Is Minnesota Orchestra management lying to us?: Part II: Michael Henson Edition

When I read the latest Star Tribune article on the Minnesota Orchestra crisis, one quote in particular struck me as being so patently absurd, and so directly opposed to everything that had come before it, I felt like I’d wandered into a new upside-down dimension. Either Michael Henson is going off the rails, or I’m becoming dangerously entrenched and reading much too deeply into a couple of sentences, and I’m not sure which it is. If you could convince me I’m crazy, I’d appreciate it. Thanks.

Here’s the portion of the article that made me feel as though a Rod Serling sighting was imminent:

Michael Henson, president and CEO of the orchestra, said on Friday that no immediate financial crisis exists, but he likened the investment funds that help fund each season to a retirement account.

“You can’t spend 90 percent of it in the first four years of retirement,” Henson said. “You need to make it last.”

He indicated the orchestra would like to draw no more than 5 percent annually from the funds; the draw rate has averaged nearly 10 percent over the past 10 years, he said.

Before I begin, I’m going to assume that Henson was quoted accurately, and that his words weren’t manipulated or misrepresented in any way. We should hear within the next couple of days if he objects as to how his comments were portrayed.

With that assumption out of the way, let’s try to unpack this “no immediate crisis” remark.

First, I’d like to say a few words on the nature of crisis.

If you are on track to spend ninety percent of your income in your first four years of retirement, then you are in IMMEDIATE CRISIS.

If you’ve staked the long-term fiscal health of your organization on overly “optimistic economic assumptions and the hope of limitless benefactor generosity,” then you are in IMMEDIATE CRISIS.

If you say on your website that “if the Orchestra continues to operate at its current rate of spending, our endowment will be depleted by 2018“, you are not only in IMMEDIATE CRISIS, you’ve been in IMMEDIATE CRISIS for years.

If your only hope of creating a “fiscally responsible” organization means cutting musicians’ pay somewhere between 25-50%, then you are in IMMEDIATE CRISIS.

If you knew you wouldn’t be able to work for the next few years, and knew your only income would be your life savings, and you knew you’d run out of that savings by 2018, then you would be in IMMEDIATE CRISIS.

If you knew that all American resources would, at the current rate of spending, be depleted by 2018, then newsflash: we would all be in one hell of an IMMEDIATE CRISIS.

Call this what it is:

AN. IMMEDIATE. CRISIS.

Financial crises don’t start when your checks start bouncing. Crises start when you make the calculations and realize that all resources will be depleted by a particular point in time (say, 2018) if you don’t make major unprecedented changes (“significant departure[s] from the traditions of the past,” according to management) that run the risk of changing the face of your organization. The risk of such a thing happening is, in and of itself, a crisis. A huge one. Period.

I’m racking my brains and I can only come up with three explanations for this bizarre statement. Leave a note in the comments if you can think of another.

1) The orchestra is truly IN IMMEDIATE CRISIS!!!ZOMG111!!!1!ELEVENTY!!!1!…but Michael Henson either A) lied or B) accidentally said it isn’t. That means that Michael Henson is either A) a liar or B) incompetent.

2) The orchestra is not in immediate crisis, and management is misrepresenting what’s actually in the endowment in order to get a sharply concessionary contract.

3) Henson didn’t actually use those exact words, and didn’t mean to insinuate that the Orchestra isn’t in crisis right now, but he made a statement that led Graydon Royce to feel comfortable risking his and his paper’s reputation by interpreting it in that way. I have no reason not to trust Mr. Royce. (And like I said, we’ll see in the next few days if any statements emerge from Henson disputing how his remarks were interpreted…) If this is true, then that means Michael Henson is communicating poorly at a moment in time when he needs to communicating with crystal clarity. It also suggests that he hasn’t thought enough about how to explain the Orchestra’s problems coherently and persuasively. If you need unprecedented concessions from your musicians because if you don’t get them, the organization as you know it will no longer be able to “survive”…then for God’s sake, run with that. Yes, Campbell and Davis made some pretty damaging PR mistakes within the last few weeks, and that sucks. But Campbell and Davis have s*** to do. Those guys were probably sneaking a five-minute phone call into the Star Tribune in between eating caviar, approving billion dollar mergers, and telephoning Tim Pawlenty to ask if he’d be interested in being CEO of the Financial Services Roundtable (where Davis is a director, FYI). But this is Henson’s full-time jobFor which he is being paid $400,000+ this year alone. He should be fully capable of handling a simple newspaper interview without mucking up his message.

