Financial transparency and judicious cost-cutting could save Baltimore Symphony

Mon Aug 12, 2019 at 1:49 pm
The Baltimore Symphony Orchestra musician lockout over the current contract impasse threatens the orchestra’s 2019-20 season. File photo: Margot Shulman

It has now been seven weeks since the management of the Baltimore Symphony Orchestra locked out its musicians. The orchestra’s summer season—which was to include a festival celebrating contemporary music by women composers—has fallen victim to the contract stalemate. The fall season’s September gala concert has been postponed to next May.

Negotiations between management and the musicians of Local 40-543 appear to be going nowhere. President and CEO Peter T. Kjome insists that the only cost-saving measure that will ensure the orchestra’s continued operation is a reduction of the concert season from 52 weeks to 40 weeks. The musicians reject that idea entirely, proposing instead a “status quo” agreement that keeps the season at 52 weeks and raises musician wages by 2% per year while maintaining the current minimum number of full-time musicians.

This spring both houses of the Maryland state legislature passed House Bill 1404, approving $1.6 million of annual funding for the BSO over the next two years. Governor Lawrence J. Hogan signed the bill into law, but it now seems likely that he will not release the funds for the orchestra in order to avoid looming state budget shortfalls. Another provision of the bill, however, is the formation of a “Work Group,” combining members of the BSO leadership and the musicians’ union, which must present a complete financial report to the state by October 1.

If it does take until October 1 to produce that report, the chances of ending the lockout before the start of the fall season seem slim indeed.

The main sticking point is the status of the Baltimore Symphony as a full-time orchestra. If management succeeds in its plan to reduce the season to 40 weeks, musicians claim that the BSO would be diminished to a “part-time regional orchestra.”

Some downsizing may be inevitable. According to census estimates, Baltimore’s population shrank last year by 1.2%, the city’s biggest loss in a single year since 2001 and the fourth year in a row with a population decline. Perhaps the audience and donor base in Baltimore can no longer sustain a full-time major orchestra.

If both the musicians and management want to maintain the artistic quality of the BSO, as they say they do, then the downsizing of the orchestra should be the decision of last resort. Perhaps that step will be necessary in the near future, if sufficient funds cannot be raised and the budget balanced. 

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One of the most important steps that BSO leadership can take would be to establish total financial transparency. The BSO should make all financial documents and the entire budget—including complete assets and expenses—available to the musicians and to the public. Everyone needs to see for themselves what the burdens are, in order to be on the same page.

“Regarding budget figures for other parts of the organization as part of [management’s] proposal,” Greg Mulligan, co-chair of the Baltimore Symphony Musicians Players’ Committee, stateed recently, “they aren’t telling us that information.”

Such transparency was a vital part of the resolution that ended the strike at the Detroit Symphony Orchestra in 2011. (In that case the orchestra brought in a federal mediator, a move that helped resolve the standoff in the contract negotiation.) It would go a long way toward reestablishing the BSO musicians’ trust in management.

When there is stark disagreement about basic facts, as there is now in the Baltimore standoff,  that is never a good negotiating position for either side. 

According to Brian Prechtl, Mulligan’s co-chair on the players’ committee, “musicians’ salaries comprise an incredibly reasonable percentage of the BSO budget.” He puts that number at 35%, while statements from BSO President and CEO Peter Kjome claim that, including benefits, the figure “has been between 40% and 41% over the last two years.” This is still around the same level or lower than the percentage in other major U.S. orchestras.

Other programs and budget areas have increased considerably. Mulligan said one area that stood out was the increase in spending for guest artists and conductors. “Despite management’s claims of poverty,” he wrote in a recent email, “that budget item was increased by almost $700,000 for last season.” BSO officials did not deny that figure, stating only that “it is not unusual for there to be fluctuation in guest artist and conductor expenses, which can vary due to the number of concerts presented.”

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There are likely enough cost-saving measures that could be implemented that could give the BSO another year or two as a full-time orchestra.

Relying less on expensive guest conductors and soloists is a good place to start tightening the belt. Other areas that have increased budgetary expenditure in recent years include foreign and domestic tours, recording projects, a subsidized clothing line, education programs, and even the BSO’s regular appearances at Strathmore. 

Prechtl and Mulligan do not advocate eliminating any of these necessarily, but costs should be saved in these areas before demoting the BSO to part-time status. Cutting the number of performances of some programs, as the National Symphony Orchestra has done, could also be an option.

What about cutting salaries?

