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Minnesota Orchestra finances: Did management manipulate the numbers?

Jonathan Eisenberg, vice chair, and Mariellen Jacobson, treasurer
Photo by John Whiting
Jonathan Eisenberg, vice chair, and Mariellen Jacobson, treasurer, of Save Our Symphony Minnesota, speak during Wednesday's meeting.

There’s no doubt that the Minnesota Orchestral Association has been on a money-losing, unsustainable path for years, leaders of Save Our Symphony Minnesota said at a public meeting Wednesday night.

But, in the next breath, those same speakers accused MOA management and leaders of the board of directors of either incompetence and deceit, or both. 

In a graph-filled presentation (PDF), Save Our Symphony Vice Chairman Jonathan Eisenberg and Treasurer Mariellen Jacobson called on MOA leadership to be replaced and called for the governor, state auditor, the state’s attorney general, as well as Minneapolis officials, to investigate financial operations of the MOA.

This was heavy-duty stuff, delivered coolly to an audience of about 100 people at a hall at the Open Book store on the edge of downtown Minneapolis.

 It should be noted that the MOA was left in a dicey spot late last night and early this morning. It was asked to respond to a wide range of SOS claims and charges in a very short time.

New info or ho-hum old news?

The MOA  did dispute — or ho-hum as old news — many of the SOS points. 

Of course, in the end, only one thing is clear: Orchestra Hall remains  empty.

Most of what was discussed  at the Wednesday evening meeting has been published at various times by various media outlets. But much of the information had come out in bits and pieces. This was a compilation of data — mostly using MOA numbers — combined with a call for the political leaders to get involved.

(Despite the SOS hope of political action, Sen. John Marty was the only pol in the crowd. After watching the whole presentation, he became convinced that the MOA is blinded by the ideology that unions are bad and therefore must be “crushed.”)

Save Our Symphony is one of the groups that has sprung up in the wake of the MOA’s lockout of Minnesota Orchestra musicians, a lockout that has gone on for 14 months with no end in sight.

Yes, SOS says, the MOA has been “excessively” relying on its endowment for years.  But that’s just a small part of a larger problem, SOS leaders say.

Certainly, they don’t believe this lockout — and the negative public-relations campaign toward musicians — will solve any problems.  

SOS leaders believe that as long as Michael Henson is the MOA’s  chief executive officer and Jon Campbell and Richard Davis have key leadership spots on the board, there’s virtually no chance of a settlement.

The MOA continues to say that it’s the musicians who have refused to negotiate and that its management is ready and willing to bargain.

“The Board remains the party that is willing to talk and is clearly open to compromise, having already significantly altered its original negotiating position,” the MOA said in a statement issued this morning.

But, of course, just who is willing to compromise is  disputed. SOS says it’s necessary to end the lockout now and that both sides should agree to meet with a mediator, either George Mitchell or someone else. (The MOA rejected a temporary settlement suggested by Mitchell, a resolution musicians were willing to accept.) 

If there’s restlessness among classical music lovers in the region about this unending matter, that restlessness does not seem to carry over to the MOA’s board. It appears there’s been no pressure from within the MOA’s massive board  to demand a shakeup at the top.

Board seems loyal to leaders

The board members seem to support the MOA’s leadership position — that the only way to save the orchestra is to get large paycuts from the musicians now, even if that means losing  the “world class” status the orchestra had achieved.

SOS Minnesota leaders, however, believe that there are more productive ways to balance the budget, which has been out of whack for more than a decade.

Yes, musicians may have to take cuts.

But SOS contends that management has created many of the financial problems. It has cut the number of concert performances from 85 in 2002 to just 49 that were scheduled for the 2013 season. The steady decline of classical concerts has meant, not surprising, a steady decline in concert revenue.

MOA says there’s a simple reason for the reduction in concerts. There’s been a reduction in demand from the ticket-buying public.

“In recent years, the Orchestra has deliberately and strategically reduced its number of classical concerts to better match supply with demand,” the MOA said in a statement. “Our aim is to find the right balance of concerts to increase our total capacity sold and overall net returns and we’ve been successful in doing this.”

Additionally, in the name of saving money, current management cut marketing staff and its advertising budget, which SOS believes led to attendance declines. Under Henson, it appears the donor pool, so crucial to the survival of any arts organization, has shrunk from more than 20,000 donors to about 2,800, according to SOS.

The MOA disputes the SOS donor base numbers. Management says the donor base actually increased slightly since Henson's arrival in 2008 and now stands at about 7,800.

But the MOA says that Henson is actually in the process of rebuidling the donor pool.

MOA total net revenue-expensesSource: Save Our Symphony Minnesota

Using a study compiled by another citizen group that has formed around the lockout, Orchestrate Excellence, the money-raising performance of MOA leadership has been woeful, compared with fundraising done in Cleveland on behalf of the Cleveland Orchestra.

Donors in Cleveland have given at almost double the rate of Twin Cities donors. Performances by the Cleveland Orchestra have generated  2.5 times the revenue generated by performances of the Minnesota Orchestra. Advertising dollars, the group says, have been spent more effectively.

Again, SOS’s Eisenberg doesn’t deny that the Minnesota Orchestra may have a $6 million hole in its  annual budget.

“We can solve that problem,” Eisenberg said. “In this market, $6 million is not that much money.”

Beyond finances, trust is big issue

Of all the issues, the big issue that must be resolved, Eisenberg said, is trust. He believes current MOA leadership has lost any claim to trust.

It is the belief of SOS that public officials should feel compelled to step into this mess because they were “deceived” by MOA leadership.

When the MOA wanted the state — and indirectly the city of Minneapolis — to come up with $14 million in bond money for the renovation of Orchestra Hall, the MOA had a set of numbers that showed a balanced budget. Two years later, when it wanted to justify its lockout, the MOA suddenly was claiming it was bleeding red ink.

“Financial statement manipulation,” said Eisenberg of the MOA’s easy switch from black ink to red. They had “good numbers when they need to look good and bad when they needed to look bad.”

It is the public on the hook for the bonds. But it is the pols who accepted the MOA’s rosy financial promises.

This charge, of course, brings strong denials from the MOA, and it says that the legislative auditor already has studied, and given a nod of approval,  to the numbers used when the MOA was at the Capitol in search of bond funding.

