The Baltimore Symphony Orchestra said today that it has the results of an audit looking into the organization’s finances, and there is “substantial uncertainty about the BSO’s ability to continue as a going concern.”
Two days before management and the musicians are due for another round of federally mediated bargaining, BSO leadership said the review of financial statements ending in August 2018 shows it will be difficult for the orchestra to meet its forecasts for contributed revenue and earned revenue.
Both sides have been locked in a public labor dispute over a proposal to reduce the orchestra’s schedule from 52 weeks to 40 weeks, cuts that BSO president and CEO Peter Kjome has argued would stop the bleeding after the orchestra lost more than $16 million over the last decade.
“The audit opinion underscores the continued urgency that we reach an agreement with our musicians as soon as possible. Unfortunately, there has been no meaningful counterproposal from our musicians that addresses the financial issues our organization is facing,” Kjome said in a statement. “This announcement makes it more clear than ever that we must ensure a sustainable business model that helps control costs while expanding revenues. It is vital that we move forward together toward a stable future.”
But today’s release did not offer any specifics from the audit, such as financial figures, saying only that the report compared finances from the 2018 fiscal year and the previous three years. BSO representatives did not respond to a request for the actual audit report.
Brian Prechtl, co-chair of the Baltimore Symphony Musicians group, said the players only found out about the statement when contacted by a reporter, and they also did not receive the audit but have asked for it.
“The fact that they have not circulated the actual audit along with the press statement or supplied it to the musicians is troubling,” he said. “Also, the vagueness of their characterization of the question regarding whether or not the organization is a ‘going concern’ seems like an obvious ploy to intimidate the musicians as we approach the bargaining table on Wednesday.”
He did concede the BSO has a “serious cash problem,” but said management should bring in nearly $2 million over the next 10 weeks as the musicians remain locked out.
There’s been a tug-of-war over the proposed cuts since last October, when management first proposed reducing the orchestra’s schedule and the number of vacation weeks from 9 to 4. The proposal would maintain a 52-week benefits schedule.
Throughout the ordeal, the musicians have argued they’ve already made significant concessions over the years and are lagging behind peer orchestras in pay. The BSO losing its status as a year-round orchestra would also be a blow to the ensemble’s reputation and make it harder to attract and maintain talent, they’ve said.
The contract between the two sides expired in January, but performances continued on under the terms of the old agreement. In late May, the summer season was abruptly cancelled, and weeks later management locked the musicians out after negotiations on a new deal collapsed.
While the Maryland General Assembly passed a bill last session to extend $1.6 million in state funds to the orchestra, Gov. Larry Hogan has opted not to disperse it, saying the BSO receives the most state money of any arts organization.
More recently, management and the musicians have tussled over the orchestra’s endowment, which has been recently tapped for two loans totaling $7.3 million and is now valued at $60 million, according to The Sun. While $60 million sounds like a lot, it’s just twice the size of the BSO’s annual budget, and Kjome said it should at least be three times the size.
In a letter to the editor published this morning, principal tubist Aubrey Foard wrote that the endowment board was violating its “fiduciary responsibility to the BSO” by not withdrawing the maximum amount of money based on the fund’s typical return of between 8 percent and 11.2 percent.
“Is that why the endowment exists—to use as a hammer on the musicians? We think not,” Foard wrote. “The endowment exists for moments just like this one.”