'Bankruptcy' is heard as orchestra struggles
The Philadelphia Orchestra likes to call itself the orchestra of firsts - the first to appear on a national television broadcast, the first in America to record all of the Beethoven symphonies on CD, the first to tour China.
Now, with attendance plummeting and finances severely strained, leaders are confronting the possibility of a considerably less sweet distinction:
The first "Big Five" American orchestra to declare bankruptcy.
How likely is that?
"I wish I could tell you," orchestra chairman Richard B. Worley said. "I don't know the answer. I can tell you our effort is to avoid bankruptcy and to achieve a recovery for the orchestra. For that to work out, we need to see some progress in reducing the deficit and raising money for the recovery fund."
The goal of the recovery fund, also called an emergency bridge fund, is $15 million.
No decision on bankruptcy has been made. "It isn't preferable," said Allison Vulgamore, who started work Monday as the orchestra's president and chief executive officer.
"Bankruptcy as a term is a way of reorganizing. That's why companies do it," she said. "It's a signal about a depth of financial challenges. I know that Rich Worley has used the word bankruptcy. I'm here to put a strategic process in place that gives us flexible options to address our sustainability."
"It is a very serious financial situation. It is extraordinary," said Vulgamore, 51, who said she "did a lot of soul-searching" before opting for Philadelphia after leading the Atlanta Symphony Orchestra for 16 years.
As to-do lists go, the one for the city's newest cultural leader is formidable, even at an organization used to financial peril and labor strife.
Vulgamore must stem deficits and revive ticket sales. Even with many seats offered at a discount, Verizon Hall is only 62 percent full this season, down from 80 percent at last season's end.
She has stepped in to referee a family squabble in which the orchestra and its pops subsidiary, Peter Neroand the Philly Pops, will decide whether they want to resolve their differences or part ways.
She is involved in discussions to help find a music director who not only must have musical substance and the charisma to excite audiences, but also is willing to be part of whatever lies beyond an as-yet-unimagined reimagination of the orchestra.
As Vulgamore continues triage on these trouble spots - she frequently visited in recent months to get a jump on her start date - her attention will be absorbed by the even more urgent need to raise enough money to get the orchestra through the next two seasons.
Worley's efforts to raise the recovery fund to cover deficits during those seasons has $8 million in pledges.
"We all know we need closer to something like $15 million to have the time to do the strategic planning in a way that involves the organization the way I want to," Vulgamore said.
The endowment, a nest egg that generates annual interest, is badly battered, standing at $112million on Nov. 30, less than half the $250 million the orchestra hoped to have at the end of its last endowment drive.
Of that $112 million, only $5.5 million is unrestricted, board-designated endowment. Donors stipulate how the rest can be used.
Orchestras elsewhere face many of the same difficulties. The Cleveland Orchestra, long considered, like Philadelphia, one of the world's best, went on strike last week when players balked at management-proposed pay cuts. The New York Philharmoniclives in a city that's home to considerably more wealth than Philadelphia or Cleveland, yet it posted a record $4.6 million deficit for last season.
The predicament of the American orchestra has brought with it retrospection.
Have orchestras become culturally irrelevant? Has the decades-long dearth of music education in schools finally shut off the pipeline of orchestra listeners? Are Netflix, iTunes, and cable TV making the living room rather than the concert hall the locus of entertainment? Do orchestras whisper their slowly unfolding, subtle message of art in an era of shouting distractions?
Locally, even in the traditional realm of theaters and concert halls, the orchestra faces stiff competition. Once it was clearly the city's most prestigious and visible arts group, and one of only a few high-quality entertainment options. But the culture industry took off in the 1970s, and in the '90s, encouraged by Mayor Ed Rendell, arts groups went on a spending spree, building new homes and expanding offerings.
The Kimmel Center, opened in 2001, began an orchestra series of its own, bringing top ensembles from Berlin, Vienna, and New York to the Philadelphia Orchestra's own Verizon Hall stage.
And then there are myriad questions about the orchestra itself: Is a ticket price that is escalating much faster than inflation leaving out some buyers? Has the lack of a music director dampened enthusiasm? Has the repertoire been too populist - or not populist enough?
The orchestra's strategic planners may seek answers from former audience members, a spokeswoman said.
After a remarkable period of growth - the 1960-61 budget was $1.54 million or, adjusted for inflation, just one-fourth of the current budget of $44.2 million - the orchestra will consider whether its size and scope are right for the times.
A report for the orchestra by consultant Thomas W. Morris suggested that it did not have the financial resources to support its current level of ambition, according to board members who heard his presentation to the board in May. (Morris declined to speak on the record about the report.)
So will the orchestra trim its activities to match its perceived support? Are more cuts on the way?
"I think that Philadelphia is at an assessing place for that very question," Vulgamore said.
Some board members said the Orchestra Association planned to ask players for more concessions. Musician spokesman John Koen declined to say whether a specific request had already come.
Musicians are willing to look, and have looked, over "the finances of the institution to try to determine what the musicians feel is the best course of action," he said. "At this time we're just looking at numbers, and may consider further concessions at a later date."
One major local philanthropist said he had declined to give to the orchestra while it operated under the current musicians' contract.
But cuts alone won't do what needs to be done, Vulgamore said.
"There isn't any one place to go. And there hasn't been for Philadelphia," she said. "Philadelphia has been mining to do what they can with the combination of cost reduction and earned and contributed income. It's always going to take a mix."
Vulgamore said she saw her role as a facilitator of discussions. "I've turned my office into a conference room," she said Monday at a nearly cleared desk in her spare, sunny office, "because it's all about having meetings, structure, and dialogue."
What she means, she said, is that the orchestra will be working on a strategic plan to sort through a variety of questions, including:
What is the appropriate size and scope of the orchestra's activities?
How market-driven has the orchestra been?
How does it harness talent, and does it have the right talent on the musical staff, administration, and board?
Who is its audience?
What is its relationship to the city and region?
The strategic planning will go on, but certain matters will vie for immediate action. Asked whether a music director will be named this season, Vulgamore said:
"I really don't know. I have some new ideas that I [want to] throw out to them."
Does it make sense for the orchestra to hire a music director with so many questions about its future unanswered? Should it finish its strategic planning first, then seek a maestro willing to embrace that vision?
"There are some really strong opinions about that," Vulgamore said. "One of my jobs is to listen and align opposing opinions. That's true of the Philly Pops question. That's true of the music director search. That's true of the challenges of size and scope. It's down to your bankruptcy question. I'm here to align these and try to come up with a way of moving forward."
"I wish I could score everything for horns." - Richard Wagner. "Our writing equipment takes part in the forming of our thoughts." - Friedrich Nietzsche
Posted on Sun, Jan. 24, 2010