Some additional questions…

If there isn’t an immediate crisis, why tamper with working conditions? How much would the changes in working conditions save the orchestra? Have they run the calculations on that? Why haven’t they made those calculations publicly available with their proposed contract? They’ve got an awesome shiny website with which to disseminate such information…

Also: why not agree to an independent financial analysis?

I’d like to take a moment to discuss the current musicians’ contract, which management is saying doomed all prospects of fiscal sustainability. This shamefully irresponsible contract was signed in October 2007, according to this Playbill article. Michael Henson came aboard in September 2007, so I’m not sure if he had any say in negotiating or ratifying that.

But even if he didn’t, dude was super-proud of how things were going financially at the Minnesota Orchestra as late as July 2010…almost three years into that irresponsible five-year contractIn retrospect, this is a hilarious article to read. [Edit 10/15: This article has since been removed from the Minnesota Orchestra website. Feel free to draw your own conclusions as to what that means. There has been no explanation so far. You can take a peek at the screenshots I took here.] For a bit of perspective, let’s remember that the much ballyhooed Strategic Plan was published in November 2011. In the introduction we read that “the ideas in this plan have been developed, tested, and honed over the last 18 months.” So that means management started working on the ideas contained within the Strategic Plan in the spring of 2010. Insinuation: they were seeing “significant financial issues and unsustainable fiscal practices the organization must resolve to ensure a sound future” before the spring of 2010. (This meshes with the claims of the Open Letter, which claims, “This is a journey that began several years ago, when the Board of Directors of the Minnesota Orchestra recognized that the organization could no longer survive [my bold] based on optimistic economic assumptions and the hope of limitless benefactor generosity.”) So, having established that, I’d like to let Michael Henson from July of 2010 say a few things. Remember that during this time, he had not only been seeing “significant financial issues and unsustainable fiscal practices” within his orchestra for at least the last few months, if not the last couple of yearshe was also, behind closed doors, writing a plan to address those financial issues and unsustainable fiscal practices.

Take it away, Michael Henson of July 2010!

The former Bournemouth Symphony head is strategising his way through the recession – and winning. [my bold]

“There’s no single strategy to beating the downturn,” Michael Henson asserts. “There has to be a whole series of strategies to maintain a focused approach. The priority is continuing the excellence in the artistic work.” With orchestras across the US hard hit by the recession – and management strategies the number-one talking point at the League of American Orchestras’ conference in June – the Minnesota Orchestra stands out as a beacon institution among the bad news. It’s planning a European tour in August (its second in two years), expanding its online content and starting a large-scale renovation project at its home venue – having recently announced the end of a highly successful fundraising scheme. “I would say the support we get from the community is unique,” Henson boasts.

“Minnesotans are highly educated and committed to education,” he goes on, “and with a community this size – around 5m people in the region – we have a wide range of arts organisations, and a collective desire from individuals and corporations to support them.” In 2008-09, contributions accounted for 44 per cent of the orchestra’s $32.5m income. “On top of that, we’ve made some concessions at various points, there’ve been some layoffs and pay cuts in administration,” Henson notes; in August 2009, he took a seven per cent pay cut himself [heh], while Osmo Vänskä, music director since 2003, took 10 per cent [the organization’s fiscal leader took a smaller pay-cut percentage-wise than the music director? classy]. At the same time, Henson negotiated modifications to the musicians’ contract, resulting in around $4.2m in cost savings up to 2012 – mostly through salary and pension reductions, and a wage freeze in FY2010. The orchestra currently numbers 95 contracted players, with six positions open; delaying filling those positions could save up to $1.8m in the long term. [Why are these concessions not mentioned on management’s website? Have they slipped Henson’s mind? Pity, because he seemed awfully proud of them in 2010…]

The orchestra announced in June 2009 that it had raised $14m of its $40m goal for the renovations. One year later, thanks to a last-minute $5m donation from the Target department store chain, it announced it was up to $43m. “The extra will mean we have enough to do it right – to improve chair Y as well as chair X,” says Henson. It also bodes well for the orchestra’s more long-term fundraising programme, “Building for the Future”, which aims to supplement its endowment by $30m, and provide a further $30m for artistic and educational endeavours. Including the renovation funding, the campaign has raised $82m of its $100m target. “Even though we’re in a recession, we have to keep up the commitment to the long-term vision,” Henson continues. “The board agreed to take the risk on this.”

