Members of the American of Federation of Musicians Local 72-147 protest the Fort Worth Symphony Orchestra administration after seven months of bargaining for a new contract. rmallison@star-telegram.com
Members of the American of Federation of Musicians Local 72-147 protest the Fort Worth Symphony Orchestra administration after seven months of bargaining for a new contract. rmallison@star-telegram.com

Arts & Culture

Fort Worth Symphony dealing with deficits lasting several years, CEO says

January 21, 2016 11:09 PM

UPDATED January 22, 2016 07:00 PM

FORT WORTH

The Fort Worth Symphony Orchestra is sliding down a scale of red ink.

In an interview with the Star-Telegram this week, orchestra President and CEO Amy Adkins detailed the symphony’s financial position and laid out reasons why management says it needs to cut musicians’ pay by more than 8 percent.

Since the 2008 recession, the symphony has lost some of its annual fee performances from the Texas Ballet and the Fort Worth Opera, and its endowments have been hit by the downturn in the oil and gas industry. Although ticket sales and contributions from individuals have increased, the orchestra has ended the past four seasons with deficits.

“No matter what we are doing to improve matters, the setbacks have erased everything we’ve done and then some,” Adkins said.

Never miss a local story.

Sign up today for a free 30 day free trial of unlimited digital access.

This year, she said, the deficit will grow to $650,000, partly because of increased rental costs at Bass Hall. And with little progress made in contract talks with the musicians union, management plans to implement a concessionary contract Monday, which will help cut the expected deficit in half.

The musicians, represented by the American Federation of Musicians Local 72-147, have authorized, but not called, a strike. Union Secretary-Treasurer Stewart Williams argues that symphony management does not have a sustainable financial plan and that cuts should not be necessary when the economy in Fort Worth is doing well.

“There needs to be leadership that moves the orchestra forward and doesn’t shrink its budget in a time of unprecedented growth for the city,” Williams said. “That just doesn’t make sense.”

Adkins maintains that the symphony has comprehensive fundraising plans that are ongoing and targeted. And just because the city’s economy is growing, she said, that doesn’t necessarily mean more symphony supporters.

But a strike by musicians or a lockout by management could mean even more financial losses for an orchestra already struggling to get back in the black.

What went wrong

About 15 years ago, the Fort Worth Symphony Orchestra underwent a dramatic transformation.

It hired a new music director, Miguel Harth-Bedoya. It launched the Millenium campaign, which eventually raised $28 million for an orchestra endowment. Twenty-five part-time players became full-time musicians.

But as the orchestra grew, so did its budget, swelling to more than $13 million by 2008. Endowment funds helped support the growth but didn’t cover all the increasing expenses.

“We often had to beg and plead for money at the end of every year to balance the budget, and many of those year-end ‘angels’ are either gone or not able to do what they once did,” Adkins said.

And then the recession hit during the 2008-09 symphony season. Within 18 months, the orchestra lost $1.5 million in revenue sources:

  • The city of Fort Worth cut arts funding.
  • Texas Ballet Theater, facing its own financial crisis, suddenly canceled its symphony contract and switched to prerecorded music for performances.
  • Endowment assets, which had been more than $27 million in 2008, shrunk with the stock market and are now valued at about $22.6 million.
  • One private trust that was donated to the symphony but not controlled by it dropped from $8 million to just under $2 million, Adkins said.

In 2010, the musicians agreed to a 13.5 percent pay cut to help the symphony weather the downturn. The symphony posted a small surplus of $88,466 in that concert season, but the deficit returned the next year.

“The cuts didn’t fix the problem five years ago, and they’re not going to fix it now,” said Williams, the union official. Management should have put a plan into place five years ago to stabilize its operations, he said.

Post-recession blues

Instead, deficits swelled to $458,374 in the 2013-14 season, despite the layoffs of four full-time staff members and a freeze on pensions. Adkins said revenues dropped that year, in part, because the Fort Worth Opera eliminated one of its main stage productions.

Bass Hall rental fees also continued to increase. Since 2010, the symphony’s rent has risen more than 23 percent, from $260,000 to this year’s expected payment of $319,000. That is without an increase in usage by the symphony, which typically uses Bass Hall 80 days each season, Adkins said.