It is Eisenberg’s belief that the whole concept of a $50-plus-million renovation of the Hall was an effort that has undercut the orchestra and set the stage, perhaps intentionally, for the lockout. Energy was spent hitting up that small donor base for the capital fund at a time when the focus needed to be on building the donor base and the endowment fund.

Not surprisingly, the MOA disputes that theory. Its view: The $50 million capital drive was only part of a $110 million drive: $50 million for the renovation, $30 million for the endowment, another $30 million for “artistic iniatives,” money to be used for such reputation-building things as European tours.

In fact, the MOA says, the capital fund drive inspired a wide-range of giving in which $98 million of the $110 million has been raised. Of that, $31 million has come from board members.

But the Hall remains empty.

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Comments (49)

Mr. Henson is in the process

Mr. Henson is in the process of rebuilding the donor pool? I wonder how that is working out for him.

Pool repairs?

I'll contribute a tube of caulk.
I'll even tell him where to put it!

Is there a graph for that trust rating?

Like others I don't get how the finances could look good enough for the hall renovation but then turn ugly for musician pay. But then I don't see how you can complain that the endowment is being eaten into but then refuse to compromise on pay. It says in this article that musicians must take pay cuts but in all other articles I've read that seems to be a nonnegotiable item with the musicians.

The quote that $6 million is not that much money in this market sounds easier to say than prove. Other articles I've seen say some rich people should just step up and give a few mil so the music can resume and the musicians can continue at their "world class" pay level. So much coming from the musician side just seems impractical and lacking in concrete details. Which millionaire? I'd guess it is probably true that there are less concerts for the reasons the MOA stated. There is a cost to putting on a concert and you want the hall filled to cover the costs, more concerts, more costs beyond the fixed costs like salary.

I would like to hear more from the "massive" board. These seem to be the primary supporters, attenders, classical music lovers. Why do they seem to support those three villians that the musicians and their supporters hate so much. Seems like many board members would be on the musicians' sides and would show up at events like this.

Personally I'm more of a jazz fan and the musicians I love the most probably make less than the last guy in the violin section of this orchestra. They are working just as hard but the audience is limited and that's life. Fifty or sixty years ago the big bands started to dry up. Except for a couple of biggies like Ellington and Basie, most couldn't afford to keep that many musicians afloat. Things changed. The big band fan base quit buying tickets. I bet that is happening here to a degree. Enough from me.

Misconceptions about the "massive board"

I don't really want to engage in dialogue with other comment contributors, but when I see Mr. Bill Schletzer's comment " that the "'massive board'....seems to be....attenders and classical music lovers.." I guess I might beg to differ. Although some board members attend many concerts, most board members do not. I have long maintained that a prerequisite for Board membership be the purchase of at least two full season subscriptions. Many of our board members, through their corporate positions gain board membership. This is only logical given the support they generate from their corporate affiliations. But I fear they participate largely because their corporate sponsors feel it a civic responsibility for them to support the orchestra. Frankly, I believe that at least 50% of the Board members attend fewer than two or three classical concerts per season and wouldn't be able to tell the difference between Mozart and LeRoy Anderson. It is unfortunate that in this context several in current board leadership positions have acted in the irresponsible way that they have. Misters Davis Campbell and Henson have found out the hard way that you can't hire replacement musicians and a replacement conductor the way you can hire workers to fill in at Crystal Sugar. Unfortunately, the Board leadership and Mr. Henson appear to have thought that you could.

What do I know, Arthur? Very little, I assume

But I do know that more people care about twerking celebrities than the difference between Mozart and LeRoy Anderson. And if the little niche occupied by classical music lovers can't support itself economically then the laws of economic motion will control the outcome. Would that your pockets were as full of cash as your head is full of classical music knowledge. What's the difference between sugar and classical music? We all consume sugar. Classical music as a popular artistic enterprise hit it's final peak over 100 years ago. Once most people have heard Mozart or Bach or Schubert or any of the long-dead, they move on. Few stay around for repeat performances. Likewise few can tell the difference between Charlie Parker and John Coltrane, two of my heroes, but I don't expect them to use taxes to build a mausoleum to my loves. We don't need a dialog because your distain for my opinion is evident. Good luck to you.

Laughable...

There is likely more music being written today for orchestras than at any other period in history. (No, I don't have a cite...it's an observation)

The music of Mozart, Bach, etc. has stood the test of time precisely because people want to hear it.

There are many orchestras doing just fine. In fact, the CSO (Chicago) has recently announced it's third consecutive year of record revenue.

You are correct, Bill Schletzer

You are correct, Bill Schletzer-you know very little indeed (at least about classical music). Charlie Parker and John Coltrane (or even Stan Kenton) did not require a 90 piece ensemble to perform, and I'll bet if you take all of their recorded music sales and stack them up against those of the Minneapolis Symphony Orchestra and its successor the Minnesota Orchestra over the same time frame that the recordings were made, their sales would be quite a bit less. And this did not occur "a hundred years ago".

Your jazz heroes performing in a small venue as they usually did, could usually break even or make a profit. Talk about a niche audience, that's what your jazz heroes' audience was. Unfortunately a symphony orchestra can not play a small club.

Forgetting the US, just go to Europe and see record size audiences attending concerts of GOVERNMENT subsidized orchestras(Its puzzeling--why do these foreigners subsidize culture?). Even in the US, competently run orchestras are thriving, though not due to ticket revenues which can never support this medium.

And by the way Bill, do you think Sophicles, Shakespear, Milton, Chekhov etc... etc... should be abandonned for Stephen King? After all, they hit their prime up to more than a thousand years ago in some cases.

How about Titian, Rembrandt, and Ruebens? Give the up for Kincaid?

A classic labor/management strategy backlash

Having extensive experience in labor/management relationships, I do believe that Henson and Campbell misread the musician's tenacity and loyalty to the quality of the music and performance, as well as their standard of living, when they engaged in the lock-out - an atom bomb of labor relations. I think they thought they could, if not outright bust the union, at least lower the pay-scale. They were wrong.

It does not surprise me that the minion board members would support Campbell and Henson. They are, after all, from the same socioeconomic "class." Business leaders, and those matrons of business leaders, who make up the balance of the board, would most likely tend to ideologically sympathize with Campbell, the top Well Fargo officer left in Minnesota. I can almost hear the "cocktail chatter" now between these friends and social colleagues about how they'll "save the orchestra" even by killing it.

