Analysis of the MOA’s 1/2 Press Release

Hey, kids! It’s time for another edition of Analyze This Press Release! As always, “Analyze This Press Release” is brought to you by Song of the Lark, the Minnesota Orchestral Association, and my obsessive nature.

The press release I’ll be analyzing today is the MOA’s most recent:

Minnesota Orchestra Board outlines four points to initiate progress in negotiations with Musicians’ Union

This headline makes it sounds like the musicians have been unwilling to talk, off on a tropical beach somewhere playing volleyball and sipping tequila, but…okay. If you need to save face by making the MOA look like the hero, be my guest.

 The Minnesota Orchestra Board Negotiating Committee and Musicians’ Union representatives met this afternoon in a productive three-hour session, the first held since contract talks broke off on September 30. On December 21, the Orchestra Board invited the musicians to a meeting in early January, with no preconditions, in order to restart negotiations.

How generous of the MOA!

Something else happened on December 21st, too…I’m trying to remember exactly what…oh, yes, that’s right, the MOA replied to fourteen angry state representatives who had contacted the MOA in early December wanting to know if the MOA had misused public money. But I am sure there is no connection whatsoever between these letters and the MOA’s new offer. Do carry on.

At today’s meeting, the assembled parties agreed to concepts important to continued discussions: ensuring the organization’s ongoing financial stability;

Of course “financial stability” would be the first concept mentioned…

 ensuring the organization’s commitment to artistic quality;

And “artistic quality” the second one…

(Because the first goal of an orchestra should always be to balance its budget, amirite?)

and emphasizing the parties’ commitment to a fresh start in the contract talks, as begun in today’s negotiations.

Fresh year, fresh start!

What does it all mean?

Additionally, the Board’s Negotiating Committee offered a four-point plan for Musicians’ Union consideration:

Four point plans! I love those. Four point plans are always helpful when solving complicated months-long labor disputes.

1. Returning to the former mission statement: Pending approval of the full Board of Directors, the Orchestra would return to its former mission statement, which is preferred by musicians, with two slight modifications.  (The two changes emphasize the importance of community service and financial sustainability.)

First:

Is it really that easy to change the Minnesota Orchestra’s mission statement? I’m not even in the non-profit world, and I know that a mission statement is a Big Deal. It is the heart of an organization. It is a description of a reason for being: it is a purpose. And right now I feel like the MOA is treating that purpose like a hastily amended fast food order. “Oh, hey, with that cheeseburger, could I substitute onion rings for fries? Thanks.” I would think that before the MOA changes its mission statement to or from anything, they should think long and hard, and, most importantly, make such change very public. Because, believe it or not, the public is actually the reason the MOA exists. Shocking, I know. The casualness with which they treat their mission statement strikes me as being a huge red flag.

I also wonder: why change this now? The MOA has known for ages that the musicians were upset with the mission statement change. It’s been a main talking point of theirs since the lockout began. In fact, they have a whole page on their website devoted to it. If the MOA really was interested in conversation with musicians and musicians’ supporters, and if the mission statement really is so malleable, then why didn’t they change it months ago, back when the musicians first raised their concerns? It’s almost as if something happened in the interim… I’m not sure what… I’m coming up with a blank… Oh, well, maybe it will hit me later…

Second:

Why exactly is financial stability even in the mission statement? We could have a very interesting in-depth discussion about this. If anyone from the MOA would be interested in having an in-depth discussion about this. Which they aren’t. But we could.

SOTL reader Paul Cantrell wrote a fabulous essay about this point here, and I encourage everyone to read it.

My favorite part:

Financial stability is crucial because it enables the mission, but it is not a success criterion in itself. It no more belongs in an arts mission statement than “buying instruments” or “generating publicity” or “having working toilets.” All are essential. None constitute success.

Let’s put “working toilets” into the mission statement. Please. The sheer weirdness of seeing a reference to working toilets in the mission statement of a major American orchestra would be so hilarious.

Also, while we’re inserting new clauses into our mission statement, I would like to see one “avoiding the need for government hearings into our finances.” Just to cover our bases. But I’m vindictive that way.

