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MSO Faces Historic Challenges

Symphony reduces size, adds concerts

Dec. 9, 2013
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The Milwaukee Symphony Orchestra, Wisconsin’s largest cultural institution and one of America’s finest orchestras, is in dire financial trouble. On Dec. 5, the MSO announced a restructuring plan that will reduce the number of full-time musicians and administrative staff, make deep cuts in benefits and the operating budget, and pursue improved scheduling opportunities as it moves swiftly to become a permanently sustainable organization.

“An immediate campaign to raise $5 million is critical,” says Mark Niehaus, president and executive director of the MSO. “We have unprecedented internal alignment, and a community-wide fundraising effort is under way, but right now the MSO is in real danger of shutting down.”

The prospect is frightening. If the organization halts operations, staff might leave and musicians scatter, making gearing up again difficult, if not impossible. Everyone is doing what is necessary to make this work; as Niehaus points out, “A controlled descent is much cheaper than the crash landing.”

“This is a critical opportunity to save what decades of effort and investment have created,” says Douglas Hagerman, MSO board chairman. “We can save the MSO, and we have a plan to do that. Following the lead set by our musicians, we need everyone to participate in order to avert a tragic loss for the cultural life of our city and our region.”

In the last 11 years, the musicians have acquiesced to financial concessions seven times. Scott Kreger, a bass player and chairman of the orchestra’s negotiating committee, said, “The problem is not with the musicians, but now it’s on everyone’s shoulders to preserve the orchestra at all costs. It would be a disaster for the Milwaukee Symphony to close its doors.”

Four serious obstacles have long stood in the way of the MSO’s financial success: the MSO’s tenant relationship with the Marcus Center, an inadequate endowment, a significant decline in the annual United Performing Arts Fund allocation to the MSO and a pension obligation.

The Marcus Center plugs in the MSO, Florentine Opera, and Milwaukee Ballet around touring Broadway shows that it brings in as a revenue source. Under the new plan, the orchestra will perform 27 weeks (up from 23) in the Marcus Center; more dates in the hall means more earned income for the orchestra. “The MSO is instrumental to the overall success of the Marcus Center,” says Paul Mathews, the Marcus Center’s general manager. “The MSO serves as a pillar to the broader performing arts community in Milwaukee, which is why we’re all willing to make some sacrifices to ensure the MSO can continue on.”

Detrimental to the MSO’s survival is an inadequate endowment: the annual draw on the current, restricted endowment of $17 million is less than $800,000, and the unrestricted portion is barely sufficient for cash-flow needs throughout the year. The endowments of peer orchestras in the Midwest are far healthier: Cincinnati, $140 million; St. Louis, $116 million; Indianapolis, $84 million; and Detroit, $54 million.

UPAF was meant to act as an endowment for the cornerstone arts groups of Milwaukee. As an unintended consequence of expanding the campaign’s beneficiaries, in the past 10 years the annual UPAF allocation to the MSO has dropped from $3.6 million to $2.3 million.

If that’s not enough, the MSO is obligated to a pension plan that was frozen in 1996. Because of the economic downturn and historically low interest rates, the MSO must make cash payments of just under $1 million a year to keep the plan funded. Employees who joined the organization after 1996 don’t participate in this pension.

Artistically, the orchestra has never sounded better. The precision, intelligence, and maturity of Music Director Edo de Waart complement the exceptional talent of the musicians. To cut costs, the MSO has reduced the number of orchestra personnel this season by 11%; next season, an agreement in principle exists that the MSO will excise a further $1.2 million through orchestra attrition. De Waart has agreed to a 10% cut in his weekly remuneration and has shortened his residency from 12 weeks to 8.

Reductions in players affect the orchestral repertoire. While the muscular works of the late Romantic era have been staples of the MSO, the orchestra and audience will become familiar with smaller-scale compositions; De Waart must make compelling programming choices that both satisfy current subscribers and attract new ones.

Under tight financial conditions, a vacancy in the orchestra may not entice the best players, and, without competitive compensation, the orchestra may have trouble keeping the best musicians here in Milwaukee. Reducing the administrative staff’s budget hinders marketing and development efforts. It will take complete buy-in on the part of the board, donor community, administrative staff, and musicians to make this change a success.

Milwaukee is a vibrant city. What sets it apart is the exceptional cultural heritage present in the MSO and the other cornerstone arts organizations here in town. It is impossible to imagine Milwaukee without its largest artistic ensemble.


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