Sadly, I do not believe the orchestra will ever come back as it was, a great civic institution with a world renown reputation and growing. But like Campbell voted to sent Norwest Bank packing to San Francisco, perhaps he'll join the board of the San Francisco Symphony and see how much damage he can wreak there. At least then, the "Minnesota Symphony" may have an opportunity to rebuild, after sending Henson back to Sussex.

Misreading

What I think Henson et al,, misread was the willingness and ability of the musicians to sustain a lockout. This miscalculation on management's part has been catastrophic for the orchestra.

I still buy

I still buy recordings of the Cleveland Orchestra under George Szell; there is magic in them, like the last performances of the musicians of the Minnesota Orchestra with Osmo Vanska and when they had truly achieved greatness as an orchestra just yesterday. Cleveland has a long legacy of excellence and draws support readily from the public.

It is over for the MN Orchestra. It is like they killed it in the name of austerity. We will never see or hear a great orchestra again unless one visits from some place where it is maintained competently. Their legacy has been snuffed out. What are we to support? A "great hall?"

Hanson et all

Put the Orchestra into a death spiral, it's that simple. Why? Somehow a group of people who were more interested in busting a union than running an orchestra ended up charge of an orchestra. Teh problem isn't that this management team underestimated the union, the problem was/is that they don't seem to understand the basic existential nature of a symphony orchestra. This is typical corporate America. Executives like this have killed banks, real estate markets, Hospitals, auto companies, software companies, etc. They even blow up an oil rig once and while. And so it goes.

I think we could get the orchestra back, I know it looks bleak but if they cancel the lease and lock out the lock-outers, that would be a defacto end to the MOA. Isn't maintaining a basic lease a minimum standard for any CEO? Specially one you're paying $400k a year? A new organization could then be built IF competent managers could be found. And yeah, membership in the executive elite should not be a ticket to board membership moving forward.

Put the Orchestra into a

Put the Orchestra into a death spiral, it's that simple. Why?

I think a lot of very conventional businessmen looked at the orchestra's finances were shocked. They applied the standards they would have applied to their own businesses, to the orchestra and came to the conclusion that the only viable solution was to cut labor costs. No doubt a familiarity with the works of Jean Paul Sartre would have given them different and perhaps more useful insights in to orchestra finances, but sadly, either those business leaders haven't read the existentialist philosopher of if they did, failed to perceive the relevance of his thought to orchestra finances.

"I think we could get the orchestra back, I know it looks bleak but if they cancel the lease and lock out the lock-outers, that would be a defacto end to the MOA. Isn't maintaining a basic lease a minimum standard for any CEO? "

I don't think so. Whether to honor the terms of a lease is pretty much a management call. Taking folks to the law involves a different set of considerations. I am not familiar with the specifics of any statutes that might be involved, but I think generally, any judge would be reluctant to second guess arguably reasonable management decisions, absent provable misconduct. Management would have very little difficulty showing that their decisions if not right, were at least reasonable, and the result of fiscally sound stewardship of the orchestra. It's actually the case that the course of action I advocate, which is to be fiscally unsound, to enter into a deal with the players which might very well drain the endowment is far more vulnerable to an attack on the basis of a violation of fiduciary obligations than the course pursued by management.

Very conventional business(people)

It's been clear for a long time that the board/management's decisions have put the orchestra on a path of destruction, (and even this commenter has agreed in some of his hundreds of previous comments), yet they have steadfastly held on the same path. If they truly cared about the orchestra's finances, why would they do this? Why wouldn't they have alerted patrons to the deficits years ago? Why wouldn't they have worked with musicians, years ago (such as when the musicians offered further concessions, that were turned down by management)? Why don't we ever hear from them, with some kind of apology or explanation, or request for help, or request for new ideas?

You can rationalize about "reasonable management decisions" all you want, but by this board's actions they have shown that they have a very different agenda than sustaining a world-class orchestra.

That's the trouble with today's business world in general

"They applied the standards they would have applied to their own businesses, to the orchestra and came to the conclusion that the only viable solution was to cut labor costs. "

And the costs they cut are always those of the people who do the actual work of the organization.

It is over for the MN

It is over for the MN Orchestra.

That may be the case. I don't think this management is capable of reaching an agreement with this group of musicians. And so I think it may be useful to look for alternate solutions. Mr. Henderson has suggested that the endowment be taken away from this management and given to someone else. I think that's unlikely, but not impossible. I do think the managers of the hall should consider their lease to the MOA is broken,that the orchestra association is in substantial breach, and open up the building to the locked out musicians for their concerts. If the musicians think they can reorganize themselves into a new orchestra, I would wish them well, and might even write them a check. Another alternative would be to merge with the St. Paul Chamber Orchestra.

Nope to the merger

Too many big egos involved - there could only be one set of "top dogs".

:-) Hiram, if you write the musicians a check...

I will match it.
(Or do my modest best, anyway.)

Conventional business

"They applied the standards they would have applied to their own businesses, to the orchestra and came to the conclusion that the only viable solution was to cut labor costs."

Mediocre thinking at best. They had a unionized workforce with an enforceable five year contract that they were only what? Two years into? And this just confirms that this management team didn't understand the existential nature of the entity they were managing on a very basic level. Frankly it was stupid to think they could treat an orchestra like a sugar factory or a football team.

Typically the biggest threat management will yield is the threat of lay offs and lay offs are the most common strategy for reducing labor costs. Lay offs or the threat of lay offs simply were not an option here. You can't lay off 20% or even 10% of an orchestra and still have concerts. Factories and hospitals bring in replacement workers, that's not an option with an orchestra or a lock-out before the contract expires. And you can't replace highly skilled artists as if they are just widgets of some kind. Besides, wasn't Henson supposed some kind of turn around wiz kid for Orchestras?

And by the way, let's not forget that the musicians agreed to over $4 million in concessions, and the problem here wasn't just about the money but other parts of the work agreement as well.

Yeah, MOA was in financial distress, they needed a talented management team. Instead they paid half a million dollars a year for mediocrity. I'll say it again... typical.

By the way, the terms of the lease are not MOA management's call, nor does MOA management get to decide whether or not they've met those conditions. The landlords, i.e. the city of MPLS decides that. They haven't had a concert in 14 months, by choice, and no concerts are scheduled, again by choice. Whatever that is, it's NOT an orchestra. You can't just point to a name plate and say: " This is an orchestra".