Back to the press release.

Sharing 2012-2015 financial forecasts:  The Orchestra Board shared with musicians its 2012-13 budget and financial forecasts for 2013-2014 and 2014-2015.

FINALLY. I wonder if there was anything that occurred between the time when the musicians originally asked for the budget months ago and January 2nd. Hmm. I’m racking my brains…hmm…

With receipt of these forward-looking materials, the Union now possesses comprehensive financial information dating back and forward three years.  Materials already shared with the Union include: Audited financials (2011 and 2012); monthly Finance Committee minutes (2009-2012); monthly financial updates to Board and Executive Committee (2009-2012); contribution reports (2009-2012), profit and loss reports; information relating to endowment draw (2010-2013); and actuarial report on the defined benefit pension plan.

Yes, MOA, we know what you say you’ve already given to the musicians. You’ve only jammed that list into every single conversation you’ve ever had ever.

3. Inviting musicians to submit a proposal for a mutually-agreeable independent financial review designed to verify the organization’s financial position.

ZOMG!

Financial review!

Finally!

Three explanations for this:

1) Michael Henson, Jon Campbell, and Richard Davis simultaneously had three separate Road to Damascus moments, and suddenly want to give the musicians and their supporters all of the information they could ever want. Also, butterflies, rainbows, puppies, and unicorns.

Unicorn

2) Michael Henson, Jon Campbell, and Richard Davis are succumbing to pressure – either from donors, legislators, board members, or all three – to share more information with musicians, so we could maybe possibly start getting this show on the road someday relatively soon perhaps.

or

3) Michael Henson, Jon Campbell, and Richard Davis are proceeding according to a dastardly plan they devised months ago, and so far everything is going largely according to plan. This theory has been buzzing among patrons for months. Did you know that if they keep canceling concerts, under the terms of their contract, the MOA won’t have to pay rent to the Convention Center? In fact, if they can make this stretch until summer, they’ll save over half a million dollars. There are rumors swirling in the music world that guest artists’ contracts for this season were phrased in an odd way, allowing the MOA to cancel their appearances without paying a penalty. I’d be interested in hearing directly from these individuals or their agents, confirming if this is indeed the truth. If it is true, then add in, oh, I don’t know, another couple hundred thousand? Few hundred thousand? I don’t know what the guest artists this season charged. And then of course you have the big ticket item: the musicians’ salary and health care costs. The MOA has claimed that they can’t play and talk because musician expenses cause them to lose $500,000 a month. If they do their best to “frolic and detour” for nine months until they don’t have to pay Convention Center rent anymore, then they can save $4.5 million, maybe $5. Altogether, those numbers add up to somewhere around $6 million. Hmm, where have I heard the phrase “$6 million” in connection with the MOA before? Oh, that’s right; it’s the MOA’s deficit from FY 2011-2012. Magic. If Michael Henson had gone nine months without health care and a salary, then they could have gone the extra mile and saved an additional $300,000 and maybe actually turned a profit (impressive for a non-profit not even delivering a product), but…whatever. I guess someone had to…sit in his office and give interviews to the press every couple weeks.

Of course if anyone ever asked him about explanation number 3, Michael Henson would throw up his hands and protest innocence. Maybe gasp, “How dare you insinuate such a thing?” then spout off something about how the musicians have not yet delivered a single counterproposal. But we’ve seen how slickly the man lies, and in front of the legislature, to boot. If this really was the plan, they’re obviously not going to tell us about it. So I have no proof, and I’m not going to get proof. But patrons aren’t stupid, and it’s not very hard to read writing on the wall.

By all means, MOA. Since I know you’re reading. Go ahead. Prove me wrong.

Back to the press release.

As governed by state law, the Minnesota Orchestra annually undertakes the highest level of financial review – an independent audit – in order to ensure that it operates with utmost financial soundness and integrity. The most recent audit, conducted by CliftonLarsenAllen, revealed a deficit of $6 million.

