According to a 9/8/2012 press statement from the Indianapolis Symphony Orchestra (ISO), the organization announced it failed to reach an agreement with its musicians; as a result, the organization canceled concert events scheduled to occur on September 14 and 15 as well as September 21-23. Shortly after the cancellation announcements, the ISO musicians asserted they have been locked out by ISO management and both sides initiated PR campaigns to begin framing the debate within the greater public forum.
According to the musicians, they offered a two month play and talk contract extension under terms that would reduce musician base pay from $1,500/week to $1,250/week for the full complement of 82 musicians; however, the ISO statement declared that course of action “would only exacerbate the ISO’s already difficult financial challenges.”
The ISO statement continues by providing an outline of their proposal which includes a weekly base salary of $1,215/week for 69 musicians for the first year of a multiyear agreement, so it appears that the insurmountable difference over the eight week period is approximately $150,000 ($820,000 under the musician proposal vs. $670,080 under the ISO proposal).
The ISO statement does not address whether or not the ISO cash flow over the two month period is sufficient enough to cover that difference. And although the musicians are apparently in possession of at least some of the current ISO financial statements, their statement does not indicate whether or not they believe the organization has necessary cash reserves capable of covering their proposed concessions.
Information for ISO patrons with tickets to canceled events is available at the ISO website; currently, the organization is offering refunds, credit or to donate the amount of the ticket purchase.
Despite musicians’ efforts to save two concerts, Symphony Society rejects last ditch proposal and cancels concerts
Two month contract extension would have paid musicians less, kept music on the stage
(Indianapolis, Ind.) The Indianapolis Symphony Orchestra Musicians (ISO Musicians) announced today the Symphony Society rejected the ISO musicians’ last ditch offer for a two month contract extension to keep the music on the stage while negotiations continue. The two month contract extension that the Society refused would have allowed the ISO’s Classical season opener on September 14th and 15th with Krzysztof Urbanski and the Pops season opener on September 21-23 with Jack Everly and Time for Three to proceed.
“We are stunned and saddened that the Society refused our offer and cancelled these concerts, which ultimately punishes the people of Indiana by depriving them of a world class musical experience,” said Richard Graef, chairman of the ISO musicians negotiating committee. “While we have continued to negotiate in good faith, and felt we were making some progress, the Society’s unwavering commitment to cancel these concerts is simply baffling.”
On Sept. 7, 2012 at 5:51 p.m., the ISO musicians made its most recent proposal for a short-term contract that would allow the musicians and the Society to “play and talk.” This offer would have paid the musicians a weekly rate of $1250, which is 16.7 percent lower than their current weekly rate. The last offer from the Society was a weekly salary of $1215. Had the Society approved this extension, it would have cost them less than $30,000 in salaries, overscale, and taxes.
The musicians also have provided 15 dates between September and November 8, 2012 to the Society so both parties can continue negotiations.
“Throughout this entire negotiating process, we have made it very clear to the Society that we want to be a part of the solution to their financial problems,” said Graef. “That’s why, using financial data the Society provided to us, we worked with a financial analyst to craft a sustainable financial model that puts the Society in a positive position both financially and artistically.”
The negotiations between the Society and the Musicians have received national attention in the last twelve days. “The Musicians of the ISO are extremely grateful for the outpouring of support we’ve received both from our local community, and from around country,” said Graef.
Earlier this week, Maestro Urbanski conducted the Los Angeles Philharmonic at the Hollywood Bowl, which served as his West Coast debut.
In his review of the concert, Los Angeles Times music critic Mark Swed referenced the contract negotiations between the Society and the musicians, and noted that Urbanksi’s opening concerts were threatened.
Swed wrote, “Urbanski has already caught the attention of the music world, especially in Europe. He is on the radar of the Vienna Philharmonic and the Berlin Philharmonic. The Indianapolis Symphony would be crazy to blow the opportunity Urbanski presents. If it does, someone else will snap him up in a second. I would if I ran an orchestra.”