This year, Minnesota will be the only US orchestra represented at the Proms, a fact with added significance for Henson. “We have already made six live broadcasts this season on the BBC,” he notes (another echo of his Bournemouth days). “Our appearances at the Proms, the world’s greatest music festival, have grown from our close relationship with the BBC and will contribute to the process of increasing our visibility.” Its 2010 tour will also take it to the Edinburgh Festival and the Concertgebouw Amsterdam. “We have to keep up our international presence,” Henson says, indicating again his multi-stranded approach to building up the orchestra’s standing. “It’s all about keeping the key priorities in mind.”

This does not sound like a man (or a board) who has been seeing “significant financial issues and unsustainable fiscal practices” for months or years. Nor does it sound like a man (or a board) who is thinking very deeply about those significant financial issues and unsustainable fiscal practices and writing a Strategic Guide of how to address them. And this surely does not sound like a man (or a board) who is anticipating the necessity of a sharply concessionary contract – a “significant departure[s] from the traditions of the past” – a mere two years later, in September 2012. So of course one has to wonder: was Michael Henson being disingenuous to this reporter, or is he being disingenuous to us now?

In case you were thinking this was just a bad interview…may I present to you the Michael Henson of December 2009

Henson says the last fiscal year was also one of artistic success for the orchestra both at home and abroad.

“We are quietly pleased with the results,” he said. “We are in control of a difficult situation and I think we are looking forward to the future with a similar amount of control, mindful of the economy we face.”

He says the coming year will continue to present economic challenges but he is confident the orchestra is keeping a careful handle on the situation.

That’s nice. But if you were drawing out of the endowment at an average of 10% during this time, then you were (by the parameters you set forth in the Star Tribune yesterday!not in control of a difficult situation. You were not keeping a careful handle on it, and you had no right to be pleased – quietly or otherwise – with how things were going. Yes, I know that when non-profits are struggling, there is a reluctance to admit how bad things are for fear of scaring away donors and fostering death-spirals. But if things are bad, and you sugarcoat them, when the chickens come home to roost, you can’t treat the public like clueless idiots for asking why your tune has changed. You can’t be in a house, smelling smoke, feeling heat, and hearing smoke alarms, while simultaneously telling people you’re totally in control of any fire that may be forming on the property…and then, when the flames start coming out the windows, scold the public – who wasn’t even in your damn house – by saying, “Guys, I’ve been talking about this raging inferno for years. Help me put it out!”

Of course that leads me to wonder: maybe the fire wasn’t actually burning yet?

Here’s another article from December 2008:

As was the case last year, the orchestra drew only 6 percent from its endowment to help address the budget. The $191 million endowment was down 11 percent because of stock-market performance. The board is allowed to draw up to 7 percent, but spokeswoman Gwen Pappas said the organization has been very firm about avoiding that method.

Okay, so… Based on that 2008 article, let’s try to figure out what’s been happening with the endowment draw rate. I’m using an average of 7% for pre-2007 years, even though Ms. Pappas said the organization had been avoiding that percentage, and it may well have been lower…

2002 – 7% or less

2003 – 7% or less

2004 – 7% or less

2005 – 7% or less

2006 – 7% or less

2007 – 6%

2008 – 6%

I obviously don’t have all the numbers, but based on the ones I do, I don’t think it’s particularly outrageous to assume that, if Henson’s “ten percent over the past ten years” statement is actually true, then in 2009, 2010, and 2011, the board must have increased the draw rate to an annual average percentage of 17%+. This seems frankly unbelievable, especially since Richard Davis went on record in December 2010 as saying, “This was a season characterized by disciplined budget management and significant expense cuts, which kept our operations stable in an unpredictable environment.” I don’t know if anyone would call a 17% annual draw “disciplined budget management” (especially not the Richard Davis of 2012), but…okay. I’d be curious to know what all happened in 2009 that necessitated such a dramatic climb in the draw rate. Yes, the crashing economy no doubt had a lot to do with it…but does that explain all of it? (Or, is Michael Henson lying about the draw rate?)

Also, since the post-2009 draw rates were clearly such dramatic outliers, regardless of exact percentages, why didn’t Henson say something like “over the last three years, our draw has increased to an average of 17%+, but before the recession began, it was no higher than 7%”? Were ulterior motives at play? Did he want to make it look like the huge draws were an indication of systemic failure, rather than merely a result of the recession? (This meshes with management’s insinuation that problems have been in place “for many years.”) Did he want to keep the public from placing the blame on him? Did he just pull that number out of nowhere, forgetting that a quick Google search is all it takes to check his statements against Star Tribune articles?

