I’ve been deliberately holding off writing anything about the real-time game of chicken going on between the Nashville Symphony Orchestra (NSO) and Bank of America over the latter’s decision to foreclose on the Schermerhorn Symphony Center in order to see if the situation resolved itself. But since that didn’t happen over the weekend, it is high time to weigh in with some thoughts.
I had the pleasure of speaking with Tennessean business editor Lance Williams about the NSO’s situation from the perspective of what sort of options might be available, how it compares and contrasts with other hotspots in the country, and why stakeholder relations are more important now than ever.
The interview was published as a webcast at the newspaper’s website, and I have to say that compared to the traditional method of a telephone interview, it was fun to cover everything in real time via Skype. From what I understand, this is a newer offering and they are still working toward a seamless process for integrating Skype video/audio into the webcast format. Technical learning curves aside, the audio is fine and if you get a smile out of mid-sentence video freeze frames, then it’s a double bonus!
We’ll certainly be diving into this topic for future posts but in the meantime, the thing you need to keep an eye on are the labor negotiations. If it degrades into public infighting between the NSO’s board and musicians, you can expect to see everything unravel in short order, which is exactly what I discussed in greater detail with Jamie McGee in the the 6/10/2013 edition of the Nashville Business Journal.
And speaking of maintaining a united front, it was fascinating to see the Tennessean publish an editorial that cries foul on what some might describe as the Bank of America’s dystopian financial practices. In other cities with mortgage oriented orchestra troubles, editorials tend to favor lenders by calling for austerity and marginalized cultural achievement.
As such, it is a must-read among the chorus of reports on this topic.
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Drew, I always thought banks preferred not to foreclose on property since the bank is then responsible for the building, it is on its books as a loss and will need to be sold, probably at a loss. Is Bank of America making a purely business decision here or is there more to the story?
I’m not familiar enough with the practices related to the foreclosure process for buildings such as Schermerhorn Symphony Center and non-commercial buildings to say. At the same time, there’s certainly no shortage of questions BoA should be compelled to answer in order to justify their behavior.
As you said at the beginning, right now it’s a huge game of chicken. Both the banks and the NSO know that the Schermerhorn won’t be auctioned off. At the very worst, the NSO would almost certainly file for bankruptcy at the last second. This type of threat from BoA is a strategy, albeit a bold move, to put a lot more pressure on the ongoing negotiations. Most of the media (especially the local media) either doesn’t recognize this or decides to focus on the actual foreclosure and auction. The NY Times article was the only one I’ve seen that really started to get beneath the surface of what’s going on.
Wow. And BOA took LOTS of bailout money from the federal government.
I think it’s fair to consider the populist point of view here in that financial institutions, such as BoA, benefited from public money at a point in time where they would have otherwise failed. A cultural institution such as the NSO isn’t exactly going anywhere; orchestras don’t pick up and move from one city to the next like a sports team or corporation so there’s no reason to believe they shouldn’t be able to arrange a repayment structure that’s mutually beneficial to all parties.
Wouldn’t it be something if this scenario became the catalyst for a great deal of public attention on the national mainstream media level on the practices of financial institutions?
Drew, I am hesitant to post this since the problem will probably be user error but the audio appears to not be working. I also tried to view it at the original web site and audio was not working there either. If this is an issue of user error – please, please, PLEASE don’t let this comment appear! Thanks!
Wish I could be of some help but video embed codes are always a bit tricky since each browser processes them differently. I’d try going to the source link and try watching the video there and if the problem persists at that point of contact, try contacting the paper.
Another financial question. The Nashville flood that seems to have caused this problem was a once in a lifetime event. Was the building adequately insured? It seems unfair for BoA to take advantage of an “act of G_d” if that is indeed the case.
I understand there was insurance but it did not cover the full cost of repairs.
Given the financial circumstances I think BoA could really make public a relations coup with this. By negotiating and forgiving some of the debt owed them by the Symphony they could counteract some of the bad press they’ve had recently. I’m not very hopeful that BoA will look at it that way but, hey, you never know.
Drew,
Banks holding $54 million debt on the Detroit Symphony’s Max retired (ate) it last year thereby obviating the DSO’s need to declare bankruptcy. The orchestra still needs to retire a separate debt of $16.2 million by 2022.