Corporate and in-kind donations have also decreased. For example, when American Airlines merged with US Airways, the carrier revamped its charitable giving policies and decreased its donations to arts initiatives. The symphony used to receive $75,000 a year in travel vouchers from American but now gets $22,000 to use for guest musicians, she said.

Two fundraising campaigns, the Bridge Fund and the Centennial Fund, helped minimize deficits, but those sources have dried up, Adkins said.

To cover its annual deficits, the symphony has dipped into its $1.9 million contingency fund, which with the projected deficit for the 2015-16 season will drop to $265,000.

“There is donor fatigue,” Adkins said. “In 2009, we said to donors, ‘Please give us more money; we need your help’ and then, three years later, came back and said, ‘Give us more money; we need your help,’ and now donors are saying we need to stand on our own two feet.”

The union doubts the symphony’s contention that it is in precarious financial shape, pointing out that it owes no debt and does not have a line of credit with a bank.

“The simple truth is they have been able to pay their bills,” Williams said. “They’ve been able to pay off those deficits, and that begs the question as to the nature of those deficits.”

What’s better

There have been a few high notes recently, thanks to new marketing and ticket pricing strategies.

Frustrated musicians march through FWSO offices

After an unsuccessful negotiating session, musicians from the Fort Worth Symphony Orchestra made their feelings known as they made their way through the FWSO administrative offices chanting. #GrowthNotCuts

This past season, the symphony’s season ticket sales grew by 5 percent to $1.47 million, as it created a more flexible package called “Compose Your Own,” which allows subscribers to mix and match symphonic and pop concerts.

It also examined its ticket pricing in Bass Hall, using a third-party consultant to help it reprice seats, Adkins said. Instead of selling all tickets on the orchestra level for one price, there are several prices depending on how close the seat is to the center of the stage.

The symphony also does not open up the upper gallery for ticket sales when a concert is announced. Once tickets in the orchestra and mezzanine levels are sold out, the symphony makes the upper level tickets available.

“You can’t buy nosebleed seats initially. We want you to buy down on the floor,” Adkins said, adding that the symphony is able to sell the upper level seats at higher prices for popular concerts than it had previously.

Season ticket prices, which in some cases were 50 percent cheaper than the single-ticket price, are gradually being raised. The national average discount for symphonies is 20 to 25 percent, Adkins said, so Fort Worth plans to decrease its discount to about 30 percent.

The popular Concerts in the Gardens series has developed into the symphony’s best revenue producer. Ticket prices were increased for the table seats, and lawn prices are now $25. “When you have a product that is in demand, it made no sense keeping the prices flat,” Adkins said. “However, we have also kept the lawn affordable. We didn’t want to price people out.”

Texas Ballet Theater has recommitted for three weeks instead of the previous six.

There are new fee engagements for the orchestra, including performances in Brownwood and Mansfield, Adkins said. She is also working with the Arlington school district and the city of Westlake for possible engagements.

“The bottom line is we have made up a lot of the ground we lost in 2008 and 2009, but our revenue still remains less than it was prior to the recession,” Adkins said.

What’s next

Symphony management and the union remain far apart with their contract proposals — about $4 million.

On Monday, management plans to implement its concessionary terms, which cut musicians’ pay more than 8 percent and save the symphony $371,000 a year. The musicians, who have authorized a strike, are to vote on the contract offer Friday but say they would rather continue negotiations.

“We just want to bargain,” Williams said, adding that the union is willing to agree to a pay freeze this year but would like raises in the next three years. “We believe there are proposals that can be made, and we’re not able to make them if they’re not at the table.”

Labor law experts say that when negotiations are not progressing, management typically says there is an impasse and imposes its latest proposal. At that point, the union can either strike or file charges with the National Labor Relations Board.

This week, the Colorado Symphony musicians filed similar charges with the federal mediators, saying its orchestra management has not bargained in good faith. That is an option available to the Fort Worth musicians, said Scott Schneider, a partner at Fisher & Phillips, who specializes in labor law.

“If there is a lockout by management or if there is a strike, it seems to me it could go on for quite a long time,” Schneider said.

Andrea Ahles: 817-390-7631, @Sky_Talk