I still think we can have a great orchestra, but it will have to be done despite MOA not because of it. The sooner we accept that fact, the sooner we can start moving forward.

$6 million "deficit"

Bill, I'm wondering which articles you are referring to. Here are a few facts you might not know about. The musicians agreed to a $4.5 million dollar pay cut a few years ago to help with the financial difficulties. That rarely gets reported. I've been following this story very closely. At no time have I ever heard the musicians say they were unwilling to negotiate salary cuts. The proposals put forth by the MOA were so ridiculous and completely unheard of in the industry that it is difficult for anyone to take them seriously. It is also quite clear to those following this story that there really was never any intentions on the MOA's part to negotiate. They had their minds made up about some magic number they were shooting for, and it was clear to the musicians that they were not going to budge. The musicians have I believe offered somewhere around 10 counter proposals. Of course, that doesn't ever get reported. As far as the 'massive" board--yes, they give money, but it is 80 people. Their corporations give lots of money, which I appreciate, but it is not all coming out of the individuals pockets. It is also common knowledge that the executive board chair NEVER attends classical concerts. You got some more research to do.

Corrections

I do not, in fact, have this view: "It is Eisenberg’s belief that the whole concept of a $50-plus-million renovation of the Hall was an effort that has undercut the orchestra and set the stage, perhaps intentionally, for the lockout." Our presentation suggested that the focus and organizational energy around fundraising for the hall renovation (requiring extra donor work as well as appearances before the state legislature and city council and heavy work with lawyers and lobbyists) may have taken focus off other priorities including other fundraising priorities. We showed by MOA's own data that both endowment pledges and "other" pledges fell heavily during a 2-year period for which directly comparable data is publicly available. We did not attribute evil motive or intent to the hall renovation project.

In regard to a comment above that the musicians have always refused to consider any economic concessions, this is one of the most persistent "big lies" of the lockout. The musicians made a $4.5 million economic concession in 2009 to help MOA with its financial condition. They have also made a number of proposals at the bargaining table, including economically concessionary proposals, that are documented here:
http://www.minnesotaorchestramusicians.org/musician-counter-proposals-yo...

Mediocre thinking at best.

Mediocre thinking at best.

Oh sure. But they are the ones in charge of making the decisions. The problem the union faces is how do they deal effectively with mediocre thinkers?

"By the way, the terms of the lease are not MOA management's call, nor does MOA management get to decide whether or not they've met those conditions. The landlords, i.e. the city of MPLS decides that"

The terms of the lease are no one's call. They are what they are. For whatever it's worth, I think whoever owns the hall should hire a lawyer and look at the lease and find some basis in it to argue that the MOA is in substantial breach and then terminate it. They could then invite the lock out orchestra to come back and perform it's concerts in the hall. That just seems to me basic good sense, but it doesn't bring us closer to a deal. It may take us further away from a deal.

Eviction is the landlords decision

"The terms of the lease are no one's call. They are what they are. For whatever it's worth, I think whoever owns the hall should hire a lawyer and look at the lease and find some basis in it to argue that the MOA is in substantial breach and then terminate it."

Ending the MOA lease would essentially be an eviction, and THAT is the landlords decision, not the tenants. MOA is/has not used the space for concerts for over a year, that would be the breach. MOA management can't decide whether or not they've breached, or whether not they'll be evicted. So yes, it IS the landlord/owner's call.

We know there's been no concerts by the orchestra for 14 months. Worse, apparently the event that was scheduled by the MOA in the concert hall was an ELEC inspired anti-union presentation about union busting with "right to work" laws. Since this is all the product of a deliberate decision by the MOA how can it not be a breach?

I'm not a lawyer so I wonder: wouldn't the loss of tenancy effectively render the MOA a defunct organization? With no physical space and no performing orchestra how could they claim to be a symphony? Can a defunct organization still collect donations? Can a defunct organization hold an endowment?

Finally, there are two notions that keep popping up throughout all the commentary threads that have always struck me as odd. The first is this idea that musicians refuse to negotiate. What's weird about this is that it ignores the fact that this is a lock-out, and I don't know how anyone can be confused by that at this point. The whole point of a lock-out is for management to establish a non-negotiable position. THIS lock-out has taken place in the middle of an existing contract period, 2-3 years into a 5 year contract. This was never a negotiation from MOA's perspective, it was an attempt to impose new work conditions. You don't lock labor out in the middle of a contract period and then complain you don't know what they want? If you want to know what they want all you have to do is look at the EXISTING contract, it's not a mystery. The second bizarre notion is this idea that concerts cost money so you save money by not having concerts. THIS IS A SYMPHONY ORCHESTRA. The whole point is to have concerts! Whether they cost money or not an orchestra without concerts is not an orchestra. If you're not raising money to have concerts than what's the point of raising the money? You can't call a symphony that has money but doesn't play any concerts a symphony. How people who are being paid a half a million dollars a year not know that? Does someone really the think the whole point of having a symphony is to pay a guy a half million dollars a year to "manage" a lock-out? Does anyone really the whole point of having an orchestra is to create an endowment for the sake of having an endowment or built orchestra halls where no concerts are played?

union-busters

Can anyone explain why the MN Orchestral Association thought bringing in a union-buster like Henson would sustain the orchestra as one of the USA's finest? The musician's union is one of the oldest and most respected in the labor movement. And for that matter, why bring in a Brit? Do we Minnesotans with our twangy American accent have to bow down to anyone that speaks like the Queen of England? The Irish saw through that decades ago!

Ending the MOA lease would

Ending the MOA lease would essentially be an eviction, and THAT is the landlords decision, not the tenants.

I said the owners of the hall would decide whether to take the position that MOA is in breach. Landlords can breach a lease too, that just isn't an issue here.

"wouldn't the loss of tenancy effectively render the MOA a defunct organization?" Not at all. The continuation of the MOA isn't tied to any lease they might have entered into.

"Since this is all the product of a deliberate decision by the MOA how can it not be a breach?"

Depends on what the lease says. From what I have seen, the lease seems pretty vague.

"The second bizarre notion is this idea that concerts cost money so you save money by not having concerts. THIS IS A SYMPHONY ORCHESTRA."

That's a point I have been making. I raise it because I think that helps explain why management doesn't feel under pressure to come to a deal. I think it's a point that might also be made internally within the board. But in legal terms, it's relevant, but a judge would also look for more, misconduct or something. What management and the board might have to realize that the offer they are making can't get a deal done, and that in order to reach an agreement, they may have to make an offer that does not serve the goals they established for themselves starting out. They might have to accept that a financially failing orchestra is better than no orchestra at all.