[Important Edit 10/29: More information on draw rates here.]

And why isn’t Henson willing to clearly discuss everything that happened in his tenure, positive or negative? It smacks of a rather desperate insecurity. He was proud to say in December 2009 that he was in control of a difficult situation, and that he was pleased with how things were going. In July 2010 the Minnesota Orchestra felt comfortable posting an article on their website saying, “The former Bournemouth Symphony head is strategising his way through the recession – and winning.” Implication: management thought they were strategising their way through the recession, and winningBut now we’re being told that, “Whoops; our bad; we didn’t actually mean ‘winning’; we meant ‘veering ever-closer toward an inevitable fiscal Armageddon.'” Then why didn’t you tell us then???

Binds like this don’t happen overnight. If the Orchestra’s only options truly are to deplete their endowment by 2018 or impose 25-50% wage cuts, there is an immediate crisis, no matter what Mr. Henson says. Obviously someone, somewhere, screwed up. Badly. And even if part of the blame rests on the musicians’ 2007-12 contract, not all of it lies there. If the problems really were this serious back in July of 2010, and December of 2009, and December of 2008, then Michael Henson knew about them. And he had a duty to say something. Or at least email whoever was in charge of the website and say, “Guys, you might want to take down that ‘Michael Henson is winning’ article…it will come back to bite us in the a** in 2012 when we’re forced to reveal how hopelessly f***ed we are…”

Michael Henson is either misrepresenting the facts now, or he was misrepresenting the facts then. Period.

(Also, I have a funny little factoid for y’all: when you Google “Michael Henson Minnesota Orchestra”, my Hundred Questions are on the first page. So every time Michael Henson does a Google search on himself and his employer, he’s going to be reminded of me. Aww.)

Like I said, convince me I’m crazy. Please. Because this just seems too wild to be true. As always, the comments section is open to everybody.

Update, 9/26.According to the musicians’ blog, at their most recent negotiating meeting, the musicians asked management questions about “inconsistencies found within the Board and Management’s financial information.” I’m assuming at least some of those questions were similar in nature to the ones asked above…? “The meeting proceeded with an assurance from the Board and Management that the Musicians would receive answers to these questions later…” Interesting. Feel free to speculate as to what that means… If I hear or read anything from management addressing what I wrote above, I’ll add it to this entry. If you hear anything, post it below.

15 Comments

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15 responses to “Is Minnesota Orchestra management lying to us?: Part II: Michael Henson Edition

  1. I don’t think you’re crazy. I think you’re incredibly smart and intuitive to come to these conclusions. I certainly did not know about all these documents or histories that you’ve come across. THANK YOU!

    I think all of this has it’s place right at the heart of this whole fiasco.

    So, just to reiterate, Mn orch management has been saying for years that finances are doing great. Well, SURPRISE! Turns out the finances aren’t that great.

    So, to reiterate, you said either Henson A) lied about the money from the start (and knew how dire the situation really was) or B) is a complete idiot. An alternative is that the Management/The Board is lying and just being a typical austere, draconian organization wrapped up in selfishness and $$$. (Lets assume the reporter isn’t lying. I would certainly hope he’s doing his job right, and I believe he is. In case you’re reading, thanks Graydon! We really appreciate your work!)

    So, here we go. Why would Henson/management/board lie? Why would they skew the data? Well, obviously, we could pull the “we hate management” card, blah blah blah. I don’t think I need to go into that, it’s been explained. This would be low and nasty, for anyone to do. Lying and manipulating to get what they want. It’s just gross. I don’t think this would be too unreasonable to be a possibility either. Everyone’s out to get $$$, especially in these economic times…

    (please excuse the upcoming stereotype, but it just can’t be overlooked)

    …especially in an age when people (cough cough, rich, elite, selfish, egotistical, corrupt people cough cough) have been known to embezzle and steal money from their own organization for personal gain…

    I just had this idea, and it’s probably crazier than yours, but is it possible? As I was reading this post I stopped by the MN Orch Musicians website and read the most recent contract update. This is an excerpt from the posting:

    “Board Chair Jon Campbell expressed regret at the Board and Management’s handling of the endowment funds over the past ten years, noting that they had been unhappy with the advice they had acted upon and had to change investment advisers. Campbell also admitted that the Board and Management had been wrong in 2007 regarding their investment predictions.”