Oh, look. Six million. Fascinating. Go on…

To assist the Musicians’ Union in understanding the organization’s financial challenges, the Orchestra would consider the Union’s suggestion of a further independent financial review and invited musicians to submit a proposal for such a mutually-agreeable review designed to verify the organization’s financial position.

First off, dear readers, don’t get too giddy. They will “consider” the suggestion, and “invite musicians to submit a proposal.” This might well be a completely meaningless empty gesture.

However, nonetheless, I think now might be a fun time to take a look back at how the MOA has described financial analysis in the past… My bold.

In response to the Union’s call for an independent audit of the Minnesota Orchestra’s finances, the MOA Negotiating Committee declined the request, citing unnecessary delay and duplication of efforts as the Orchestral Association undertakes an annual independent audit and shares its audited results publicly each December. – press release, September 25

And of course the instant classic from Almanac on November 30 from MOA representative Doug Kelley:

We, like every other organization, we have income, and we have expenses. And they are certified by an outside accounting firm every year. And those numbers are given to the musicians. We file a tax return. Everybody knows you don’t lie on your tax return. And that’s given to the musicians every year. I think the dispute this week is about the budget and how that works. Let’s say we budget $8 million to come from the endowment, and at the end of the year the expenses are greater and we draw $10 million from the endowment. That number – every penny – is accounted for. It goes down, put on all the income tax return and everything else. It’s as transparent as you can be, and we have done that every year, and those numbers are public. The musicians have them. If they want to do a forward-thinking analysis, the first place they’d go would be to a certified financial statement or tax returns. Those are sort of the gold standard documents in financial analysis… I hope that instead of going off on these frolic and detours, we just come back to the table and help us settle and solve this problem. We’re not afraid of anything… We have opened our books up totally. We don’t need to take another frolic and detour into something that won’t help any.

Frolicking, detouring.

I can think of three possibilities to explain the about-face…

  1. Henson, Campbell, and Davis were never going to consider financial analysis, but something between November 30 and January 2 changed their minds.
  2. Henson, Campbell, and Davis were planning on eventually agreeing to financial analysis within the next six weeks. They told Kelley they were going to do so, but told him to continue to act incredulous that such a thing would ever be needed.
  3. Henson, Campbell, and Davis were planning on eventually agreeing to financial analysis within the next six weeks. They just didn’t tell Kelley, and they were content with the knowledge he would publicly humiliate himself on statewide television.

None of the above possibilities are particularly heartening. If you can think of another explanation, let me know in the comments.

Okay, back to the press release…

Offering additional meeting dates: The Board expressed its desire to set a regular schedule of future meeting dates beginning in January and early February.  The Union is currently checking availability and will confirm dates.

Yay…ish. I don’t know what to think yet. Too early. Too much up in the air. Too much at stake.

“We’re pleased with the progress made today on many fronts, including the agreement to pursue discussions concerning an independent financial analysis, and we look forward to continued conversations,” said Board Chair Jon Campbell.

I love that Jon Campbell is acting like a financial analysis was his idea.

tumblr_mg21qriard1qcm0m3o2_400

Too funny.

But…whatever, man. If rewriting the history of the lockout floats your boat, then go ahead, I guess. Know that everyone sees through it, but if it makes you feel better about what’s going on…

Contract talks between the Orchestral Association and its musicians, who are members of the Twin Cities Musicians’ Union (Local 30-73), began on April 12 and are currently overseen by a Federal Mediator.  The Orchestral Association’s proposal offers a total package averaging $119,000 per musician, including an average salary of $89,000 with $30,000 in benefits per musician.  The proposal also includes 10 weeks of paid vacation and up to 26 weeks of paid sick leave. Musicians have not yet put forward a contract counterproposal.

Stop the presses! The musicians haven’t submitted a counterproposal? I haven’t heard that talking point, like, ever.

/sarcasm

Seriously, though, I find this desperately jammed-in summary of the situation from their point of view more entertaining than I should. These talking points haven’t won many, if any, people over, but still they keep obsessing on them. It’s like watching a flailing political campaign in late October. And I always get a sick pleasure out of watching flailing political campaigns in late October.