According to public data, the salary of the BSO’s chief executive has never been among the ten highest U.S. salaries for orchestra presidents. In the 2015-2016 season, the last full year of the tenure of Paul Meecham, the BSO president was paid $361,132. In the following season, that figure dropped to $320,733. In a recent email, Kjome stated that his salary as president dropped to $260,569 in the 2017-2018 season, so at least the musicians know he has skin in the cost-cutting game.

While CEO compensation at the BSO falls in the normal range for orchestras with similar budgets, an expenditure that has increased to record levels in the last decade is the salary of music director Marin Alsop. 

For six seasons out of nine years of publicly available data, Alsop was either the 9th or 10th top-paid conductor in the United States, on a list that generally includes much wealthier and more celebrated orchestras. In the 2014-2015 season, Alsop was paid $1,015,937, the first time that any BSO music director has received more than a million dollars in compensation.

Since that high point, Alsop’s salary dipped down to $854,319 in the 2015-16 season, but it went up again to $987,667 in 2016-2017. According to Kjome, Alsop’s earnings for the 2017-2018 season were $926,562. These numbers are about $300,000 to $400,000 higher than the 2016-2017 salaries earned by music directors at orchestras with budgets comparable to the BSO’s, like the Cincinnati Symphony Orchestra ($508,733), Indianapolis Symphony Orchestra ($456,711), Nashville Symphony ($506,659), and Seattle Symphony ($558,322).

Alsop’s salary is comparable to that of music directors at orchestras with expenses larger than the BSO’s, which was reported at a total of $28,527,620 for the 2017-2018 season. She makes around the same amount as music directors at the Detroit Symphony Orchestra ($886,210), Minnesota Orchestra ($981,630), Pittsburgh Symphony Orchestra ($978,542), and St. Louis Symphony Orchestra ($1,040,317), all recording total expenses over $30 million. Alsop’s current contract at the BSO extends through the 2020-2021 season.

Publicly available tax forms show an ongoing  spending problem at the BSO. Expenses were in the range of $24 million to $25 million from the 2010-2011 season until the 2013-2014 season. There were moderate deficits in three of those years, but net income of $1,629,056 reported in 2013-2014. At that point, expenses increased for the next four years, ranging from $27 million to $30 million. In just three seasons, from 2014-2015 to 2016-2017, the BSO incurred over $10 million in deficits. Whatever the rationale for spending in those years—2016-2017 was the year of the BSO centennial celebration—the outlay was clearly beyond the orchestra’s means.

To his credit, Kjome’s first full season as president of the BSO, 2017-2018, registered a deficit of only $745,465, which is a marked improvement over the ballooning red ink of the three previous seasons. As of April, the BSO also owed outstanding debts of some $2.1 million to long-term vendors. Linda Moxley, vice president of marketing and communications, says that that debt is now paid down to $1.6 million and “efforts continue to make progress in this area.” The financial stress on the BSO is serious, and Kjome is right to oppose further drawing down its already-raided endowment to continue spending beyond its means.

Costs must be reduced if the Baltimore Symphony Orchestra is to continue to be viable. But it makes more sense to cut from nonessential areas like guest conductors, guest soloists, education programs, the Strathmore concert series, and yes, even the salary of its music director, than to reduce the orchestra to part-time status That move can likely never be undone. 

Make the orchestra’s expenses leaner for the next two or three years and see if greater funding from the government or from BSO board members materializes to balance the books.

If the city of Baltimore continues its economic decline, then it may be inevitable that the BSO will be forced to diminish along with it. With some responsible financial changes, however, let us hope that both the city of Baltimore and its orchestra can come back from the brink.


5 Responses to “Financial transparency and judicious cost-cutting could save Baltimore Symphony”

  1. Posted Aug 12, 2019 at 4:37 pm by George Alderson

    The article says Baltimore’s population shrank last year by 1.2%, but doesn’t mention growing populations of other jurisdictions served by the Baltimore Symphony Orchestra. Populations are growing in Baltimore County, Anne Arundel County, Howard County, and Montgomery County. I live in Baltimore County, and we’re just 30 minutes away from the Meyerhoff Symphony Hall.

  2. Posted Aug 12, 2019 at 5:52 pm by Ann Glass

    It is my belief that if a closer analysis is made in on upper level management salaries, parties shown as fund raisers you might see a some clear improvement in funds available.
    Ms. Alsop is very talented but not sure she’s a million dollar talented.
    Major factor, the state of Maryland needs to be proactive in this process. The donors do not all come from Baltimore City.
    I’ve been a passionate ticket holder for over 12 years. It will be the end of the BSO if it goes part time.