    At least they are finally admitting they were wrong. But could there be a cover up of some sort going on here? Is it possible that while management and the board were expressing success to the public something more sinister was really going on on the inside? From your extensive research SOTL it seems that yes, in fact, all management and the board were issuing from 2007- about 2010 was pretty much good news. Essentially ‘times are bad but we’re doing OK, nothing to fear’. And now shit has hit the fan. Maybe they won’t allow a financial audit for fear someone will catch wind of fraud or something.

    I don’t know, I mean, this is SO farfetched. But did anyone think Denny Hecker was embezzling all those funds? I guess nothing is too crazy to be ruled out. I certainly hope this isn’t true. Think of all the implications and negative reputations that will come if this is true. That management is just evil and inhumane would be more appealing. I don’t know, just a thought. Hope to God it’s just me being paranoid.

    So that covers “they lied” What about “Henson is an idiot?” Well, yes, this is certainly true. If this is the case there are 2 things that need to be considered.

    1) Henson (and others) must be fired or removed from the board. Immediately. As you said, this is Henson’s ONLY JOB! FUCKING DO IT RIGHT! If he’s fucked up this much he needs to get the hell out. I’m liking your idea that the musicians accept the current proposal with the exception that Henson and others are fired. Maybe even take a leaf out of Milwaukee’s book an appoint a musician as the president.

    2) Henson and other’s have overlooked this HUGE financial issue because they don’t care about the wellbeing of the orchestra and what it means to the community and culture of the Twin Cities. In this case, there is nothing for it but to fire their asses.

    Unless it is proven that there was no foul play on managements part or that they know exactly what they are doing, and they are doing it in the best interest of the orchestra, community and musicians, I don’t see any reason why these people shouldn’t have their asses fired.

    BUT, again, devils advocate, maybe they DO know exactly what they’re doing and everyone is just getting really upset about something they care about a lot.

    However, it is fishy about all the discrepancies…

    This is all just so upsetting. Hopefully we will find out more concrete info soon.

    I’ll check back later to see any other updates or comments

    (also, just as a note, I’m kind of hating on management, a lot. I hope I don’t sound too diabolical or harsh. Emotions are running high. I’m pissed at management, but we know so little about the big picture. I just want everyone to work together to create the best possible outcome. I realize the “best possible outcome” probably won’t be ideal, for both sides. I’d just hate to see anything horrific happen to the orchestra, and that includes the musicians and the management, even if the management is really pissing me off)

  2. I’d also like to pass along my thanks to Mr. Royce. When this whole thing started off MPR was doing the best job covering the Orchestral Apocalypse, but this week, the Strib has really taken the crown. MPR has been letting some important things slide (and they OK’d that laughable quote about how few “hearts and minds” the musicians were competing for), while the Strib keeps coaxing these incredibly revealing quotes from management. IMHO. *shrug* I still need to send along the apology that I wrote to Mr. Royce in the comment section to Week -2; I don’t know that he ever got it.

    “Why would Henson/management/board lie? Why would they skew the data?” I wish we could know. I don’t think we can, given the limited amount of information that is public. (This strikes me as another problem: the lack of accountability to the public. I don’t know how to solve it, but… It’s something I want to see addressed *in some way* after all this is over.) The musicians do not deserve that kind of “leadership.” This community does not deserve that kind of “leadership.” This great music, with a storied history stretching back centuries, does not deserve that kind of “leadership.”

    Henson sounded like a different man in 2010, didn’t he? Even in 2009 and 2008. This makes me wonder, have there been individuals behind the scenes who have influenced him? Is Henson a puppet for whoever happens to have the most power on the board at the time? Did he change his views himself, or did others do it for him? One of those things we can discuss and speculate over, but never prove…unless additional documents come to light…

    http://articles.philly.com/2011-06-09/news/29638733_1_allison-b-vulgamore-james-undercofler-orchestra-ceo This article may be of interest… In Philly, when that orchestra was ***going through Chapter 11***, the CEO was being paid nearly $600,000 that year…*eyebrow raise* I find this lame. This article also establishes that Henson was being paid $390,000 in 2009, so his salary has grown nearly 4% in the last three years. Also, from what I understand, his actual compensation is actually more, between insurance and such.

    I know there are caveats… Different markets, different individuals, different experiences, different cost of living. Like you say, management shouldn’t be a scapegoat, and we shouldn’t hate on management just to hate on management. But…the median income in Minnesota is about $57,000. Am I really so unreasonable to think that someone that makes 7x the median income should be INCREDIBLY competent at his or her job? Really? I could live on one year of Henson’s income for a couple decades, at least. And the salary for musicians vary but the average base is currently $109,000, a mere 2x the median… And they’re some of the greatest at what they do **in the world.** Is Michael Henson one of the greatest orchestra CEOs in the world? Um…based on his words over the last few weeks, I’m not so sure about that. I’d be interested in hearing someone making that argument, though! (Maybe Michael Henson himself would like to make it? The comment section is open…) ;)

    (This also gets into the question of… How does someone like Richard Davis justify earning 115x the median Minnesotan income, just from his Bancorp position alone?)

