San Antonio Symphony News and Archive

Aid offered to make symphony sound




from the San Antonio Express News 8/9/98

by Mike Greenberg



Top business and foundation leaders are forming a "stakeholder group" to inject $700,000 a year into the San Antonio Symphony in an effort to rescue the orchestra from financial ruin.

The symphony board also has asked the orchestra musicians to reopen their labor contract and reduce their wages and benefits by more than $1.2 million over the remaining two years of the contract.

A lawyer representing the symphony has filed an unfair labor practices charge against the musicians union and threatened cancellation of the forthcoming season if the union does not begin renegotiating its contract Friday.

The stakeholder move and the effort to renegotiate the contract could determine as soon as this week whether the symphony will continue to exist.

Former Mayor Nelson Wolff, who's involved in the rescue effort, said last week the scenarios range from downsizing to shutting down the orchestra.

Music Director Christopher Wilkins said, "I would be crushed if the season were to be delayed. I'm very realistic that that's a serious possibility."

The stakeholders named in a memo by symphony board Chairman Charles Lutz include high-profile figures such as banker Tom Frost, auto magnate B.J. "Red" McCombs and Kronkosky Foundation executive Palmer Moe. Lutz was unavailable for comment.

Some members of that group also serve on a Symphony Review Task Force that began in June to study every aspect of the orchestra's finances and operations.

The task force is expected to release its report publicly at the end of next week, according to symphony executive director David Schillhammer, and to give the symphony board a preliminary report Tuesday.

The symphony closed its 1997-98 season May 31 with a deficit of about $67,000 on expenses of $6.8 million, according to Schillhammer.

The accumulated debt, however, has risen to about $1.5 million. The symphony's endowment, most of which was liquidated several years ago to pay debts of $5 million, stands at only $1.1 million.

Together, the rescue team's proposed $700,000 in additional annual gifts and the wage and benefits concessions requested from the musicians would allow the symphony to retire its debt over the next two seasons.

"The symphony board of directors and the organization are committed to not (repeating) the financial crisis we all went through last year," Schillhammer said, referring to the delayed payrolls and scrambling for cash that characterized the second half of the 1997-98 season.

"It's no secret that the symphony has struggled financially for a number of years," said Kenny Wilson, a senior vice president of with NationsBank and a key member of both the task force and the proposed rescue team.

"That has increased in severity the last couple of years. The question has become whether we will have a symphony or not. The task force is looking at every cost-saving option, every revenue option," Wilson said.

Although the task force has not yet completed its report, the symphony board already has demanded wage concessions. Wilson disavows any connection with the new pressure on the musicians union to reopen the contract.

Wilkins, speaking in more general terms about pressures to balance the budget, observed that the symphony has been "desperate" for support from the business community for a long time.

"As we look to that sector to shore up an end we've been weak on, their voice has been heard strongly," he said.

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Under a management proposal, base minimum salary would drop next season to $26,352.

"Any reduction in salary has a clear negative impact on quality, because our salaries are just barely at the threshold of what you could call a full-time wage," Wilkins said.

"When you drop below that threshold where somebody can feed a family, you no longer have what we have, a group of people completely dedicated to making music."

The proposed base salary would be close to pay levels at the orchestras of Jacksonville, Fla., and Buffalo, N.Y.

However, that's significantly below salary levels in Rochester, N.Y., Raleigh-Durham, N.C., and Salt Lake City - all with fewer people and less money than San Antonio.

On the other hand, the proposed base pay would still be higher than levels in Phoenix and Denver, which are much larger cities than San Antonio.

"People are not coming back. It's very depressing to me," said concertmaster Stephanie Sant'Ambrogio, who noted that at least eight of the orchestra's violinists have fled to other cities.

With a total roster of 77 musicians, including 26 strings, the symphony was already understaffed by major-orchestra standards last season.

"The strings are forced to play as hard as they can to balance the wind complement," Sant'Ambrogio said, citing the risk of tendinitis, a common career-ending injury for string players.

But for the symphony board and the task force, the risk is that the symphony could face bankruptcy.

Wolff, the task force member studying issues relating to the symphony's venue, the costly Majestic Theater, underscored the difficulty of maintaining fiscal solvency and artistic quality at the same time:

"I think there are three scenarios," Wolff said. "One, we're $1 million short, and just close it down. Two, how much can you cut and save without hurting the orchestra, and you can't do much, quite frankly. Or three, just have a chamber orchestra. There's divided opinion" among the inner circle of decision makers, Wolff said.

