More troubled news coming from the New Jersey Symphony Orchestra. Annual operating debt combined with a questionable instrument collection purchase has conspired to put the NJSO in a position where they have apparently opted for an arts administrator’s version of the Hail Mary pass: a massive withdrawal from their endowment…

An Associated Press article appearing in the 07/17/06 edition of the Philadelphia Inquirer describes the NJSO’s plan. Reportedly, the orchestra is taking approximately $3.1 million from its endowment and transferring it to a separate endowment which officially owns the string instrument collection. Afterward, that endowment plans to sell the NJSO 10% of the collection, which the orchestra plans to sell to interested buyers willing to lend them back to the orchestra for performances.

If the reports are accurate, this risky endeavor is just the latest in a string of perilous actions undertaken by the organization as a result of purchasing the instruments from Herbert Axelrod. For example, while suffering under the debt incurred from the instrument collection purchase, the NSJO had to scale back on a number of concerts they performed resulting in lower earned income and public exposure. To help compensate for that revenue gap the musicians accepted substantial salary and working condition concessions in their latest round of collective bargaining negotiations. Now, their situation has degraded to such a point that they are apparently looking to sell off some of those instruments in order to ease some of the debt incurred from purchasing the instruments in the first place.

>From an analogous point of view, it’s as though a bachelor purchases a vintage high performance luxury car to help attract women only to discover that he can’t afford the cost of gasoline and insurance. As a result, he decides to look for people to buy pieces of the vintage car with the hope that they’ll let him continue to use them so he can still attract women. Do you see the dilemma?

The decision to draw on a third of their endowment is decidedly a big gamble. Of course, drawing on an endowment in and of itself isn’t a bad thing but only under a distinct set of parameters. That issue was discussed in more detail in an article about a similar decision by the Baltimore Symphony’s board a few months ago so I won’t hash over those points in detail again.

Nevertheless, there are some intriguing parallels between Baltimore Symphony and the NJSO. For example, they are both slowly surrendering ownership and/or control over capital possessions, in Baltimore, it’s their hall and in New Jersey it’s the string collection. Additionally, it has been reported that both organizations are hoping that lowering their debt by drawing on their endowments will help attract a new executive administrator.

Will the decision pay off? Only time will tell.

There’s more to examine here from a dynamic point of view but I’ll wait until tomorrow to cover some of that as the popular WNYC radio program Soundcheck with John Schaefer will cover the issue today during a brief segment. The program begins at 2:00p.m. ET.

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.

Related Posts

Leave a Comment