Board, musicians face difficult path to survival

Robyn Julyan plays the violin during a Charleston Symphony Orchestra practice at the Gaillard Auditorium.

The fortunes of the Charleston Symphony Orchestra and its patrons now rest on a grave ultimatum: Avert imminent disaster through creative cooperation or declare bankruptcy.

Those are the options, and both mean a major reorganization and financial restructuring, according to symphony officials, who face perhaps the worst fiscal crisis in the organization's 72-year history.

Executive Director Jan Newcomb, who joined the management team 13 months ago, put it this way: "We've had people sitting on the Titanic for about a decade discussing the choice of china."

The orchestra's financial ups and downs have become status quo, she said.

"We have not been brutally honest in a long time." When there are more former donors than current donors, it's clear that something is not working, she said. "We have to show that we are good stewards (of the budget)."

Several factors have converged this season to cause a projected $1 million budget shortfall. Donations are down, ticket sales (both subscription and single-ticket) are down, and income from two endowments is down because of market losses.

The severe economic downturn has caused or exacerbated these problems, Newcomb said. Making matters worse is the fact that wages and benefits for the core musicians make up 51 percent of the annual budget, but when conductors' salaries, extra musicians, guest artist fees, travel and other expenses are added, that figure rises to 70 percent, Newcomb said. This can leave insufficient maneuvering room if the budget needs adjustment, she said.

"It's not a rogue wave," Newcomb said. "It's a series of rogue waves."

To get out of the rough surf, the symphony has set two broad goals. First is to stabilize this year's operation through emergency fundraising — $250,000 by Jan 1. Next year, some municipal funds from the city of Charleston and town of Kiawah Island are expected to become available, even though that won't be enough to make payroll for January.

Then comes development of a long-term plan. This effort includes bolstering two endowments managed by the Coastal Community Foundation, cutting costs and redefining concert programming and marketing initiatives.

The symphony is the largest performing arts organization in the state, but it should be smaller, CSO board President Ted Legasey said. The annual budget of $2.9 million ought to be more like $2.3 million, he said.

Critical to achieving these goals is a renegotiated contract with the musician's union, Legasey and Newcomb said. Meetings were held this week to find a solution.

On Monday, Legasey asked the union to reopen the contract, saying an immediate fix was essential and that "everything is on the table" for consideration in addressing long-term issues.

If the renegotiation fails and the symphony runs out of money, it will signify a breach of contract, forcing the organization into Chapter 11 bankruptcy, Newcomb said. Bankruptcy would then obligate the parties to renegotiate and restructure, except musicians would not be paid during this process, she said.

Representatives of Local 502 of the American Federation of Musicians could not be reached Thursday, but symphony officials said they expected to get an answer on how to proceed with the union soon.

Kate Prescott, a consumer research consultant who has worked with many orchestras, including the Charleston Symphony, said financial strain is an unfortunate mainstay of performing arts groups, which too often rely on benevolent donors and patrons to attend concerts and bail out the organization when it gets into trouble.

The Erie Philharmonic in Pennsylvania nearly collapsed three years ago, she said. Its audience was small, its staff and board in disarray. To turn things around, they found new board members, contracted with an outside marketing agency and hired a new music director.

"They made a wholesale change in a year," she said, "and sales turned around with it."

The situation in New Orleans was a little different.

In 1990, the old symphony folded, but a group of determined musicians re-established the ensemble, with help from the community. It was a musician-owned, musician-run orchestra whose managers did everything: balance the books, sell tickets, market concerts, conduct and play, Mollere said.

Little by little, they hired staff and a music director but maintained a high level of control. Musicians sat on every committee and held seats on the board.

When Hurricane Katrina blew through in 2005, members of the Louisiana Philharmonic were scattered far and wide, and it looked like the orchestra was doomed, said Barbara Mollere, its executive director. It was the second time disaster had struck.

After Katrina, the musicians worked hard, often from other cities and with support from other communities and arts organizations, to get the Louisiana Philharmonic back together.

They succeeded because New Orleans demanded it, Mollere said.

Musicians play an active role in the management of the Orlando Philharmonic, too, according to Executive Director David Schillhammer. Five musicians are part of the administrative staff and musicians comprise 25 percent of the board.

The income produced by a healthy endowment can serve as a relatively stable funding source and make the orchestra less susceptible to short-term economic trends, he said.

Charleston Symphony's endowment balance was $1.1 million at the beginning of the fiscal year, and the annual 4 percent draw was $45,000, significantly lower than other orchestras in the same category. The Madison Symphony Orchestra in Wisconsin receives $177,000 annually from an endowment of $15 million, according to public records. The Richmond Symphony in Virginia receives $400,000 annually from its $10 million endowment.

Newcomb said that the local symphony relies on $1.5 million in contributions each year, and that major declines in giving have prompted an emergency fundraising campaign. By Thursday, more than $30,000 had been raised in a telephone blitz.

Legasey called the crisis a "perfect storm" that no one saw coming.

"Without the perfect storm it would have just been a steep uphill climb," he said.

David Stahl, music director of the symphony, said from Munich on Thursday that the budget crunch is far from an isolated event, and not unique to orchestras and other arts organizations, but that major changes need to be made in Charleston.

He said a regional strategy might enable the symphony to extend its reach, develop new revenue streams outside the Charleston market and boost its influence in the South.

To get there, though, the organization needs an infusion of funds. "But we also need an infusion of belief."

Spoleto Festival USA, which got its start in Charleston in 1977, sparked a cultural renaissance, Stahl said.

"The arts was the blood transfusion Charleston needed," he said. It helped rejuvenate a troubled city and whetted the appetite for more culture.

Sustaining the arts, though, takes an especially strong commitment from the community since the Lowcountry boasts no Fortune 500 corporations that can afford to make significant regular donations.

"Do the people really care whether there's a first-class orchestra or not?" Stahl asked. "You can have it here, but you have to pay for it."

And if the orchestra failed to survive?

"Charleston would lose its heart," he said.

Reach Adam Parker at aparker@postandcourier.com or 937-5902.