"We'd like to see a balanced budget," Wilkins said. "That's not unreasonable. But there are so many different constituencies, all of which need to be satisfied. It's awfully hard to see how we can do that in 45 days."

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The financial problem has grown steadily since the first of the year.

Although the symphony had sunk deeper into debt with little respite for more than a decade, the latest stage of financial peril was telegraphed publicly during a concert in January.

Guest conductor Benjamin Zander made a highly unusual plea for donations to the orchestra. It turned out that Zander had donated his own fee to the symphony the day before when he learned the board was considering options that included bankruptcy.

A month later, on Feb. 25, the board declared a state of financial emergency, triggering a provision in the musicians' contract that alllowed partial or late payment of wages.

Over the next several months, the symphony was able to meet only 20 percent of its payroll obligation on scheduled paydays, with the balance following a week - or sometimes two weeks - later. Meanwhile, the bills of creditors piled up.

Through it all, the musicians, who hold three slots on the 44-member symphony board, maintained solidarity with management.

Tubist Lee Hipp, who was then chairman of the orchestra committee - which represents the musicians' interests and serves as their collective bargaining team - expressed confidence repeatedly during the winter and spring that the management and board leadership had plans in place to reverse the orchestra's misfortunes.

Several musicians hinted obliquely at plans for a major restructuring of the symphony board, which is widely regarded as too large and too weak.

Hipp's successor, flutist Jean Robinson, said Thursday, "We had no quarrel with our management. There was no reason for animosity. They were doing everything they could do to raise the funds that were needed. We didn't feel that Schillhammer was remiss."

There was another reason for the unified front, however: Like most major orchestras, the San Antonio Symphony depends on advanced season ticket revenues to meet current payroll and other financial obligations during the spring months.

Musicians and management feared that any exposed fissures in the organization might frighten off potential subscribers to the 1998-99 season, as well as donors.

Subscription sales held strong, meeting budget projections, but they were not enough to keep the symphony above water. The last few payrolls of the season were rescued by extraordinary gifts and loans totaling about $350,000. Symphony officials and task force members would not identify the sources of the extra funds, but people close to the symphony have named USAA and the $300-million Kronkosky Foundation.

Soon after the end of the season, the shape of the previously hinted restructuring began to reveal itself.

In a June 16 memorandum, Lutz, as board chairman, outlined the proposed changes: Eleven high-power business and foundation leaders, including those who had provided payroll bailouts late in the season, were poised to join the board and form a new executive committee, along with eight current board members and three musicians to be appointed by the orchestra committee.

In addition to McCombs, Frost, Moe and Wilson, the new executive committee would include chief executives or high officials of SBC Communications Inc., USAA, H-E-B Grocery Co., Valero Energy Corp., Clear Channel Communications Inc., Diamond K Ranch, Ultramar Diamond Shamrock Corp., the San Antonio Express-News and three other banks, including Lutz's BankOne.

"The companies represented by those individuals who will be asked to serve on the Executive Committee are those which will be asked to form a stakeholder group, pledging annual support for five years in amounts sufficiently greater than their current pledges to provide aggregate additional annual support for the Symphony of $700,000," Lutz wrote in his memo.

The rest of the existing board would, in effect, become a figurehead body, meeting once every other month. Those board members, Lutz wrote, would "serve for the remainder of their present terms," leaving open the possibility that the existing board would be phased out.

At about the same time as Lutz's memo, the Symphony Review Task Force formed 13 committees to study the orchestra's operations, board structure, marketing and finances.

Robinson was included on the committee studying the size of the orchestra and the length of the season.

"The conclusion was that any reduction in the size of the orchestra was too detrimental to the quality of the orchestra to be recommended in a permanent way," Wilson said.

"We did say that a temporary reduction of four to seven players would be OK, but that it would be an undesirable measure to be undertaken only under financial emergency, and no reduction in the length of season should take place."

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But at the same time as the task force committees were doing their work, another drama was unfolding.

The declaration of a financial emergency in February allowed the board to reopen the musicians' contract, according to a term in the contract itself, although Robinson says the board gave no signals during the season that it intended to exercise that right.

But on June 16 - the same day as Lutz's memo - accountant Dan H. Hanke, who had been recruited in March to verify the financial emergency, submitted his report.