  3. Posted Aug 12, 2019 at 7:09 pm by Nancy D Bridges

    I agree with everything except sacrificing Strathmore, although I’m open to changing my mind about that if shown convincing financials to support that decision. As yet, I haven’t seen any.

    Strathmore appears to have a very healthy and growing audience for BSO performances, as compared to the Meyerhoff Symphony Hall, which appears to be only about 50-60% full at many performances. In addition, Montgomery County is a wealthy community. Rather than cutting back on Montgomery County performances at Strathmore, the BSO management should do a better job than they have done to date to develop relationships in MC that lead to major donations. This may require some re-branding of the orchestra so that MC residents do not feel that they are being asked to support Baltimore’s orchestra.

    Abandoning an interested and wealthy audience does not strike me as the right approach for this financially struggling orchestra.

  4. Posted Aug 13, 2019 at 5:42 pm by Summer Music

    Don’t forget that musicians enjoyed 9 weeks of paid leave under the old contact. The BSO schedule was that of a 40 week season in practicality.

    Summer concerts were so poorly attended it was cheaper for management to pay musicals not to play, than to lose money every time they turned on the lights in the summer. While I believe most musicians in the symphony want to work during the summer, the reality is that they just don’t have a front office that can sell a summer season.

    I hope for the best for BSO musicians, but this has been a long time coming. Baltimore hasn’t been able to sustainably support a major, 52-week orchestra for at least a decade.

  5. Posted Aug 16, 2019 at 9:37 am by Geo.

    Here in St. Louis, we’ve seen a variation of this movie before, back in the late 1990’s / early 2000’s, in terms of a cash-strapped orchestra having to take action to save the organization, after earlier management had borderline run the SLSO fiscally into the ground. One such action was to change the SLSO musicians from a 52-weeks-per-year contract to a 42-weeks-per-year contract, the action that Mr. Downey wants to avoid until a last possible option, and that one other commenter here warns about in a kind of “the sky will fall if the Baltimore SO does that” comment.

    But here’s the catch: changing the SLSO to a 42-weeks-per-year orchestra has not negatively impacted the quality of the SLSO at all, or caused it to lose status among American orchestras. The SLSO is performing at as high a level as I have ever heard it, in almost 25 years of hearing their live concerts. The SLSO continues to attract loads of high-quality musicians for auditions, through the David Robertson era, and this will no doubt continue with Stephane Deneve.

    Plus, the summer audience had honestly eroded by the late 1990’s and early 2000’s, and the Queeny Park pops series that the SLSO had played was another item that was discontinued in the budget-cutting to save the orchestra at the time. The SLSO musicians are no longer on their contract during July and August, to be sure, but they have adapted to the situation and have managed. Some stay in town with their families. Others play summer gigs are different festivals out of town.

    The point here is that the Baltimore SO management proposal to cut the contract to 40 weeks, while an unfortunate proposal from the POV of the musicians, may likewise be unfortunately necessary from a fiscal perspective. Note that I do not say “desirable”; not at all. If there is not enough audience to support Baltimore SO summer concerts, or in the larger picture, there is not a big enough donor base in Balitmore and environs who are willing and happy to pay for a 52-week-per-year orchestra, then what other option is there?

    Earlier articles in the Baltimore Sun have noted that management had tried to tap big-money donors to shore up funding, and failed. Here, in STL, after the SLSO executive director in the late 1990’s, Don Roth, had finally taken a good look at the SLSO financial books and realized what a hole the orchestra was in from prior management’s less-than-stellar fund-raising, the next exec director, Randy Adams, did the schmoozing and fund-raising to help shore up the funds. It took years (and yes, there was a 2005 work stoppage and nasty lockout during one phase of the financial rebuilding), but through the subsequent exec directors after Adams, the finances of the orchestra are much more stable now.

    At the time, the SLSO musicians, to their credit, swallowed the painful pill of salary cuts as a sacrifice to help save the organization. The STL community stepped up to shore up funding, and SLSO management did flex its fund-raising muscles to build up, very belatedly, the orchestra’s endowment to lay the fiscal base for where the SLSO is now. Since then, the SLSO musicians contract is now at 43 weeks a year rather than 42 (I think).

    From reading past accounts, it is true that Balitmore SO musicians have already sacrificed a lot over the past several years to help keep the orchestra afloat, and past management has not delivered in recent years to honor that sacrifice. But in the short term, the musicians may need to say something like a willingness to settle for a pay freeze for the next year, rather than a 2% increase that the organization may not have the financial basis to pay for. Like it or not, the fundamental question comes down to this: what level of symphony orchestra does the Baltimore region what, and what are the people there willing to pay for it?

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