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Detroit Symphony Resolves Bank Loans Tied To Venue
The settlement was announced Wednesday before the orchestra’s executive committee and released publicly Thursday morning. Details of the deal were not disclosed.
“The settlement had a very tight confidentiality agreement,” orchestra executive vice president Paul Hogle told The Associated Press Wednesday afternoon.
“It’s not a restructuring. This is done and behind us,” he added. “I think it’s a credit to the five banks.”
Resolving the loans enables the orchestra to move forward with its strategic recovery plan and follows several years of financial troubles, including a contentious 6-month strike by musicians who in April 2011 agreed to major contract concessions.
The loan settlement took two to three years to complete, orchestra treasurer Arthur Weiss said. Weiss negotiated with the five banks and their counsels to broker the deal.
“We settled it,” Weiss said. “We have a lot of work ahead of us. We have to create a strong foundation for this cultural institution and increase annual fundraising. We have to make sure we meet the annual giving and we will continue to do whatever we can to put the institution on a sound financial base.
“We have a ways to go, but it’s a sound step.”
The orchestra still faces an expected $3 million operating deficit heading into the start of its new fiscal year in August, and could spend another three to five years with a negative balance.
“We will definitely still be in the red,” Hogle said.
But the orchestra is on track to raise the final $2 million of its $12 million annual fund campaign goal by Aug. 31. The campaign provides half the orchestra’s operating revenues.
Hogle also credited sacrifices by the orchestra’s musicians for helping get it through tough money times.
The 3-year, $36.3 million concessions pact they agreed to following the strike is more than 11 percent less than the previous contract.
In 2009, 39 staff positions were eliminated, while pay cuts of 5 percent and 10 percent were instituted. Music Director Leonard Slatkin agreed in 2010 to a 3-year contract extension and a pay cut.
“If the debt is removed, that’s a tremendous thing,” Chicago-based arts consultant Drew McManus said.
“With a labor disagreement and that ugliness that ensued, it was from that standpoint (the orchestra) couldn’t renegotiate with the banks unless that was done first,” McManus said of the new contract.
Concertgoers also appear to be committed.
The number of households buying season tickets is up a third, while there is an 85 percent renewal rate for next seasons tickets, Hogle added.
Earlier this month, a collaboration concert with performer Kid Rock reached its $1 million fundraising goal. Proceeds are to help pay symphony musicians for community outreach and education efforts.