He "concluded that a state of financial emergency does exist such that continued operations under the terms of the (collective-bargaining) agreement would foreclose continued operations of the Symphony Society of San Antonio."

On June 29, attorney George P. Parker Jr.of the law firm Wells Pinckey McHugh, representing the symphony on a pro-bono basis, invoked the contract clause that calls for a 30-day periiod of "private negotiations" - formal collective bargaining.

The musicians' attorney, Susan Martin of Phoenix, phoned Parker on July 9 and agreed to begin formal negotiations, but Robinson says Martin had not consulted her first.

Robinson was not prepared to begiin formal bargaining sessions with the symphony while most of the musicians, including three of the five members of the negotiating team, were out of town for the summer.

Martin was fired, and the musicians retained New York labor lawyer Leonard Leibowitz. He agreed to meet Parker and symphony representatives Aug. 14, but only on the condition that the meeting not be regarded as the start of formal negotiations.

On July 16, Parker deployed the threat of canceling the season to try to force formal talks before the end of July.

Leibowitz held firm, and Parker agreed to the Aug. 14 meeting on the condition that the meeting be a "negotiation session."

In that same letter, Parker presented an eight-point proposal for changes in the collective bargaining agreement.

The proposals included reducing the contract season from 39 weeks to 36, freezing weekly base salary at last season's $732, reducing the core orchestral roster by four players, reducing the pension contribution from 6 percent to 3 percent of gross pay, switching health coverage to managed care and eliminating employer-paid parking. The cuts would save $617,472 a year for the remaining two years of the contract.

In addition, the proposal would apply income from the annual pension fund benefit concert to the symphony's 3 percent contribution to the fund, "allowing the musicians and staff together to make a contribution directly to the bottom line."

Leibowitz still wouldn't budge: "We will bargain with you when we are able to discuss the situation with our constituents and get their input. If this arrangement is unsatisfactory with you, then I would suggest that you stop issuing ultimata, and do whatever you deem best."

Parker accepted that gambit. In a July 28 filing with the National Labor Relations Board, Parker charged the musicians union with "an unlawful refusal to bargain" and asked the NLRB for injunctive relief.

In a July 30 letter to Leibowitz, Parker again insisted that the Aug. 14 meeting must be a formal negotiating session, and Leibowitz replied the same day that it would not be.

Negotiations, Leibowitz wrote, could not begin until the musicians return to San Antonio in September.

"If this is still unsatisfactory to you, there is nothing further to say. Please let me know if I should cancel my flight plans for Aug. 14."

As of Friday, Parker had not responded to that challenge, and the Aug. 14 meeting remained in limbo.

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A further unknown is the course of future city support for the symphony.

The City Council last year cut the symphony's grant from $533,000, recommended by the Cultural Arts Board, to $465,000. For the coming year, the Cultural Arts Board is recommending only $400,000.

Mayor Howard Peak said he met once with the symphony's leadership group, and since then the matter has been handled through staff. Themayor says he has no idea what the city's role in the symphony's recovery is expected to be.

"The key point as far as I'm concerned is that the city isn't going to be able to sustain the symphony long term," Peak said.

"The support needed to get through each season - whether it is an extra infusion of cash, a large endowment or whatever it takes - is going to have to come from the community. The city cannot go through this each year."

Peak said he is willing to listen to any proposal and isn't ruling out any ideas. However, he did say the symphony management won't make any points at City Hall by blaming problems on the costs of leasing the city-owned Majestic Theater as its concert hall.

"The city bought the theater to save it and signed a contract with Las Casas Foundation to raise funds and restore the building and then to ovesee its operation," Peak noted.

"It is Las Casas who contracted with Arts Center Enterprises (ACE) to run the theater, not the city, and they (the symphony representatives) don't seem to understand that connection," the mayor said.

Councilman Roger Flores, whose downtown district includes the Majestic, said, "We have seen the orchestra go through these cycles where they scramble to straighten everything out. Things are fine for a year or so and then they are in trouble again two seasons down the road."

Flores said the new leadership will have to propose something "very dramatic and very drastic" to convince people there is a workable long-term financial plan for the orchestra.

At present, the councilman said, "They aren't going to find much help, or even get much sympathy, from City Hall.

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Staff Writers David Hendricks and David Anthony Richelieu contributed to this report.


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