The full article can be viewed here: http://www.latimes.com/entertainment/arts/culture/la- et-cm-hollywood-bowl-review-20120906,0,5763582.story
“As musicians, we want nothing more than to be on the stage with Maestro Urbankski, Jack Everly and Time for Three, playing great music,” said Graef. “To the people of Indiana, we are sorry the Society cancelled these concerts.”
The musicians of the ISO appreciate your support and assistance during this crisis. If you can help us in our struggle to preserve the ISO as Indiana’s “Major League” Orchestra contact us firstname.lastname@example.org. Please send any statements of support for the musicians to:
Interim CEO – ISO
32 East Washington St
Indianapolis, IN 46204
Also please copy any statements of support to the Musicians at email@example.com
UPDATE ON NEGOTIATIONS- AS OF 9/8/12
The Indianapolis Symphony Orchestra and the Indianapolis Musicians, Local #3 of the American Federation of Musicians Union failed to reach agreement on a new contract, despite two days of negotiations to try to reach common ground. The previous contract expired on September 2, 2012.
The ISO worked day and night on a new contract, but regrettably were unable to reach a compromise in last week’s ditch effort to maintain the start of ISO’s 2012/13 performance season. The gap between what the musicians’ union is proposing and what is essential to economically sustain the ISO’s future is just too great. The union’s proposed extension would only exacerbate the ISO’s already difficult financial challenges.
In order to have sufficient time to notify ISO subscribers and single-ticket buyers of the performance schedule, ISO is forced to cancel its first two weekends of performances for the 2012-2013 season (Sept. 14-15 and Sept. 21-23). Additional performances may be cancelled unless an agreement is reached soon.
The ISO’s intent all along has been to maintain the artistic quality of the Indianapolis Symphony Orchestra, and to do that in an economically sustainable way. The ISO’s proposal, which the musicians’ union has rejected, would continue the Orchestra’s key music series, including Classical, Pops, Symphony on the Prairie and Yuletide Celebration; aggressively manage all non-artistic expenses; grow the annual giving campaign by raising an additional $2.5 million per year; develop a more robust planned giving campaign to support the endowment; continue ISO’s commitment to quality performances while matching both the orchestra size and performance schedule to actual needs; and ensure that innovation remains an ISO focus for the future.
The ISO will work with the musicians’ union to select a new date for talks and is committed to push forward in the hopes of reaching a solution. The ISO board and staff treasure the Symphony Orchestra and all that it means to the City and State.
The ISO will provide updates on its website, www.indianapolissymphony.org, as well as via local news media outlets. Ticketholders can contact the ISO Box Office by calling 317-639-4300. ISO subscribers may email the ISO at firstname.lastname@example.org.
Negotiations with the Musicians’ Union
The current contract between the Indiana Symphony Society, Inc. (the official name of the organization that operates the Indianapolis Symphony Orchestra) and the American Federation of Musicians, Local 3 (the union representing our musicians) expired on September 2, 2012. We entered negotiations in early June of this year and offered more than 40 dates to the Musicians’ Union throughout the summer to negotiate. We are eager to find viable solution that works for the musicians, the organization and our patrons and supporters.
Issues related to the current union contract
There are many provisions in the current union contract that limit ISO’s ability to fix the problem with our current business model. The most significant is the fact that the ISO typically uses 61-69 musicians for most performances; however, the contract requires us to pay full salary and benefits to 82 musicians, even though we use 82 musicians less than half the year.
The current minimum salary is $78,000 per year, and benefits under the current contract include 9 ½ weeks of paid vacation, and up to an additional 3 ½ weeks of other paid time off. The union contract also requires the ISO to pay up to $40,000 per year for massages. The musicians currently pay less than 10% of the “premium” for health insurance, and the union has a defined benefit pension plan, which will require funding contributions of $13.3 million over the next nine years.
While we understand that we must stay competitive to attract the best and brightest musicians, we must also remain fiscally responsible to the generosity of our patrons, donors and endowment.
Our Proposal – as of 9/4/12
Our most recent proposal adjusts the orchestra size to 69 musicians, to better fit the number of musicians we use for most of our music series. Because our 20-weekend Classical Series repertoire requires more musicians, we have proposed hiring the additional string players needed to build the orchestra size up to 87 on an annual contract basis. These musicians would be selected through a rigorous audition process, directed by other ISO musicians and our Music Director.