Yet another way to fry an egg

Apparently the MOA is registered as a corporate non-profit, that means they have a charter issued by the state does it not? Well, I'm guessing the charter and buiness description doesn't describe an entity calling itself an orchestra that doesn't have concerts or perform music. I wonder if the charter can be revoked?

Well, I'm guessing the

Well, I'm guessing the charter and buiness description doesn't describe an entity calling itself an orchestra that doesn't have concerts or perform music. I wonder if the charter can be revoked?

Who knows? But I am sure somewhere, somehow, that obligation has been imposed on the MOA requiring them to act in a fiscally responsible manner. If called upon to testify before a judge, I am sure they could make a very reasonable case that the orchestra is currently on an unsustainable course, and that for it's long term survival, it must adopt a labor cost structure along the lines of their proposal to the union. And that's just about all they have to do. It's not up to the courts to manage an orchestra, nor are they qualified to do so.

I think things are looking up

First of all, your link to the data presented on Wednesday does not work. Here is the correct link: -

http://www.saveoursymphonymn.org/uploads/2/2/7/7/22773088/sosmn_presenta...

I feel things though difficult, are looking up. The Board will not win this battle. The Musicians have been retained to re enact their concert from over a half century ago, for the opening of Northrop Auditorium on May 2. They will be conducted by Osmo Vanska. This is a huge poke in the eye to the MOA board and Henson.

So next season Northrop will be available and its a little larger than Orchestra Hall.

It will be difficult, but not impossible to put together a new major donor pool. We need to sign up people with skin in the game, especially electronics manufacturers. Car companies should also be looked at, for instance Audi have spent millions to improve car audio systems. The Minnesota Orchestra have a long history going back to the fifties, of helping the industry with cutting edge advances. Before the lockout DTS were a partner helping develop surround sound broadcasts.

The smart organizations are developing ways of selling tickets outside the concert hall world wide. The BPO are moving ahead with improvements at a lightning pace, and are now engaged in research with the Heinrich Hertz institute to develop 3D Internet streaming. Classical music has been a major driver of technology for over a 100 years, it is not and never has been the pop industry in the drivers seat.

All these developments have the potential, to make the arts, and especially the musical arts, drivers of the new economy, and lead to many high paying jobs. This is a big and probably the biggest reason politicians need to pay attention and not let huge opportunities escape.

The audience for classical music and especially opera is not in decline. The paradox, is that concert attendance is down. People want to get access via electronic media. The biggest problem is that there is far too much free program out there. Musical arts organizations need to clamp down on this and harness this new technology to support their bottom line through world wide ticket sales and targeted advertizing, which this new and emerging technology allows them to do.

The biggest deficit is not the money, though that is significant, but a severe lack if vision and imagination.

Corporate sponsorships

I wish them well in their fundraising efforts but managing the financial affairs of the orchestra is not what musicians do. The problem with trying to obtain corporate sponsorships is that the Minnesota Orchestra isn't on TV.

Alignment

Agreeing in principle with the vision the Musicians have for the orchestra instead of the financially driven goals of the board does not make you aligned with the musicians, and of course if one side of the dispute is holding concerts and one side is not, the music lovers are going to link to the side that is still serving the community for purchasing tickets and providing support.

But this question of alignment has me wondering, has there been any public support for the board and managements tactics and plans in this dispute from any orchestra-industry professional or authority? I have seen many articles and quotes from people in this business who think the lockout is terrible and the board is mis-managing the orchestra, severely, possibly to a record setting level of incompetence.

Beyond an occasional sympathetic Star Tribune editorial I haven't seen a lot of support for the board and management from beyond, well the board and management. If it wasn't for their regular stream of letters, commentaries and interviews doubling down on austerity there would be no one really proposing this as the way to go. If this is the right path why aren't boards or CEO's of other orchestras rising to their defense to sadly confirm this is what is necessary? Why are those organizations continuing to hire Minnesota Orchestra musicians regularly for their performances?

The Board and Management are badly losing the PR war here in town, I would think they would appreciate their peer institutions backing them up the way the musicians of other orchestras have backed up the Minnesota Orchestra musicians. That is if people agreed with them. Why aren't Orchestra chief executives standing arm in arm with Mr. Henson the way the musicians support their colleagues here?

"has there been any public

"has there been any public support for the board and managements tactics and plans in this dispute from any orchestra-industry professional or authority?"

My perception is that there has been very little. The public doesn't seem interested in the dispute at all. Apart from MinnPost, and the occasional story in the Star Tribune, is issue has almost completely receded from public view.

" If this is the right path why aren't boards or CEO's of other orchestras rising to their defense to sadly confirm this is what is necessary?"

It's none of their business. And they have problems of their own, with nothing to gain from intervening in the problems in others.

"Why are those organizations continuing to hire Minnesota Orchestra musicians regularly for their performances?"

Because Minnesota Orchestra musicians are extremely talented. I think one of the most fundamental mistakes the MOA made in entering the lockout is that they overestimated the dependence of Minnesota Orchestra musicians on their Minnesota Orchestra paychecks. Management simply had nowhere near the leverage they thought they had in this dispute. One simple thing this dispute comes down to is that management is offering below market wages to the musicians, and when you do that, you just won't get musicians to sign up for the deal. Ever. It is becoming to everyone except the management and the board here is not a choice between a full loaf and a half a loaf; the choice is between a half a loaf and no loaf at all. In other words, we don't have a choice between a fiscally sound and a fiscally unsound, orchestra, our choice is between a fiscally unsound orchestra or no orchestra at all. When management finally comes to that realization, a deal will be a lot closer to tetting done.

Hiram, your comment is misleading

Hiram, there has been near-universal condemnation for the tactics of this board and management from others in the industry. Here are few examples:

The highly respected arts critic of the New Yorker, Alex Ross, recently described the situation in Minnesota as "one of the most flagrant cases of mismanagement in the recent history of American classical music": http://www.newyorker.com/arts/critics/musical/2013/11/25/131125crmu_musi...

