San Antonio Symphony News and Archive

Symphony on brink of bankruptcy




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from the San Antonio Express News 9/18/98

by Mike Greenberg



Stalled contract talks between the San Antonio Symphony and its musicians may go to mediation next week, but only if bankruptcy doesn't intervene first.

Symphony board chairman Charlie Lutz and orchestra committee chairman Jean Robinson confirmed Thursday that lawyers representing the two sides had agreed to begin mediation next week.

But with just $7,000 in the bank, $2.1 million in debt and the bulk of $1.1 million in advance ticket sales already spent, the symphony is "on the brink of bankruptcy," Lutz told the San Antonio Express-News Editorial Board.

Express-News Publisher and CEO W. Lawrence Walker Jr. is on the symphony board and is a past chairman.

"I feel positive about anything that might move us toward a resolution," Lutz said. "I don't know how much time we have. I don't have confidence today that we'll be able to pay the (year-round administrative) staff at the end of the month."

The orchestra's 60th anniversary season was to have opened Sept. 11, but the governing board voted early last week to put the season on hold pending successful renegotiation of the musicians' contract.

Meanwhile, the City Council approved a budget for next fiscal year that includes $500,000 for the symphony. But Mayor Howard Peak cautioned, "This money won't be there if there isn't a season."

Such city grants reimburse arts groups for current expenses but cannot be used to retire debts and the money isn't paid in a lump sum.

Looking past the "brink of bankruptcy," Lutz on Thursday outlined the symphony's latest offer to musicians and the organization's "financial restructuring plan," including pledges of an additional $1 million a year from businesses and the Kronkosky Charitable Foundation.

He estimated the two sides are still about $325,000 apart.

"There is no prospect, none whatsoever, of generating another $325,000 a year in support," Lutz said.

Under the financial plan, 24 businesses have collectively pledged an additional $500,000 a year for five years to retire the symphony's debt, create a small cash reserve and allow advance subscription sales to be put in escrow.

Historically, the symphony has used most advance sales revenues to pay current-season expenses.

Lutz declined to name the businesses in this group, but said the additional pledges would more than double their current contributions to the symphony.

In addition, the Kronkosky foundation has agreed to donate $2.5 million over five years to replenish the symphony's endowment fund.

All of these promises come with a string attached: "The annual pledges won't be paid unless the symphony maintains a balanced budget," Lutz said.

The financial plan also would seek funds to hire a marketing director to help the symphony increase earned income by $150,000 a year.

The symphony's latest offer sweetens the original management demand for $617,000 in financial concessions from the musicians by restoring their paid parking, worth $52,560, and by continuing to make pension contributions at 6 percent of gross pay.

The original offer would have cut pension contributions to 3 percent, saving nearly $115,000. Past-due pension payments already account for $300,000 of the symphony's debt.

The new offer still would leave five orchestra vacancies unfilled, though $70,000 would be set aside to pay for free-lance substitutes when they're needed.

Jean Robinson, chairman of the orchestra committee representing the musicians, said: "They are still asking $400,000 from the orchestra budget annually, and that is too much. That has to do with, not just our compensation and benefits, but the number of musicians."

Together with cuts in administrative and production costs, the symphony's current proposal would reduce its 1998-99 budget to $6.4 million from last season's $6.8 million.

Under the musicians' existing contract, the budget for 1998-99 would be $7.1 million without other expense cuts.

The musicians reportedly have offered to freeze their salaries at last season's level for two years.

Robinson said the musicians would not "cave in" to their employer.

"We are being asked to participate in our own artistic dismemberment, and as musicians we cannot do that," Robinson said.

"We have made the point repeatedly that this plan not only represents artistic disaster; it is a poor business plan. Quality is perhaps the most important aspect of the business of music."



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