Some Additional Thoughts About Louisville

Since it was announced, I’ve been mulling the details of Louisville’s new contract over in my head. So far, I’ve come up with mostly questions…

The overriding question I have is how the organization plans to function when they’ve stated in the press that the overall savings over the five year contract term is only $1.9 million. That’s not a huge savings and it seems even smaller when you take into account that the organization needs to raise an additional $1.7 million just to finish out this season (although that figure may only be $700,000 since they say an equal amount of funding will come in almost immediately).

Given the concessions listed in the new contract, it seems as thought the cumulative savings should be much higher than $1.9 million. In the first year alone, they’ll earn 25% of that $1.9 million through the no less than $500,000 they’ll save in salary cuts. Of course, that’s just the first year, every subsequent year of the contract yields smaller savings from salary cuts but even by year five they’ll only end up paying about $10,000 more than they will for the current 05-06 season.

Then there are the cuts in health insurance. The players now have to pay 20% of their premiums out of their own pocket. Let’s be generous and say that health care expenses went up 15% from 04-05, even in that case the organization will still save 5% on health care costs. Furthermore, those savings will be realized every year of the contract as the musician contribution of 20% never changes.

Additionally, there’s the two weeks of vacation which have been cut out. When compared to the previous contract it appears that these weeks were “mandatory vacation weeks”. This indicates the organization wouldn’t have been performing anything during those weeks anyway so there’s nothing to be lost from expected performance revenue, a twofer with respect to savings.

Then there’s the immediate savings found in the new tiered system of personal and sick days (detailed here). That’s another twofer savings due to the fact that the organization saves by not having to pay musicians when they are sick or otherwise out but they don’t have to pay a substitute to cover the part which would have been filled by the salaried musician.

All of this makes me wonder why the cumulative savings are only $1.9 million. Of course, without seeing the spreadsheets it’s not really possible to accurately gauge the validity of that figure but there’s another question that pops up from all of this worth examining: the issue of tough negotiation rhetoric.

When this mess initially hit the fan, board president Joe Pusateri claimed that the organization needed to cancel its planned recapitalization campaign because the system in place of 71 full time musicians wasn’t sustainable; as a result, they could no longer legitimately convince donors to give. Now the organization is faced with needing $700,000 by the end of the season (assuming the other pledged $700,000 comes through) and they have to go out with hat in hand while that old rhetoric is still buzzing around in everyone’s ears.

Then there’s the “deal breaker” rhetoric. Joe Pusateri repeatedly asserted that in order for the organization to be financially stable they would have to cut the number of full time players. They even went so far as to stipulate that as one of their terms for going to mediation.

Now they come out of mediation with 71 full time players in tact. Did Joe Pusateri have a change of heart and he’s now motivated to go out and lead the campaign to raise the additional funds needed to keep the organization going for the next five years?

Mediation is a tricky process; it’s rarely as simple as finding middle ground. Tough talk from both sides is par for the course before getting to the table and as such, one of the principal components of mediation is to provide both sides with a way to save face. If not, whatever deal they end up with may be in jeopardy before the ink dries. So far, I’m not finding any face saving measures in this situation and that observation is gnawing at the back of my head.

It makes me wonder if Pusateri has plans to put his money in right now and slip quietly into the mist within the next year, away from public attention, leaving the organization without any leadership or any plan. It wouldn’t be the first time it’s happened in this business but I would be very disappointed to see it happen in Louisville.

However, in situations where both sides are presented an opportunity to save face and board leaders, in particular, have taken advantage of that prospect the results have been worth merit and their organizations are better for it.

I want to make clear that my observations and concerns aren’t to disparage the recent settlement. Even in the worst of conditions (such as the current LO board leadership skips town), the new agreement allows the organization to continue making music and paves the way for new leadership with a fresh attitude to enter the organization.

The good news is that the organization will be able to continue with a full compliment of musicians, allowing them to produce as high of a quality musical product as possible. As long as they maintain that, then board members and administrators will always have something worth their talent and effort.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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