The Chicago-based arts consultant Drew McManus has repeatedly described the actions of the board and management in far less than glowing terms. Here, he describes the negative consequences of the orchestral association's proposed elimination of seniority pay: http://www.adaptistration.com/blog/2012/11/19/examining-the-minnesota-or... Here, he describes the orchestral association as being uninterested in engaging in actual bargaining and compromise: http://www.adaptistration.com/blog/2013/08/30/minnesota-proposes-a-trap-... I could go on with examples.

When you state that the public isn't interested in this dispute, you illustrate exactly the type of thinking that has gotten the orchestra into this deep morass. While it may be true that folks who never listen to classical music are not interested in this dispute, the people who care deeply about classical music DEFINITELY care about this dispute. This difference is of profound importance. The orchestra needs to cultivate the people who care deeply about classical music, as these are the orchestra's customers and donors. Alienating your core constituency just because another segment of society doesn't care is not a recipe for success.

Your statement is simply misleading PR spin that creates an untruthful impression on readers.

Hiram writes:"But I am sure

Hiram writes:

"But I am sure somewhere, somehow, that obligation has been imposed on the MOA requiring them to act in a fiscally responsible manner...I am sure they could make a very reasonable case that the orchestra is currently on an unsustainable course, and that for it's long term survival, it must adopt a labor cost structure along the lines of their proposal to the union."

If you want claim that a death sprial is a fiscally responsible strategic plan be my guest. This team has not only deliberately prevented orchestra performances for 14 months, they failed to increase revenue, and created a misleading portrayal of their finances. One can make a stronger case they've charted a path to oblivion rather than fiscal stability.

At any rate, I'm not sure any of that is actually relevant to their charter as a non-profit. The Charter isn't about managing their finances, charters are a business license of sorts. Whether or not you bankrupt is your business, charters basically lay some basic ground rules. One of those ground rules is (I think) that you have to do what you claim your going to do. If your going to provide health care, you have to provide health care. If you're going to provide housing assistance... and so on.

What I'm asking, because I really don't know, is whether or not a non-profit symphony orchestra that deliberately prevents any concert performances for 14 month can still call itself an orchestra? Whatever their financial plan or mistakes if they aren't providing an orchestra, what's the point of their charter? If the entity is essentially defunct, as the MOA clearly is at this point, can the charter be revoked? Their reasons for doing whatever they did may actually be irrelevant.

The Orchestra can and should be on TV

My whole point is that the Orchestra can and should be on TV.

Watching on TV is now my preferred way of listening to concerts. I pretty much only play opera in AV now and have for about 7 years.

The 35 and under generation are cutting the cable in huge numbers and only watch TV via the Internet. A recent Nielsen survey, that I paid to download in its entirety show tectonic shifts in viewing habits. In my over 65 generation the survey showed only 5% could open a web browser in their TV screen. Well I'm in that 5% and very glad I am. So we now need to plan for the next middle age and older generation who will be tech savvy. In fact you can now see the end of traditional terrestrial broadcasting.

I have a years subscription to the Berlin Philharmonic Orchestra, Medici TV and the Metropolitan opera. I do watch others, including the DSO. Their programs have significant tasteful advertizing. There is also limited advertizing on Medici TV.

So the Minnesota Orchestra, or what ever it becomes should and must be on TV. The same goes for the SPCO and the Minnesota Opera.

MPR need to wake up also. From them I get a good FM signal, a lousy low bit internet stream and no picture. The cost of the subscriptions I mentioned are exactly half the cost of being a leadership circle member of MPR. From the other sites I get and HD picture and better audio. Now I wonder how much longer I will be an MPR member?

I just can't believe how we in Minnesota are letting the world pass us by. In fact we have the pieces in place here to be a world leader in the transformation.

From the data presented on Wednesday night, it is impossible to escape the conclusion that the high paid business leaders round here are not very bright. I suspect the board of MPR are cut from the same cloth. MPR should be way out in front of all this and not way behind. Again governance and leadership are primarily to blame.

Media

While I do think the orchestra should explore various new media options, the notion that they can get sufficient media exposure to justify the sale of naming rights is just unrealistic. I can't think of an orchestra anywhere that has managed to sell naming rights. The New York Philharmonic plays in Avery Fisher Hall. Do you know anyone who has a Fisher stereo?

If you want claim that a

If you want claim that a death sprial is a fiscally responsible strategic plan be my guest.

I don't want to claim that but that's what mangement would claim before a judge. And they would be able to make a reasonable, credible case.

I don't know what any charter says. I will say that if a board member wants to make those kinds of arguments internally, they should. But again, it's very difficult and would be very expensive to oust management, and efforts directed in that area don't address the orchestra's problems as a whole.

" is whether or not a non-profit symphony orchestra that deliberately prevents any concert performances for 14 month can still call itself an orchestra?"

It can certainly say it's in the orchestra business. No law requires management to cave in to labor demands. If management can show that it's being reasonable, responding to problems, it would be pretty difficult for a judge to displace them. No judge wants to manage an orchestra because they don't have orchestra management classes in judge school.

How judges see things

In this kind of a dispute, what a judge looks for is, in broad strokes, whether management has managed it's responsibilities reasonably. The judge does not see it as his responsibility to second guess management decisions, and the judge certainly doesn't want to take over management herself. The judge is going to be concerned with case before her. Although she might not dismiss them as totally irrelevant, she won't by comparisons with other situations which are not before her court. She isn't and can't going to try what's happening in Cleveland.

The case of the two op eds in the Star Tribune is instructive. The first op-ed, from labor talked vaguely and emotionally about a shared vision, and how management was failing the orchestra community. The immediate and automatic and I would say very predictable response from management was an op ed detailing in very specific terms, many of the successes of the orchestra in recent years. It is virtually undisputed at this point, that the orchestra is at an artistic high. My point here isn't with the actual merits of the position of either side, but simply to note that management's position was reasonable, and that since their obligation under the law is pretty much to make reasonable decisions, there isn't much the court can do about it. The issue of whether management is making right decisions, or good decisions. isn't one of law, it's a question for the board to decide, should they choose to address that issue.

Nicky Carpenter's Star Tribune op-ed

I can understand how someone could read Nicky Carpenter's op-ed and see it as giving specifics; on the surface, the op-ed was appealing.

