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When arts institutions invite disaster

MinnPost photo by Corey Anderson
Elite boards tend to prefer raising big money for arts building projects — the "edifice complex" — rather than for actual arts activities.

Many have offered opinions and insights concerning the value of the Minnesota Orchestra now mired in the unprecedented long-term lockout of the musicians, but something more can be learned by remembering and comparing the serious situation of another arts organization more than 40 years ago.

In the early 1970s, the Minneapolis Society of Fine Arts — MSFA, then the umbrella organization for both the Minneapolis Institute of Arts and the adjacent Minneapolis College of Art and Design — undertook a massive building expansion project that was strongly advocated by key MSFA board members Atherton Bean and Charles Bell. With an expected cost of more than $30 million, $167 million in today’s dollars, the sheer scale of the fund raising caused concern. At that time, for example, John Pillsbury told me his family had concerns about the huge project, although they finally went along with it.

I was active then in a group of artists, composers and authors that publicly criticized the project; idealistically we urged that money be set aside for an innovative effort to help artists. While we would have been pleasantly surprised if Bean and his MSFA peers had altered course, we certainly shone a spotlight on the tendency for elite boards to prefer raising big money for arts building projects — the “edifice complex” — rather than for actual arts activities. But MSFA risked serious disaster with its oversize project. Several years later, a former MSFA official pulled me aside at a social gathering and said, “You don’t know how right you were.” When I asked what that meant, the insider explained, “They almost defaulted on their bonds!” Had that occurred, the Institute’s fund-raising capability would have taken a grievous hit, and because the organization does not own the buildings, the art collection would have been jeopardized. Bad management, no doubt, though not ill-intended.

Compare what has happened in the case of the Minnesota Orchestral Association (MOA) after its board was captured by bank executives Richard Davis and Jon Campbell, who pushed MOA into an expensive renovation of Orchestra Hall during a time of recession while neglecting the all-important endowment fund that exists to help pay the musicians. MOA’s report filed in July of this year with the Internal Revenue Service stated the organization’s mission or most significant activity to be “A Minnesota Symphony Orchestra, internationally recognized for its artistic excellence” and for its “distinguished performances around the world, award-winning recordings, radio broadcasts and educational programs, and a commitment to building the repertoire of the future, ” etc, etc. Elsewhere, however, the MOA board clarified its new intentions by removing “orchestra” from the corporate mission statement and designating MOA a mere operator of Orchestra Hall as a center for unspecified performances.

Degrading the operational asset

While they raised big money, acknowledged in the IRS report as “significant increases in public support” related to “renovating Orchestra Hall” and “raising support to fund the cost of the renovation,” the bankers and their allies publicly complained that in their view the community could not afford an orchestra at the present level, and they let the endowment erode. As with the MSFA example, bad management, but here with ill intent, to degrade the renowned operational asset.

During the 1970s period when MSFA plunged ahead with massive construction, the museum employees began organizing because they had unresolved work problems. MSFA’s board reacted by spending considerable money on legal fees to try to fend off unionization. One experienced labor contact said it had been years since he’d seen such extreme managerial truculence. But the Minneapolis Institute of Arts did become only the second major U.S. art museum to unionize. Now, these many years later, both management and labor describe relations there as reasonable.

In contrast, MOA’s relations with the musicians plummeted to an all-time low as if on cue, just before renovation began on the hall. The board proposed a hefty cut in musicians’ pay, and perhaps even more significantly, more than 200 changes in the collective-bargaining agreement. Besides its provisions concerning pay and benefits, the union contract provides protections from unreasonable working conditions and is the cumulative result of many years of good-faith negotiations.

Faced with such an extreme retrenchment, the musicians predictably rejected the proposal, and management locked them out. Even the involvement of a noted mediator, former Sen. George Mitchell, didn’t narrow the gap between the two sides. Formerly such staunch and musically minded civic leaders as Elbert Carpenter, Judson Bemis, John Pillsbury, Kenneth Dayton and many others would have never let matters come to this. Gone are the early days of the Evergreen Club when business leaders and musicians collaborated to put the orchestra on a firm footing. Campbell and Davis are of a different breed.

It appears that MOA may have risked disaster by planning to lock out the musicians through making an unreasonable and likely to be rejected proposal, thus saving money that would have gone to musicians’ salaries and rent for use of the Convention Center as an interim concert venue. But now the hall renovation is done, and the musicians continue to hold firm, citing their desire to keep the orchestra’s status high by maintaining work standards comparable to those of other top-rated orchestras.

Planned or not, disaster arrived

Whether planned or not, MOA’s position has resulted in disaster. Esteemed music director Osmo Vänskä resigned, and a number of key players have gone elsewhere. So far, MOA has not defaulted on bond payments or failed to pay bills, but its fund-raising capabilities must have suffered a heavy self-inflicted blow. And it may have breached trust with those who previously donated specifically to fund musicians, if MOA has spent such income during the lockout. Why would anyone gladly donate money to such a financially mismanaged organization? (Not to delve into the management’s deficiencies in audience development and other areas!)