Management has also proposed a 38-week season for the orchestra. This is a reduction of 7 ½ weeks compared to the current contract. We have asked the musicians to have an open discussion with us on where to reduce these weeks.
We have proposed a minimum weekly scale of $1,215 for the first year of the contract. Our proposal retains the seniority pay provisions and, of course, individual contracts will continue for musicians in “title chair” positions.
Another change comes from reducing the number of weeks of paid time off. Management has proposed 2 weeks of vacation, 10 days of sick leave, and 10 days of other paid time off – a total of 6 weeks – to go along with the 38-week orchestra season.
We have also proposed a freeze to the defined benefit pension plan service accruals, and replacement with a 3% matching contribution in a 403(b) plan. Even with this freeze, the plan will require $10.4 million in funding contributions over the next 9 years.
Management’s proposal does not include immediate termination of any musicians. In fact, our proposal has offered an early retirement package and a voluntary incentive for string players who choose to leave the orchestra by the end of the 2012-2013 Classical season.
The Musicians’ Proposal – as of 9/4/12
The Musicians’ Union has proposed a 14-week furlough over five years (4-weeks in year one), with savings of about $3.5 million spread over the five year period. Their proposal continues to focus on a 52-week orchestra with 82 musicians and includes a $6.5 million draw on the ISO Foundation. This proposed draw is $2.5 million higher than the ISO Foundation grant approved for the 2012-2013 season. We appreciate the willingness of our musicians to find solutions. Unfortunately, we know ISO’s annual budget gap is closer to $10 million, an amount the ISO Foundation can no longer afford to make up.
The ISO’s financial situation
For the past several years, the Indianapolis Symphony Orchestra has been able to maintain a balanced budget thanks to the extraordinary generosity of the ISO Foundation. Although with the economic downturn and dramatic changes on Wall Street, the ISO Foundation can no longer cover the ISO’s operating budget shortfall. Unless significant changes are made to the overall business model, the ISO’s annual operating deficit would deplete the ISO Foundation’s unrestricted funds in a matter of years.
Operating budget shortfall
Over the past 10 years, ISO expenses have increased faster than income:
- Ticket sales have increased 14 percent, and contributed income has increased 28 percent.
- But orchestra expense has increased 28 percent, concert production costs have increased 23 percent and departmental costs have increased 31 percent.
- Even with significantly increased ticket sales, a balanced budget could not be achieved going forward with current expenses.
We are now in a position that requires a bold new approach to our business model – a business model that significantly reduces annual operating expenses while maintaining the diverse, quality programming the public has enjoyed and deserves.
The role of the ISO Foundation
The Indianapolis Symphony Orchestra Foundation (ISO Foundation) was formed in September 1990 for the purpose of “educating the public and providing financial and other support to the Indiana Symphony Society, an Indiana not-for-profit corporation that operates the Indianapolis Symphony Orchestra.” When references to the ISO’s endowment are made, those funds are held as assets in the ISO Foundation, a separate 501(c)(3) managed by a separate board of directors.
We currently have $80 million in the endowment, but due to the economic downturn, the endowment is down more than $46 million from a high of $126.8 million in 2007. In addition, the ISO has had to borrow $8 million, which is our maximum line of credit. The ISO Foundation is not in a position to continue funding the annual deficit experienced by the ISO in the past several years.
ISO Revenue vs. Expenses
We must take immediate steps to bring expenses in line with operating income, and we must continue our efforts to increase performance income and donations. We also must meet our obligation to fully fund our musicians’ pensions.
In 2011, our annual earned and contributed revenue was approximately $23.9 million (including $7.3 million from the ISO Foundation in grants and $2.0 million in capital campaign funds used to support operations), and our annual expenses were approximately $25.6 million. This left the ISO with an annual $1.7 million shortfall.
The ISO Foundation, while a very generous contributor to our operating revenue over the past several years, is unable, going forward, to make up the full deficit amount without severely eroding the endowment’s unrestricted principal. Expenses must be reduced to bring spending in line with anticipated revenues, including forecast ISO Foundation contributions going forward.