    I too think there may be grounds for Henson (…and Davis, and Campbell, and maybe more) to resign, especially if more damaging information comes out. (For example, if the musicians are successful in getting a joint financial analysis, and we learn more.) Since it’s been demonstrated pretty publicly and pretty obviously that Henson was being disingenuous (if not lying) over the last few years, I don’t think it would be unreasonable for him to offer to take to a 30% pay cut, and whatever other reductions are being offered to musicians. I don’t care if he got a 7% salary cut a few years ago; he’s still making more now than he was in 2009. He should make the cut very publicly. No, it won’t make that big of a difference in the overall fiscal health of the organization, but it would be a powerful symbolic statement, and be a first step in showing that he’s remorseful for his mismanagement. (I think we all agree that mismanagement has occurred; if the endowment is in great shape, Henson is lying now, and if the endowment is in poor shape…Henson was lying then, *and* the endowment is in poor shape, and he is at least partially responsible for that.) A person can live very comfortably on $283,000 a year in Minnesota. Hell, I’m still alive, and my income is less than 5% of Henson’s. He’d survive. And if he can get a better-paying job elsewhere, then hell, good for him!!

    Another question: why resist the joint independent analysis? I just don’t understand that. What would management have to lose by agreeing to do such a thing? In fact, THEY’D HAVE A LOT TO GAIN: if management doesn’t have anything to hide, they should be SEIZING this golden opportunity. If there’s nothing to hide, it makes the musicians look like the selfish oblivious money-hungry bastards management has painted them out to be on their website. It’s a lot like Mitt Romney not releasing his taxes, and the Obama campaign slamming him over and over again on it…think of how STUPID Obama would look if Romney did release everything, and there was actually nothing incriminating! What a hugely powerful PR tool that would be for Romney (or management)! “Look at how petty my opponent is, now let’s get back to the serious issues”, etc. etc. The talking points write themselves. I don’t know; maybe that’s what they’re planning to do, only in a few months, so that the musicians look even worse in the public eye after not working for such a long time. Kick them while they’re down. (Then again, there was a part of me that believed that Mitt Romney would release his spotless tax returns in September to make Obama look terrible for harping on it for months. Obviously that never happened, and obviously the Romney campaign is incredibly stupid. So maybe management in this particular situation is also just plain stupid, and incapable of playing a long game.)

    The only reason I can think of to resist an analysis (besides the threat of them finding out something fishy) is the cost. I wonder how much a joint independent analysis would be? Would there be any way of raising the money for that? We raised $20,000 for Judd Greenstein’s Acadia. Could we raise thousands for a joint independent analysis if we felt the Orchestra was in peril? Would that even be legal? Or maybe the musicians could split the costs among themselves and have that amount taken out of their eventual contract? Something? I’m sure someone who knows what it would take could come up with some idea to make it happen. If management can raise $100 million for their Building for the Future campaign, certainly if they wanted to make it happen, they could raise however many thousands a joint independent analysis would cost.

    We’ll see where it all goes. Management has A LOT to answer for, though, and even if they somehow sign a new contract, I’m still going to be pissed if Henson, Campbell, and Davis don’t account for what’s been happening.

    “BUT, again, devils advocate, maybe they DO know exactly what they’re doing and everyone is just getting really upset about something they care about a lot.” But until more evidence is put forward, it would be irresponsible to assume they know what they’re doing (IMHO). I think we have **more** than enough information to assume that management is totally inept, until further notice.

  3. Ken

    I don’t think the idea of fraud entering the equation is far-fetched. I work in the financial industry and trust me, whenever money is involved, you can bet somebody, somewhere, at some point in time will be looking to take advantage of it.

    • Glad to know I’m not insane for thinking that! thanks Ken!

