Minnesota Orchestra reports $6M deficit

The Minnesota Orchestra disclosed today that it has a $6 million deficit for its fiscal year ending Aug. 31.

Even as the organization celebrated a Grammy nomination for Best Orchestral performance for its recent recording of the Sibelius Symphonies Nos. 2 & 5 with Osmo Vanska conducting, news of the shortfall dominated the discussion. However, the disclosure received very different readings from the two sides in the ongoing lockout of musicians at the Minnesota Orchestra.

Asked about the causes of the shortfall, Minnesota Orchestra President and CEO Michael Henson was blunt. He cited the poor economy and the challenges all orchestras face in an era of declining audiences before hitting on the orchestra's central position in the ongoing labor dispute:

"We largely honored a five-year contract from our players which saw substantial raises across that five-year period," he said.

Henson said the shortfall is no surprise, but the formal audit shows it is real.

"We are here for the art, and that has got to be what drives us forward... But you need to pay for that art."

With the musicians' contract representing a major element in the orchestra's budget, management is eager to negotiate a new less costly one.

However, musicians rejected the offer made last April, which cuts the average pay of players by more than $45,000 a year. Management then locked out the musicians Oct. 1, and has now canceled all concerts through the end of the year.

Henson said board members have concluded that the Twin Cities community can realistically support an orchestra with an annual budget of $26 million.

"We are here for the art, and that has got to be what drives us forward," he said. "But you need to pay for that art. You need to scope it at the size that is affordable and then you need to actually make it the best organization, the best orchestra that you can."

After having reduced the size of administrative staff, the orchestra must make what Henson admits will be painful cuts to musicians' salaries.

However, that argument holds little water for the musicians. They were not invited to the annual board meeting today, despite having made repeated requests to speak to board members.

Orchestra musicians declined to make anyone available to speak after the meeting. In a release the musicians said they had not yet seen the audit, but believe management and in particular Henson have manipulated budget numbers in the past.

"Henson has violated the public trust by reporting fictitious balanced budgets to the legislature to secure public tax dollars for a $50 million lobby," the musicians said in the release. That was a reference to testimony Henson made in support for bonding money for the renovation and expansion of Orchestra Hall currently underway.

Elsewhere in the release, the musicians say they "cannot and will not trust any audit directed by the same management and board leadership that stated that they would consult a PR firm on 'which deficit to report.' "

The musicians called again for a joint financial study about the future of the Minnesota Orchestra and an end to the lockout.

In response, Henson said that the audit released today is independent of the Orchestra.

Larry Adams, a partner at Clifton Allen Larson, the auditing firm that produced the audit, said he is confident in the analysis done by his company, and he is not sure what more might be done.

"I'm really not clear what an independent financial analysis means," he said. "Because we are independent and we did analyze the books. But without knowing specifically what the independent financial analysis is it's hard know how to compare it." However, many supporters of the musicians say what is needed is a larger analysis that takes into account the financial situations of other orchestras. They have also made clear their displeasure with management and in particular with Henson.

Paula and Cy DeCosse, two donors featured in the Orchestras' fundraising materials, describe themselves as mid-level donors.

In a hand-delivered letter addressed to Henson and Board Chair Jon Campbell they said they are halting their annual donations, and removing the Orchestra from their wills, Paula DeCosse said.

"And we suspended them because we don't agree with the direction that management seems to be taking," she said. "It seems to us that they are raising money for a building at the expense of the orchestra."

Henson said he respects donors' choices. However, he argues that funding for the renovation was raised specifically for the building and will ultimately help the organization by attracting new audiences.

The locked out musicians have two concerts scheduled for Dec. 15 and 16 at the Ted Mann concert Hall at the University of Minnesota in Minneapolis.

There are no contract negotiations scheduled at present.

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