The financial challenges have been mounting for several years, and the ISO Foundation’s endowment certainly suffered from the economic downturn. In 2007, the ISO Foundation endowment was worth $126.8 million; currently, it’s worth approximately $80 million.
Aggressive and active fundraising is absolutely a part of the solution. We are grateful for the ongoing annual operating support we receive from the corporate community and individual donors to the Annual Fund, as we successfully raise $6.5 million each year in contributions. We have added to the team an interim Vice President of Development, who is working through CCS, a nationally-recognized fundraising consulting firm, to analyze potential growth in these areas.
The ISO Capital Campaign was successful by many measures, and we are so indebted to our generous donors, many of which stretched a great deal to help the Symphony in its ambitious effort. Thanks to our many donors, we raised $13 million in pledges and gifts, and those funds will be used to maintain and enrich our programming for patrons.
With the Capital Campaign challenged to attract the dollars needed to significantly rebuild the ISO Foundation’s endowment, the Symphony must look at innovative ways to balance its annual operating budget.
Support from Foundations
All of our local foundations have been very generous supporters of the ISO; however, foundations, as a rule, tend to fund special initiatives and concerts rather than general operating expenses.
The Indianapolis Symphony Orchestra has significantly reduced its administrative (non-musician) staff size in all departments to align expenses with projected income. Since January 1 of this year, we have reduced the number of employees by 25 percent. We now have 46 employees on staff, down from 78 full-time employees in 2009. Departmental expenses have been greatly reduced across the board as well.
The ISO Board of Directors
The ISO Board and Executive Committee of the Board have been fully engaged in the negotiation process since early June. We have a very generous Board, who not only give significantly of their time and talent, but also their financial resources. Last year, the Board contributed $5.6 million in pledges and gifts to the organization and ISO Foundation. As part of Management’s current proposal, the Board is also committed to ensuring that the ISO has the resources it needs to raise an additional $2.5 million in operating funds on top of the already $6.5 million the organization raises each year.
Maestros Krzysztof Urbanski and Jack Everly stay involved with the Indianapolis Symphony year round, even when they don’t appear on the podium for certain performances. Although our artistic leaders are not involved with the negotiations, they remain hopeful an agreement can be reached.
Educational programming at the ISO
A new contract with a sustainable business model will enable the ISO to continue to provide the extraordinary musical experiences and traditions for which the ISO is known, including ISO’s Classical, Pops, Family and Happy Hour series, artists-in-residence Time for Three, Symphony on the Prairie and Yuletide Celebration. The ISO is also proud of its extraordinary educational programs which impact the lives of thousands of children and adults each year. Our commitment to nurturing the next generation through music education is included in our proposal.
The current size of the Orchestra
The contract that just expired called for 87 full-time musicians; currently, with recent retirements and vacancies, the ISO is comprised of 74 musicians. Management’s proposal does not include immediate termination of any musician, as has been incorrectly reported.
Because the ISO typically has from 61-69 of our musicians on stage during a performance throughout the year (with the exception of our 20-weekend Classical Series performances), we are seeking to match our orchestra size to our actual yearly needs.
Our Solution – A Summary
With full Board support, the ISO management team is negotiating with the Musicians’ Union to develop a new sustainable business model that would:
- Maintain the primary ISO programming schedule (Classical, Pops, Family Concerts, Happy Hour, Symphony on the Prairie and Yuletide Celebration) as this is what makes the Indianapolis Symphony Orchestra unique in the orchestra industry.
- Match the ISO’s orchestra size to fit its actual needs. As it stands, the Musicians’ Union continues to propose an orchestra size of 87 while the ISO typically requires only 61-69 musicians on stage throughout the year, with the exception of the 20-weekend Classical Series.
- Adjust ISO performance schedule to a 38-week season, rather than the expired contract’s 45.5-week schedule with Orchestra.
- Through retirements and normal attrition, reduce the number of full-time ISO musicians on a year-round basis, and recruit exceptionally talented musicians to fill the positions required for ISO’s full orchestra classical performances, which currently account for about half of the ISO season.
We are hopeful an amicable agreement will still be reached, and we plan to work toward that resolution.