    • Yeah, I agree with you Ken (and SOM). Sorry I forgot to reply to that part of your post, SOM! I don’t mean to be a conspiracy theorist, either, but clearly something is not adding up, and obviously a lot of money has been flowing into the orchestra’s coffers lately, at a pretty quick pace. Were those involved on the orchestra’s side given the resources to deal with the demands of such an intensive capital campaign? Until all of the questions we’ve raised are explained fully – preferably by an independent third party – I have to assume SOMETHING is wrong, whether it was just incompetent mismanagement, or something more sinister. When you’re raising $100 million in such a short period of time, I’d imagine there would be plenty of opportunities to either screw up, (gulp) steal, shift assets around to get the numbers you want, etc…

      Also I wonder what it means that the board wasn’t pleased with the way the money was invested and had to switch investment advisers (according to the musicians’ latest blog). I wonder what exactly all happened there? And what the timeline was? This adviser must have fucked up pretty dramatically, because just about EVERYBODY lost a ton of money in the recession. I can’t imagine that management would have replaced someone who lost the amount that everybody did…it must have been **even more**…..Right? Another question: what connections, if any, did this unnamed adviser have to any organization Campbell or Davis is associated with? Do the current advisers have anything to do with them?

      I wonder what people who work on the financial side of the orchestra (who aren’t on the board of directors) are thinking right now. If rumors start spreading that the Orchestra is mismanaging its endowment, and has been lying about how well it’s been managing its assets – **rumors based solely on what their own CEO and board of directors have said** – might that affect the staff’s professional reputation and/or their ability to solicit donations in future, even if the rumors ultimately aren’t true? Would they be able to pressure the board of directors to agree to an independent analysis? Can anyone who has given to the Building for the Future campaign legally take back their money if, say, something like fraud was uncovered? Or is the money that’s donated, donated, regardless of what might be uncovered later? I know I’d be SUPER PISSED if I was Julia Dayton and I’d given 10 million plus to the Building for the Future campaign, and then it came out that the money was being drastically mismanaged. Because presumably when she was being courted for that donation, she was told how responsibly the Minnesota Orchestra would spend the money, etc…basically she would have been lied to. I don’t think anyone, no matter how wealthy, writes a $10 million check to an organization they don’t have very, very good reason to trust… What if management is resisting because some of the numbers aren’t adding up behind the scenes (for whatever reason), and they’re afraid of making it public and alienating a crapload of the wealthiest donors and contributors in the Twin Cities? That could be just as disastrous to the organization as a mass musician exodus, I’d think, especially on the heels of such a devastating recession. I’d also think it would be a MAJOR professional obstacle for Henson to overcome…if he could overcome it. Even in orchestra CEO land, where you can still fuck up pretty badly and still find other jobs elsewhere.

      Okay, I’m really really veering off into tinfoil hat territory there. But if management won’t answer questions, what the hell else are we supposed to do? Just say “oh, apparently according to what you said, you had a 17%+ draw rate for three years; well, whatever”? No, I refuse to do that.

      Sincerest, sincerest apologies to anybody who may be reading who is involved with the MO, who is totally innocent, and who feels like I’m accusing you guys of anything. I don’t think any of us are. We’re just floating different possibilities, given the very little we know now. We only do it out of concern and love…

  4. Ken

    I’m all for the musicians taking control of the organization. They’re musicians, they aren’t money people – but that doesn’t mean they can’t hire someone to handle certain aspects of the operation. Also, all the money being used to pay Henson can be used for something else. The musicians would then be held accountable for the success or failure of the organization, but I have no doubt from an artistic standpoint the situation here in Minneapolis would improve drastically.

    I wouldn’t sign off on anything until an independent review of the books was completed. Simple as that. I don’t find that to be an unrealistic request in the slightest. I think the musicians are being low-balled. I think management is bandwagoning – the air of lockout hangs large over many organizations, and they are trying to use that to their advantage. I believe the best offer that can possibly be made to the musicians is what should be made, but I doubt highly that is what is happening here.

    • If the musicians did take control… What would the musicians do re: the Orchestra’s assets, such as the hall and the endowment? How would they get control of that? (You know management won’t give it to them…) How would they fundraise? How would they have the money to perform, much less be paid living wages? Would they be able to get donors to back them instead, and then force management to form a substandard pickup band to play in the new hall? I know a musician-controlled organization sounds incredibly appealing right now, but could something like it be remotely possible, you think? I don’t know enough about how the business works…

    • Anon

      Many people donate a percentage of their investment returns to charitable causes annually. That money ebbs and flows as markets rise and fall. As a result “projections” based on income derived from donations of that type can sometimes be grossly inaccurate. Take the reduced market based donations, add on top the orchestra’s own financial adviser’s projected revenue derived from re-investing those donations *back* into the markets and you have yourself a recipe for disaster when markets decline/retract like they did during the recession. Add on top of that, spending big in order to keep up appearences abroad and well, if management isn’t being derilict for some ulterior purpose then they are being **HUGELY** and **GROSLY** incompetent in the duties they’re being paid well to perform.

