The management and board of directors of the crippled Minnesota Orchestra have repeatedly stated that their financial plans are sound. Unfortunately, many outside observers are not so sure.
I have spent much of my spare time since August writing about the orchestra’s travails, and I can attest that there are dozens of questions about past and future fiscal performance that the management and board of the Minnesota Orchestral Association (MOA) have yet to answer. Chief among them are the following:
1) Throughout the $100 million-plus Building for the Future fundraising campaign, donors (and legislators) were never told that a “business model reset” was imminent — much less one that could result in the departure of key players or Music Director Osmo Vänskä. I have talked to dozens of people who say they wouldn’t have donated to the hall construction effort if they had known what was coming. Their contributions combined number in the millions of dollars. Has the MOA created a plan to address the potential future loss of revenue from these patrons?
2) According to their 990 forms (available on guidestar.org), in FY 2009, the Minnesota Orchestra sold $28.7 million in securities at a nearly $14 million loss. This loss contributed to one of the worst investment income records among major American orchestras during the Great Recession. What were these securities? Who made the decision to sell? What is their value now?
3) According to their Strategic Plan Summary, in 2007, the MOA determined that in the fiscal year lasting from September 2007 to August 2008, the Association’s invested assets would be worth a total of $192.4 million. They ended up being worth $168.5 million. Even before the market tanked in October of 2008, the MOA was off by 13 percent … a mere one year into their projections. Who was in charge of drawing up these numbers?
4) In FY 2011, according to audited financial statements, the board approved an endowment draw of $12.1 million, but only $6 million of that went to operating activities. Where did the other $6.1 million go?
5) According to their 990s, the MOA’s program service revenue fell by 15 percent from FY 2008-2011. This is an extremely poor program service revenue record compared to most other major American orchestras. During that same time, according to their 990s, the New York Philharmonic’s program service revenue held steady, while the Cleveland Orchestra’s increased by 8 percent, and the Los Angeles Philharmonic’s increased by 7 percent. Even among orchestras that saw decreases, the Cincinnati Symphony only saw a drop of 9 percentage points, the Boston Symphony a drop of 8, and the Chicago Symphony a drop of 7. Why wasn’t Minnesota Orchestra’s management able to duplicate its peer orchestras’ successes? Is it looking to more successful orchestras for ideas to implement here?
6) According to their Strategic Plan Summary, the MOA is striving for 80 percent paid capacity at Orchestra Hall post-renovation. (Their pre-renovation paid capacity was 69 percent.) However, several hundred seats were removed during the renovation. 69 percent of a 2,450-seat hall is 1,691 tickets sold, while 80 percent of a 2,092-seat hall is 1,674 tickets sold. In short, the MOA’s self-described “ambitious but achievable” goal is to sell 17 fewer tickets per concert than it is now. How is this ambitious — or even desirable?
7) In publicly released minutes, the Minnesota Orchestra management praised the Detroit Symphony as an organization worthy of emulation. That orchestra’s unrestricted endowment was only worth $23 million when it signed a contract with musicians in 2011 guaranteeing a base salary of $79,000. The Minnesota Orchestra’s total invested assets are currently worth more than $150 million, yet it is proposing a base salary of $78,000. The disparity is puzzling. Could the board discuss the Detroit-Minneapolis comparison in greater detail?
8) The renovation of Orchestra Hall and resulting increase in rental fees has made the facility too expensive for many nonprofits. The Minnesota Youth Symphony and Suzuki Association of Minnesota will no longer be able to hold concerts or events there. Is this acceptable to management? What is being done to ensure these groups can perform at Orchestra Hall?
The board asserts that its plan will save the Minnesota Orchestra for future generations. I and many other patrons remain unconvinced. However, regardless of who is “right,” the board is doing Minnesota a tremendous disservice by not explaining itself clearly, and by letting important questions like these stand ignored and unanswered.
It is discomfiting to know that the Minnesota Orchestra board of directors is led by Richard K. Davis, the president & CEO of U.S. Bancorp, and Jon R. Campbell, the executive vice president and director of government and community relations at Wells Fargo. One can only hope that these men lead their banks more effectively than they’ve led the board of the Minnesota Orchestra.