Following the trend of other major U.S. orchestras facing financial deficits, the Philadelphia Orchestra announced voluntary cuts yesterday that promise to save $4 million in 2010 and 2011, including a reduction of 4.8 percent in negotiated salary for players.
"For a Big Five orchestra to have voluntary talks about modifying a trade agreement, and to alter the terms of it, shows that the musicians were aware of the financial situation," a deficit potentially as high as $3 million, "and wanted to do their part to help," said cellist John Koen, lead negotiator for the musicians.
"They've been truly amazing," said the orchestra's executive director and chief executive officer, Frank Slattery. "What the musicians did here was pretty heroic, and they did it in a fashion that was as open and as giving as I can imagine."
Philadelphia Orchestra musicians are known as some of the toughest negotiators in the country, and though yesterday's vote reportedly was not free of dissension, musicians speaking anonymously confirmed that the attitude was overwhelmingly positive.
In the course of the negotiations, the current contract was extended from three to four years and now will expire at the end of August 2011. That will allow the 4.8 percent raises promised for September to be deferred until the fourth year, beginning in September 2010. The minimum salary then will rise from the current $124,000 to $131,040.
Other cuts included the electronic-media guarantee paid to musicians for recording activities, saving $194,740 annually starting in 2010. Work-rule changes and waived fees for extra concerts will save $265,000 annually in both 2010 and 2011. Pension obligations will be reduced by $1.75 million. The musicians also have pledged to raise $500,000 on their own to contribute to the orchestra's annual fund. Overall, those factors will reduce musician costs by 10 percent.
Separate administrative cutbacks announced in recent months amounted to just under $1 million in annual savings for future fiscal years, including a 20 percent pay cut for staff, 12 layoffs, and six positions that will go unfilled. Total cuts will equal nearly $5 million in fiscal year 2010. The cuts will come mostly out of the yet-to-be-determined overall budget for 2010.
Similarly dramatic budget cuts have been announced in recent months in Atlanta, Chicago, and Cleveland, among others. Facing a $3 million deficit, the Atlanta Symphony Orchestra announced salary cuts for administrators and musicians that would save $4.2 million. Earlier this month, the Chicago Symphony Orchestra announced $4 million in savings over the next several seasons, including a 2.5 percent salary reduction for musicians during the next two years, plus a commitment to perform benefit concerts.
Music directors, usually the highest-paid people in any orchestra, have also taken salary cuts. Atlanta's Robert Spano took a 7 percent cut this year and will take another 7 percent reduction in 2010; Cleveland's Franz Welser-Most will get 20 percent less over an unspecified period.
Slattery would not discuss whether any concessions might be forthcoming from Philadelphia's Charles Dutoit, who does not hold the title of music director (he is chief conductor and music adviser). "There's no announcement on that yet," Slattery said.
The Philadelphia musicians expressed relief that the cuts were not worse. In a public statement of unusual solidarity with management, cellist Gloria DePasquale said: "The musicians are proud to collaborate with our board."
Prompting these moves was the possibility of a 2009 budget deficit of $2 million to $3 million, Slattery said; earlier unofficial estimates had predicted a shortfall as much as $5 million.
"There's no question we have had a meaningful reduction in single tickets sold," he said, declining to be more specific. Though there was no stated threat of bankruptcy, that distant possibility had been privately discussed in recent weeks as a worst-case scenario.
More immediately, there was talk among musicians of cash-flow problems, which Slattery said weren't unusual in the industry when contributions and ticket sales decline.
"Whenever one of those [elements] gets out of whack, we always have a liquidity issue," he said. "We're no better or worse than other orchestras." The situation is made tighter due to the unusually high proportion of restricted gifts in the orchestra's endowment.
Board members are being asked to raise their usual contributions; Slattery said some had doubled their usual commitments. Private donations to the orchestra's annual fund from musicians have been unusually large, as much as $15,000 or $20,000.
"It's really very inspiring," he said.