      I’m not qualifying that one little bit. Management, as you read this, you do not get the benefit of the doubt from me. :(

      They need to go. And I mean now. Before they have a chance to convince people fully that they *are* actually helping. Before they’ve had the chance to *completely* cover up their inadequacies and failures with PR spin.

  5. So the SPCO web page now contains their contract submitted to management over the weekend. I don’t know if that’s kosher but it’s all there. Interesting read, however I don’t know if it tell us anything new.

    Note: While I agree management is being austere, the musicians seem pretty naive (or almost a little dumb…..?) to ask for as much money as they requested in this proposal. $70,000 is hardly less than they make now, and jumping up to $77,000 seems pretty unrealistic at the present. So yeah, I don’t agree with management, but the fact is, everyone is STUCK in this situation and cuts and compromises need to be made if people want to get out of this. I mean, has it occurred to people that 3 years from now, because of these cuts, the businesses will be more successful finically and artistically than ever? And wages will go up?

    It’s so hard to be positive right now. I’m finding it incredibly hard, myself. But there’s always hope as long as people won’t give up. I’ve said it one: I won’t give up on the musicians, I hope they won’t give up on me.

    • and actually….I must have just missed it. SPCO proposed a new contract agreement today that offers $700,000 in savings over 3 years with a 10% cut for the first 2 and a 4% for the 3rd. MUCH MORE REASONABLE! I’M HOPEFUL!

      best part: “These savings, coupled with the approximately $3 million that Management wants to use to buy out some of our most talented and experienced musicians, will buy the Orchestra time to finally put together an effective endowment drive. “ (emphasis on $3 mill from management, lol I love you musicians, so sassy!)

      well, this is good news! I don’t see how management can turn this down, but knowing them they will. If musicians proposed it, it means they’ll deal with it and accept it, rather than battle the managements proposal and be all like “Fuck this shit”. So maybe we’ll hear good news tomorrow!!!!!!

  6. Pingback: Minnesota Orchestra and SPCO 2012 Negotiations, Week (Gulp) -1 | Song of the Lark

  7. Dez Moore

    I have thoroughly enjoyed your posts but would be disappointed if your information regarding Richard Davis and Jon Campbell did not include the following:

    An SEIU Report on the Shortchanging of MN schools by USBank and Wells Fargo Bank:

    http://seiumn.org/2012/05/07/new-seiu-report-banks-shortchanged-schools/

    and,

    A “Follow the Money” Report concerning the financial backers of the Minnesota Voter ID Amendment:

    Considering the refusal of the Minnesota Orchestral Association to sign on with all other Minnesota Arts Institutions (and regular folk, too) opposing the Anti-Marriage Amendment, I would not be the least surprised if the Davis and Campbell were at the end of the money trail supporting this, too!

    • Heh. Yeah. I’ve spent many hours combing through those and other documents…

      But since you’re interested in the connections between politicians and the board members, here’s a fun research project for you: why did Tim Pawlenty, no fan of the arts and no fan of big government spending during economic downturns, *change his mind* and choose *not* to veto the Orchestra Hall renovations? (He never explained his change of heart, as far as I can tell, and I’ve dug around quite a bit.) Some hints to follow up on as you ponder: all the other things Pawlenty vetoed that year, the fact that Pawlenty had formed a PAC to study the possibility of a run for the presidency, Minnesota Forward, the percentage of money Minnesota Forward gave to Republicans vs. Democrats in the 2010 election (98% v 2%), Davis’s contributions to Pawlenty’s PAC, Wells Fargo contributions to Pawlenty’s PAC, 501(c)4s, who’s on the board of directors at the Financial Services Roundtable where Pawlenty just got hired at $1.8 million/year…

      Obviously nothing can be proven, and I’m not saying I have proof of anything happening, because I don’t. If any quid pro quo did indeed happen, it occurred behind closed locked doors. But of course the shadowy intersection of politics and finance – and orchestra board of directors – makes a person wonder.

      • Dez Moore

        You are right on with this, too! It must be one large jug of Kool-Aid they’re sharing. What makes this so disappointing is this is all supposed to be about the music. They could care less about the quality of the music. It’s more about the $5 million naming rights for the USBank Lobby. Leave your union-busting politics at the next teller window!

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