Why are orchestras in trouble? (the financial side of things...)

I have previously written of the plight of many of our nation's orchestras, including both smaller, regional ensembles as well as the "too big to fail" (see the continuing plight of the Philadelphia Orchestra).  Given the proliferation of the availability of financial information, it is now possible to examine all of these ensembles with closer scrutiny.

Orchestra Hall, Detroit--6M refurbish

The myriad problems of the Detroit Symphony remain a prime example of nearly everything gone wrong.  Orchestra management decides, in the early 2000's to build a major addition to historic Orchestra Hall, to which the DSO had relocated in 1989 (deserting the horrendous--and now demolished--Ford Auditorium).  The cost of the project? $60 million. Amount raised? $60 million. What's the problem? Management decides to invest the endowed funds instead of paying the bill. Economy tanks and the musicians are left holding the bill, subsequently agreeing to salary freezes amidst negotiations of a new master agreement.

"The Max"--60M boondoggle

Management proposes a 27% salary decrease; musicians counter with 24. Management counters that offer with 33%!!!!!! Over six month long strike ensues; many of the orchestra's most prominent musicians leave the DSO for greener pastures (as if that could be difficult).  The end result (the strike ended in April 2011)  left the orchestra's personnel depleted (74 full-time players, down from 96 and seven below the contractual mandated 81), salaries slashed (the orchestra's pay scale currently ranks somewhere between 17th and 20th place among the orchestras in the U.S.) and a continuing mountain of debt.  A report from the musicians of the DSO can be found here.

The most recent financial report filed to the IRS notes a $15 million deficit, despite the sacrifices of the musicians--the people that patrons pay to hear.  On top of this, DSO CEO Anne Parsons, who has presided over this folly, received nearly $300,000 in compensation and benefits.  An additional endowment provides Ms. Parsons with free housing and "social club dues" to the tune of another $76,000! On the flip side, the base salary of Music Director Leonard Slatkin is a mere $165,000.  In these days of skyrocketing conductor salaries, he is a bargain on the level of Sam's Club.

Note that amidst all of this dire news, the Detroit metro area ranks ninth nationally in the number of millionaires. Methinks there are a lot of potential patrons to help dig the DSO out of this mess, but it is going to take action on a grand scale and undoubtedly with new management--a completely clean slate--in place.

How many other orchestras have suffered from a gross mismanagement of the budget? Well, we could start with Philadelphia...