Philadelphia Orchestra Board Approves Chapter 11 Bankruptcy Filing
PHILADELPHIA -- The world-renowned Philadelphia Orchestra, long considered one of the best in the nation, will be filing for Chapter 11 bankruptcy protection – an apparent first in recent history for a major U.S. orchestra.
Board chairman Richard Worley said members made a nearly unanimous vote Saturday to file for reorganization in a federal bankruptcy court in Philadelphia after a "long meeting, thoughtful meeting, emotional meeting."
"We're running low on cash, we're running a deficit, and we have to put ourselves in a position to attract investment funds to help us," Worley told reporters.
Allison Vulgamore, president and chief executive officer, also cited a "tremendous decline" in audiences over the past five years.
Officials stressed, however, that concerts would go on as scheduled, including the evening's performance of a Mahler symphony. And they said a revitalization campaign was planned to increase revenues by about two-thirds and bring in new art and audiences.
John Koen, chairman of the members committee, which represents the musicians, said the five musicians at the meeting were the only "no" votes on the 65-member board.
"It was a terrible letdown. I think this is a tragic decision for the orchestra," said Koen, who said he has been with the organization for almost half of his 44 years. "A big orchestra has never done this before. It's impossible for the musicians not to feel betrayed by the board of directors ... It feels like a vote of no confidence for the future of this orchestra that's been around for 111 years and world famous for 99 of those years at least."
"We're in a state of shock, really," said Richard Woodhams, principal oboe. "I think it's a very, very sad day for culture in the United States and the world."
The orchestra is expected to take in a combined $33 million from this season's ticket sales, fund-raising, endowment income and other revenue, according to its financial records. That won't cover its $46 million operating costs, and its projected deficit is $5 million despite an emergency fund-raising effort.
The country's economic woes have taken a toll on nonprofit arts organizations, and smaller orchestras in cities such as Syracuse, N.Y., and Honolulu have filed for bankruptcy in recent years. But Philadelphia's is the first major metropolitan orchestra to do so, said John Bence, spokesman for the League of American Orchestras, citing records his organization has kept dating as far back as 1986.
Jesse Rosen, the orchestra league's president and CEO, said the Philadelphia Orchestra is experiencing the same challenges as other arts organizations in figuring out how to stay viable in the current economy and an era of "on demand" entertainment made possible through technology.
"We've had a belief for a long time that if we're really, really good, and the Philadelphia Orchestra is off-the-charts fantastic ... everything will follow, and really, times have changed and it's not enough anymore," Rosen said.
Philadelphia Orchestra musicians who object to a bankruptcy filing distributed leaflets to the audience before Thursday night's concert, calling such an action "unnecessary" and saying it would have "both an immediate and a long-term devastating impact" on the orchestra. Union officials and others have cited the orchestra's $140 million endowment, but Vulgamore said use of that money was restricted.
"Thank heavens it's there, it's the future we have to live off of," she said. "If we take that money now, then we frankly don't have annual monies to keep going."
Musicians, who in recent years have agreed to take pay cuts totaling millions of dollars, have expressed concern about the effect of bankruptcy on their pensions. Worley said that would be worked out in negotiations, but officials want orchestra members to have a "reasonable and respectable pension."
The orchestra's management is seeking a 16-percent pay cut and other concessions from the musicians as part of ongoing contract negotiations. Players say there have been no talks since March 27 and none are scheduled.
The Philadelphia Orchestra, which rose to national prominence under conductors Leopold Stokowski and Eugene Ormandy, has traditionally been considered one of the "Big Five" American orchestras along with those in New York, Chicago, Boston and Cleveland.
It made history in 1973 when it became the first American orchestra to tour communist China. Its hundreds of recordings include the soundtrack for Walt Disney's 1940 film "Fantasia," which helped popularize symphonic music in the U.S.
"I think it's emotional because we feel the weight and burden of a tremendous legacy," Vulgamore said. But she said the situation was not unique even in the orchestra's long history, citing "Save the Symphony" campaigns from early in the 20th century.
"We've been through this before, we've been through two world wars and a depression," she said. "We're going to need to pull ourselves through this bankruptcy with pride and will to remain the Philadelphia Orchestra."
Audience members picking up tickets in the lobby of the Kimmel Center for the evening performance were taken aback by the news.
"It's shocking," said Tianhui Ng, 32, who said he tries to see concerts every week. "I think they do a wonderful job, and the city loves them."
Stan Swigoda, 53, of Philadelphia has heard of the orchestra's endowment and wonders why some of that can't be tapped.
"It seems to me that this whole movement to Chapter 11 is just an attempt to ... renege on the union contract," he said.
Spencer Jarrett, a visiting 17-year-old high school junior from Highland, Utah, said he hopes to make playing trombone his career and said the impending bankruptcy filing was "kind of scary to be honest." But he said he was generally optimistic about the future of his calling.
"There's always going to be an orchestra in the world," he said. "Music is just that thing that we can't live without. It's a necessary part of being human. It's a shame that people aren't recognizing it."
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By RON TODT 04/16/11 09:30 PM ET Associated Press