my understanding that their total budget was $8mill, which includes musician & staff salaries and benefits plus all other costs for production, marketing, development and the like. Every dollar of expense needs to be counterbalanced by income from ticket sales, sponsorships, annual fund etc. They would first need to create what is felt to be a do-able income budget from all those sources: realities, not dreams. Once that is determined, then we turn our attention to expenses, i.e. what will $Xmill pay for: # of musicians & staff, # of concerts, etc. That might mean a smaller orchestra, a shorter season, etc. But the primary driving factor must be what the COMMUNITY wants, not what the musicians, managers, or music director want. The orchestra exists to serve its community, no more and no less.
+1000
The union would never allow that to happen
Texas is a “Right to Work” state, and if they decide to reincorporate as a non-union orchestra, the AFM would be left out of the picture. There are many thriving, smaller non-union orchestras in the country, and although many if not most of their players are union, the association is not. Of course, many of the current SAS players would refuse to return and go elsewhere (where?), but the law of supply and demand is clearly on the side of the Association. Every year America’s conservatories turn out thousands of gifted players who compete for very few jobs. It would be a real process, but an entirely new orchestra could be rebuilt on a non-union platform. I’m not saying that should happen, but realistically it could happen.
Question for the knowledgeable folks who’ve explained the pension “hole”: If the orchestra just goes out of business and there’s no successor organization, what happens with that pension liability?
If an orchestra that withdrew from the AFM pension goes into bankruptcy, then the withdrawal liability becomes a claim for the bankruptcy court to deal with. If the bankrupt orchestra has no assets, which is often the case, then the pension won’t be able to collect the debt. In which case the pension, and the musicians who participate in it, are forced to take the hit.
Have a look at midwest blogger Emily Hogstad’s discoveries about the San Antonio Symphony and the Tobin Endowment.
tl/dr Can you say “conflict of interest”…?
Emily Hogsted, of “Song of the Lark” fame, has unearthed some interesting information on this topic:
https://songofthelarkblog.com/2018/01/04/bugging-the-san-antonio-symphony/
The concluding two paragraphs:
“I don’t claim to have any answers. I just wanted to raise questions to help guide the people smarter than I am who are looking for a solution. I also have no idea what lies ahead for the San Antonio Symphony. All I can say is that I pray for a Minnesota-style miracle. They’ve been known to happen.
“But on this dark day, as Texas patrons and donors decide what comes next (x), it might be worthwhile to look at the rewards – and more importantly, the risks – of tying any orchestra’s fortunes to J. Bruce Bugg, Jr.”