With a deeper reading, however, the op-ed is very concerning. Nicky wrote in glowing terms about what the orchestra had achieved in recent years, but she fails to mention that these achievements were made possible by an environment that she and the rest of the board have systematically dismantled:
(1) Prior to Michael Henson's tenure as CEO, the Minnesota Orchestra was famous for the vision of excellence and harmonious working relationship that that the musicians, management and board shared. It should be noted that not only were Nicky and the board responsible for hiring Mr. Henson, I believe - if my memory serves me right - they renewed Mr. Henson's contract for another four years this year. Under Mr. Henson, the work environment had become very toxic even in the year leading up to the lockout, and it would obviously be worse now. I don't understand how the board expects the same level of artistic excellence with that type of sustained work environment, and Nicky does nothing to assauge this concern.
(2) The artistic excellence that Nicky lauds was due to the caliber of the music director (Osmo Vanska) and musicians at the orchestra. Nicky and the rest of the board made it very clear that Osmo Vanska was dispensable, and they have repeatedly stated that they view the musicians as dispensable; accordingly, Osmo is now gone and so are most of the musicians occupying principal chairs. The board's contract proposal to the musicians eliminates all seniority pay - another way of stating that the board doesn't value experience and thinks that fresh graduates from conservatories will be just as good - and it also take final hiring authority from the music director and gives it to the CEO, which is another way to say that the board doesn't value having a conductor with a strong sense of artistic vision - which will leave them with only mediocre conductors, because no one who is good would accept that type of dis-empowerment.

Hiram, when you state, in the present tense that the "orchestra is at an artistic high", it sounds like you've believed Mr. Henson's words and actually believe that the caliber of this orchestra will be maintained if the board's proposed cuts come to fruition. I'm afraid that you will be rudely awakened if the vision put forth by Mr. Henson and board comes to fruition.

I would also challenge you to consider that the board does not have to be financially irresponsible by offering the musicians competitive wages. Relative to peer insitutions (Pittsburgh, Cleveland), the Minnesota Orchestra has been woefully managed in the past decade, and revenues have not been maximized. With a combination of competent management that rebuilds ticket sales and the donor base, coupled with temporary but modest salary cuts, the Minnesota Orchestra can continue to achieve the artistic heights that Nicky Carpenter lauds. With the current path (incompetent management + austerity), the future is bleak. I would advise you that many patrons share my perspective.

Jusfwa

I am sure there are lots of reasons for the orchestra's current success, or at least the success it had prior to the lockout, but the simple fact that the orchestra has been successful make it very difficult to argue that this management has acted unreasonably.

" it sounds like you've believed Mr. Henson's words and actually believe that the caliber of this orchestra will be maintained if the board's proposed cuts come to fruition. I'm afraid that you will be rudely awakened if the vision put forth by Mr. Henson and board comes to fruition. "

Here I am talking about, not what I believe, but what management can argue. Management will argue that the orchestra has had success under their leadership, but that under the current financial structure that success cannot continue. They will have a lot numbers to back up that claim. Courts will be very reluctant to substitute their judgment for management's judgment on these matters. As I have noted, they don't teach orchestra management in judge school.

"I would also challenge you to consider that the board does not have to be financially irresponsible by offering the musicians competitive wages."

I do not know whether that's the case or not. What I do know, or what at least I am pretty sure of, is those who are charged with making those decisions believe it would be financially irresponsible to pursue a different course of action. Legally, a lot depends on not whether that belief is right or wrong, but rather on whether it is reasonable. Now as between the board and the management, the issue is different. If the board is dissatisfied with management, they have their remedies under various incorporating documents and whatnot. But there are lots of practical reasons why ousting management is very difficult.

Crump

Part of the problem with the Orchestra dispute is that each side has backed itself in a corner, for whatever reason. What this reminds me of, is when the Twins threatened to dissolve themselves if they didn't get a new stadium. It's been a while, and pardon me if I get some of the facts wrong, but what happened is that Judge Harry Crump, with literally no legal justification at all, stepped in with an injunction halting the dissolution. What I suspect was that this injunction could have been overturned in a second had the Twins appealed to a higher court. But they didn't, and the reason for that was that the injunction allowed the Twins to back down from what was an unrealistic threat without a loss of face.

With respect to the Minnesota Orchestra, a Judge Crump figure might be useful. I don't know in what forum such an individual might appear, but what might help is a strategy which addresses, not necessarily the problems of the orchestra itself, but the need or at least desire of the various parties involved to save face.

Huh?

Hiram writes:

"I don't want to claim that (a death spiral is sound financial practice) but that's what mangement would claim before a judge. And they would be able to make a reasonable, credible case."

You can't have it both ways Hiram, you can't refuse to defend a death spiral as "reasonable" financial maneuver but claim that any judge will see it as a reasonable financial maneuver. Judges look at facts, the "broad" stroke here is that this management has been deliberately preventing performances for 14 months. The fact is that this management has essentially liquidated the orchestra under the guise of "saving" it. You may be fooled, but I doubt a judge will be. Besides, I think your confusing charter revocation with bankruptcy. I'm not sure a Judge decides to revoke a corporate charter, it may just be a procedure for the secretary of state. When the FTC killed Enron for instance I don't think it was a judges decision, it was up to the FTC. I don't know, but revocation may just an administrative procedure.

"I don't know what any charter says. I will say that if a board member wants to make those kinds of arguments internally, they should.

This board is irrelevant. They either cannot or will not do anything, all we've gotten from the board for 14 months is 7 different kinds of nothing. Boards don't issue charters, the Secretary of State issues charters in MN. The board has been irrelevant thus far and I see no reason to expect that to change.

" No law requires management to cave in to labor demands."

Again, this is a "lock out" NOT a strike. Labor's demands are not the issue, labor is not the ones trying to impose demands, nor does the law require labor to cave in to management demands. MOA has locked-out the musicians half way through a contract period, it is management, not labor that is trying to modify the contract in the middle of a contract period. What I don't understand is why a mid-contract lock-outs aren't breaches of labor contracts?

Ya know, when you have a contract with labor, your supposed to work with them, not against them. The adversarial stance that MOA has taken has been the single greatest, and probable they single most unnecessary mistake they've made.

The idea that labor has been vague or unwilling to negotiate is simply ridiculous and completely contradicted by the facts and the history of this crises. I can tell you exactly what labor wants and what they say they want, and so can MOA. Any claims to the contrary are simply disingenuous.

I predict...

Either MOA will end up losing control of the orchestra OR they will declare bankruptcy of some kind within the next three months.

Arguments

"Management will argue that the orchestra has had success under their leadership, but that under the current financial structure that success cannot continue."