In December, the Orchestra announced a $6 million deficit, the largest in its history, despite continued cuts in administrative expenses, new efforts to build audiences, and robust fundraising.

Are you sure you want to keep hammering home that “$6 million”? Because once people start doing the math of the savings of a nine-month lockout, that may not be a number you’ll want to keep publicizing…

***

In other news, we’ve got at least one date for a hearing. According to this MPR feature, it’s January 23rd. The hearing will focus on “whether lawmakers should consider holding organizations that receive public money accountable when it comes to labor disputes like the current NHL lockout [and Minnesota Orchestra and SPCO lockouts].” According to the audio feature, musicians will be testifying. Not sure if Michael Henson, Jon Campbell, or Richard Davis will be testifying, but…they really ought to, don’t you think? Surely their valuable perspectives could only add to our understanding of this complex economic issue, right?

Representative Joe Atkins, the chair of the Minnesota House of Representatives Commerce and Consumer Protection Finance and Policy Committee, says in the interview at 2:50:

HOST: I don’t hear – I don’t recall hearing, anyway – that there will be legislative hearings on the Twin Cities orchestra disputes, or the American Crystal Sugar lockout in the Red River Valley, although –

ATKINS: You may not hear it, but that’s because some folks in the media aren’t wanting to talk too much about it, I guess. We actually have the Minnesota Orchestra musicians coming to this same hearing, as well as a couple of local restaurant owners that are nearby, who are being hurt by the lockout there as well. So I appreciate you bringing that up.

Ooo.

In any case, Representative Atkins is obviously not pleased with the MOA. Even in this hockey-dominated segment, he kept bringing the conversation back to the Minnesota Orchestra and SPCO. It would not surprise me if another is held about Mr. Henson’s misleading testimony to the legislature. Keep writing lawmakers, folks. Because it’s making a difference. If we can’t get answers through the press, then we’ll go through the legislature. Watch us.

4 Comments

Filed under Labor Disputes, Minnesota Orchestra

4 responses to “Analysis of the MOA’s 1/2 Press Release

  1. Sarah

    First of all, an “independent financial audit” is NOT the “highest level of financial review”.

    Second, I love Rep. Atkins’s OH SNAP of “You may not hear it, but that’s because some folks in the media aren’t wanting to talk too much about it, I guess.”

    Third, I don’t think I’m the first to have thought of this but – WE the TAXPAYERS are now footing the bill for at least some of the musician salaries in that they are able to collect unemployment. That seems to be Corporate America’s modus operandi these days – get the evil government to pick up the slack while they pay little if any taxes.

    Me, I’m waiting for the Tony Ross et. al. version.

    And I hope you don’t go quietly into that good night, SOTL, should a miracle occur. Oh no, I bet you are getting ready for Act 2!!

  2. Sarah’s right. Taxpayers are responsible for picking up the tab for unemployment–call it an insurance program, but it is ultimately underwritten by the government. Taxpayers are on the hook.

    It’s also true that taxpayers of ordinary means are responsible for paying the tax deficit left by wealthy patrons when they give to charitable institutions such as the Minnesota Orchestra. Taxpayers are every bit as vested in the well being of the Minnesota Orchestra as are wealthy patrons–and we shouldn’t be shy in saying so. We have voice.

  3. Alan Nilsson

    In looking at MOA audits -and the implied bill of good health – it is interesting to understand the role an auditor plays. A good start for the uninformed might be the article “Pressure grows to bring auditors to account”, in the January 7 edition of the Financial Times.

    Two short excerpts: The profession’s failure to give warning of the financial crisis has increased long-simmering dissatisfaction with the auditor’s report, the formulaic paragraphs in a company’s annual accounts that say whether the auditor deems the figures reliable.
    Some want the auditor to give a more detailed opinion, breaking away from the lifeless “pass or fail” pronouncements that did so little to alert shareholders to impending bank failures..

    ….Other respondents to the IAASB consultation were more hostile, citing fears that the commentary would undermine the principle that it is the role of management – and not the auditor – to provide original information to investors.

    [

    Ss:

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