Nashville Symphony threatened by foreclosure
11 June 2013
The Nashville Symphony Orchestra last week became the latest prominent US musical institution to face the threat of dissolution, when its biggest creditor, Bank of America, began foreclosure proceedings that could end with its new concert hall being put up for auction on June 28.
Nashville, the capital of the state of Tennessee, has a population of more than 600,000, making it the second largest city in the state after Memphis and the fourth largest in the southeastern US.
Nicknamed “Music City,” Nashville is best known as the center of the country music industry, but the Nashville Symphony is also well known. It made its debut at New York’s Carnegie Hall in 2000, and has many recordings and several Grammy awards to its credit.
The orchestra achieved wider recognition after completion of its new home, the Schermerhorn Symphony Center, in 2006. The new concert hall, named after its late conductor Kenneth Schermerhorn, had a price tag of $123 million. It received generally favorable reviews, both for its architecture—although it was judged to be quite conservative—as well as its acoustics.
Now, however, the orchestra is unable to repay a bank loan of $82.3 million that has come due. Despite a successful campaign to raise some $100 million in connection with the hall’s construction, a May 2010 flood and a drop in donations from wealthy benefactors have led to serious financial difficulties.
The 2010 flood caused about $40 million in damages to the hall. The orchestra suffered an $11.7 million loss for the fiscal year that ended last July 31. Donations to the orchestra in that year fell from $14.7 million to $10.6 million, while investment income dropped even more sharply, from $6.4 million to $2.2 million.
On June 5 a committee of independent auditors issued a report warning that there was doubt that the symphony could “continue as a ‘going concern.’” The next day Bank of America announced its foreclosure proceeding.
The foreclosure announcement has been discounted somewhat as a chess move in the ongoing and stalled negotiations over debt restructuring between the orchestra and its creditors, led by Bank of America. The bank issued a statement, as reported in the New York Times, that the lenders have “been in discussions for some time with the orchestra to help it resolve its debt on an acceptable basis and operate on a sustainable level.”
Kevin Crumbo, the treasurer of the orchestra’s board of directors, said foreclosure threats had not come as a surprise, and “we remain hopeful of reaching an out-of-court resolution.” Crumbo called the foreclosure move an attempt to “move negotiations forward.”
A final legal option for the orchestra, one that could be taken up to the June 28 date of the auction of the concert hall, would be a filing for Chapter 11 bankruptcy protection. Such a move, like the one that the much more prominent Philadelphia Orchestra took two years ago, would enable Nashville orchestra management to rip up contracts with its musicians, as well as reducing other outstanding debts.
As the negotiations play out between the banks and the local corporate elite in the Tennessee capital, the musicians and the audience for classical music are held hostage. The proposal to put the concert hall on the auction block calls to mind the even more outrageous proposal to sell off the priceless art in the Detroit Institute of Arts to pay off the city’s bondholders.
The Nashville Symphony musicians union, whose contract expires on July 31, issued a statement denouncing the orchestra’s lenders, but also criticizing orchestra management. “Such hardball is absurd,” the union declares, in reference to the scheduled auction of the concert hall. “As readers, interested symphony patrons and musicians weave through numbers (some inaccurate) with lots of zeros and terms like deficit, default and bankruptcy, the common thread that most of us understand is banks, ruthless bankers and foreclosure.”
“Another point of interest from published information,” the statement goes on, “is the hundreds of thousands of dollars being pulled out in fistfuls to compensate administrators, attorneys, accountants and turn-around experts appointed, employed or otherwise engaged to ‘save’ the Schermerhorn.”
The statement says nothing about the broader issues raised by the current crisis, however. As everywhere in the US, the business model for music and other arts institutions is based on multi-millionaire and billionaire patrons who often exercise dominant influence and even in some cases veto power over artistic decisions. Even where this is not the case, cultural life is dependent on the largess doled out by the ruling elite, rather than funded as a public resource that belongs to the population as a whole. Several years ago the Detroit Symphony sacrificed most of its season in order to make its musicians pay for its financial crisis.
The Nashville Symphony’s most prominent patron is Martha Ingram, who heads the Ingram Industries, among whose holdings are the well-known Ingram book distribution empire. Ms. Ingram, whose reported net worth of $2.8 billion makes her one of Tennessee’s wealthiest citizens, gave $30 million through the Ingram Charitable Fund to the campaign to build the concert hall.
Among the programs now threatened in Nashville—in addition to the 140 concerts presented annually at the concert hall, including jazz and pop in addition to classical—are many educational programs that bring music to thousands of Nashville schoolchildren who would not otherwise be exposed to classical programming. These include the “One Note One Neighborhood” program, in which transportation, instruments, teachers and lesson spaces are provided at a local music school for students in the city’s public schools.
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[18 April 2011]