Well, you can always make arguments. The problem is that MOA cannot make a CONVINCING argument. They can't claim to have had any success because they never balanced revenue and expenses, they raided the endowment to create the appearance of a balanced budget... the illusion of financial success. You can say what you want about judges but I don't most judges are stupid. Look, MOA isn't simply trying to balance a budget at this point, they're trying to nullify an existing contract with the musicians under the guise of balancing the budget. It order to get a judge to go along with that it seems to me they'd have to prove that their financial strategy isn't simply their financial strategy, but that it's the only possible financial strategy they could pursue. Every time the've gotten close to a situation like mediation where they'd have to prove something like that, and that's happened twice now, MOA backs out. I think we all know why.

In a lot of ways it's like Republican false claims to have "balanced" budgets during the Pawlenty era, smoke and mirrors but no real financial stability. Like Pawlenty MOA seems to have decided that they had a spending problem not revenue problem. MOA produced the same results.

You can't have it both ways

You can't have it both ways Hiram, you can't refuse to defend a death spiral as "reasonable" financial maneuver but claim that any judge will see it as a reasonable financial maneuver.

I can have it multiple ways. In any event, what I think doesn't matter. In a legal context it's what a judge thinks. And here, a judge is confronted by two death spiral scenarios. And it really isn't his job to choose between them.

Management has not been preventing the orchestra from performing. Indeed, the orchestra has been giving concerts all over town. While they may have "essentiallly" liquidated the orchestra, courts are not concerned with the essence of things, only with the law. And legally, the orchestra remains quite unliquidated.

"This board is irrelevant. They either cannot or will not do anything, all we've gotten from the board for 14 months is 7 different kinds of nothing."

That's not the court's problem.

"Labor's demands are not the issue, labor is not the ones trying to impose demands, nor does the law require labor to cave in to management demands."

Kind of verging into a labor law issue. Has there been a refusal to bargain in good faith? You would have to look at the facts. Has either party refused to enter into negotiations? Both would be best advised to at least appear to negotiate,

As for bankruptcy, again I don't know, but my guess is that the MOA is quite flush at the moment. They receive income from the endowment without having to pay musicians. One reason we don't have a settlement is that neither party is under much pressure to settle, at least that's my guess.

Management doesn't have to make a convincing argument to the court, only a reasonable one, It's not up to the courts to evaluate the merits of how the orchestra is managed. As I have noted, they don't teach orchestra management in judge school. If management is doing a rotten job, it's up their employers to do something about it.

Lawyer stuff

Three quick points:

1) Management has in fact spent the last 14 trying prevent any performances from taking place. They have failed. They cannot take credit for performances that take place despite their best efforts to prevent them. An orchestra that spends 14 months trying and failing to prevent orchestra performances is not an Orchestra.

2) Hiram is right, they have too much money to declare bankruptcy. The question then will be who ends up in control of the orchestra. At some point, if the MOA itself doesn't let the orchestra perform, it must become a defunct entity.

3) "Kind of verging into a labor law issue. Has there been a refusal to bargain in good faith?" I don't know why it is that management supporters don't seem to understand the nature of a "lock-out" in the middle of contract period. Frankly, I don't think the musicians are even obligated to negotiate at all, they've already negotiated, they HAVE an existing contract that is valid until what? 2015? That's a contract that management signed. Nevertheless the musicians have offered to negotiate, and have offered to modify their existing contract. Management is responsible for the lock-out, management are the ones demanding concessions, Management are the ones who want to crack open an existing contract and re-negotiate the terms, management are the ones who have backed away from all attempts at mediation. Management supporters keep wanting to pretend that everyone is equally responsible for the lock-out, it's that simple. Now they want to maintain the lock-out and we're supposed to pretend that someone else is responsible for it? Frankly it's kind of bizarre. You want to know what the musicians want? Read the contract they all signed two years ago, this is not a mystery.

Reasonable? Right...

"Management doesn't have to make a convincing argument to the court, only a reasonable one."

It doesn't take a minor in orchestra management from "judge school" to see how unreasonably this management has handled things -- supposedly world-class financiers mismanaging operating revenues and the endowment, the ridiculous work rule changes they have tried to impose, huge bonuses to the CEO while crying poor and laying off staff, sidestepping the mediator, throwing away prestigious residencies in New York and London, and then of course the lockout and being completely unresponsive to patrons who ask questions. (I could go on.) People are now calling this a hostile takeover -- board leaders acting as if they were in an ownership role of the orchestra -- something which I don't think anyone would consider a reasonable way to manage a non-profit arts organization.

"If management is doing a rotten job, it's up their employers to do something about it."

Thanks for the good laugh. We all know the board leaders and management are in cahoots -- despite all the horrible decisions he made and toxic work environment he established, the CEO was hailed "the perfect leader" by the board chair, given those huge bonuses, and signed to a new contract. And with a self-selected board that chooses to be intransigent, I guess there's really nothing anyone can do about it except go to court.

Finances

I don't think management would have any problem at all in showing that the Minnesota Orchestra's finances are deteriorating.

If the board thinks management is doing a good job, who is a judge to question their decision? And what exactly, are people asking a judge to do? Take over the management of the orchestra?

Contract

" Frankly, I don't think the musicians are even obligated to negotiate at all, they've already negotiated, they HAVE an existing contract that is valid until what? 2015? "

According to the musicians' website:

"Negotiation Update from May 28, 2012

"The contract between the musicians of the Minnesota Orchestra and the Minnesota Orchestral Association expires on September 30, 2012. Negotiations for a new contract began in April."

Irony is...

World-class musicians have been locked out and without a contract for more than a year, a world-class conductor has resigned, recording contracts and prestigious residencies have been thrown away, a newly renovated hall (at some taxpayer expense) sits empty except for some political fund raisers, while an incompetent CEO continues to earn nearly $400K per year (plus who knows what in bonuses)--to do what? I have no idea. But yes, it only matters what the board thinks.

But yes, it only matters what

But yes, it only matters what the board thinks.

You are right. Ultimately, it's the board's call. And the problem is that the board for various reasons, finds it difficult to make the call, leaving what I do think is an unacceptable status quo, in place.

I see according to the morning paper, the St. Paul Chamber Orchestra is showing a surplus. Not holding concerts is profitable. One overlooked option is for the St. Paul Chamber Orchestra to merge with or perhaps absorb the Minnesota Orchestra. I don't know why people aren't discussing that possibility.