Aside from the annual high-society “Symphony Ball,” the renovated hall has stood largely empty except for an event by the politically conservative Center of the American Experiment on right-to-work laws: in your face, union! Of course the artistic status of a renowned art museum such as the Institute of Arts does not depend on unionization, but it’s highly unlikely that any first-rate U.S. symphony orchestra would maintain top quality without an effective union and good labor contract. The finest musicians wouldn’t want to join a “right to work” orchestra.

A final point of comparison centers on public subsidy and finances. At the time of its gargantuan expansion, MSFA approached the Legislature for an increase in the “Park Museum Fund,” its means of support by a direct levy on Hennepin County property based on statutory authority dating back to 1911. The Legislature complied, and to this day the rate remains at .00846 percent of market value. Few seem aware of this unique subsidy, which currently nets the museum more than $10 million per year. MOA got a $14 million bonding grant for the hall renovation, but unlike the Institute it gets no steady operating support from a tax levy. Legislators might consider a comparable or more broadly based measure for the orchestra. (Of course, the Institute generally offers free admission, and that cannot be the usual procedure for the orchestra.) There would have to be changes in MOA governance.

And changes in governance are needed in any case, because it appears that for the orchestra to survive in recognizable form, either the musicians must struggle to operate as a new entity divorced from MOA or else Jon Campbell, Richard Davis and their allies must resign from the MOA board in order for MOA to restore its fund raising ability, amplify the endowment and resolve the lockout.

David Markle, of Minneapolis, is a writer and acoustical designer.

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Comments (6)

  1. Submitted by Bill Schletzer on 12/20/2013 - 10:47 am.

    excellent article

    Nice to read a new slant on this situation. Thank you.

  2. Submitted by Sam Bergman on 12/20/2013 - 11:04 am.

    And what was the renovation really for?

    The Orchestra Hall renovation was ostensibly undertaken to improve the facility on behalf of the orchestra that calls it home. But midway through the process, the internationally renowned acoustical firm that had been retained to insure that the hall remained acoustically superior withdrew from the project entirely. It would be interesting to hear the acousticians’ perspective on the misplaced priorities of the MOA.

  3. Submitted by jody rooney on 12/20/2013 - 12:54 pm.

    So how is the orchestra board different from the legislature

    Any group with a big collective ego like to invest in monuments to their ego. We have more state parks than we can afford because it is easier to pass legislation supporting a new park than pay for the maintenance on the parks we already have.

    In the case of the orchestra I believed that ego combined with good financial acumen that said if you increase the capital but don’t have much in the way of expense you accumulate more money. This apparently has a better ring to it than the orchestra sounds to bankers.

    Of course one wonders where the endowment fund is invested and if there may be a conflict of interest. I am surprised no one’s followed the money. My guess is there is less than 6 degrees of separation from some board members and profiting from the endowment. And that would be against state statute.

    This is a great article and is getting at the heart of the problem in both the orchestra debacle and the society in general. We have lost the truly civic minded individuals like the Pillsbury’s, Bemis, Dayton, and Carpenter and replaced them with a lower class of money makers. Really these people are just so tacky.

  4. Submitted by Elizabeth Erickson on 12/20/2013 - 01:03 pm.

    great analysis

    Every single time I drive past a US Bank or a Wells Fargo Bank, I scream and say rather nasty words I can’t print here. And I am not alone. At what point are the board members of THESE organizations going to wake up and realize that not only are Jon Campbell and Richard Davis destroying a world class orchestra, they are also doing serious damage to their own companies. This disaster is being covered by both arts and business organizations; it is being covered by the major newspapers in London, Paris, New York, and LA; it is being written about in countless blogs with thousands of readers; and it has been covered extensively in well known periodicals like the “New Yorker”, This is not a little “Oh the hard core patrons of the Minnesota Orchestra living in this town are pissed off” This fiasco has significant ramifications well beyond the state borders

  5. Submitted by Tom Foley on 12/20/2013 - 05:43 pm.

    low tax rates and county tax levies

    The current crop of civic minded patrons probably have financial instincts very similar to the patrons of yore, such as Elbert Carpenter, Judson Bemis, John Pillsbury, and Kenneth Dayton. The difference may be that both taxes and inflation are currently very low, and there is therefore very little financial incentive to invest or to give. The very well known but dirty little secret is that contemporary corporate America and wealthy individuals have lots of capital, and they have wisely chosen to put it under the proverbial pillow.

    On quite another note, the MOA does not have anything comparable to a “Park Museum Fund,” but I respond very well to the implicit idea that the state could grant to Hennepin County the right to impose a levy to support the orchestra. Of course, in accepting such support, the state and county would impose conditions in addition to those already imposed by the lease of the property to the MOA.

  6. Submitted by Tom Foley on 01/08/2014 - 07:13 pm.

    It’s a “complex.”

    Is it an “edifice complex,” or a “build it and they will come complex?” Either way, it’s a dumb idea.

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