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Is Minnesota Orchestra Management Lying To Us, Part 3: Yes

Yesterday proved to be an important day. Graydon Royce penned and published the single most important article yet written about the orchestral apocalypse. So go read it. Now. Please.

Let’s all take a moment to acknowledge that Graydon Royce is the King of Minnesota Orchestra Investigative Reporting.

Your crown, dear sir.

The article begins:

For four years, the Minnesota Orchestra board has walked a tightrope between managing public perceptions about its financial health and making its case to cut musicians’ salaries.

I’m not writing in a newspaper, and I’m not speaking on behalf of anyone but myself, and I don’t need to be delicate, so please, allow me…

The Minnesota Orchestral Association lied to the public about its fiscal health in order to get what it wanted. Yes, I know that we’ve sidestepped the L-word in the past. I wrote “obfuscations” once; the MOA then wrote about “misrepresentations“. So I’m going to be the first to be blunt, and say lie. They lied. They lied, as in “they presented false information with the intention of deceiving.”


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What We Know About Minnesota Orchestra’s Finances – and What We Don’t, Part I

There is an old stereotype that artists are terrible with numbers. Many enforce the stereotype (me, for instance), while others defy it. Happily, Mary Schaefle defies it, and she is today’s guest blogger!

Mary is a Twin Cities nonprofit professional and community violinist. You may have seen her name in the comment section here at SOTL, on Facebook, or on the Musicians of the Minnesota Orchestra’s website. I highly recommend reading the two letters she sent to Minnesota Orchestra management; you can find those here and here. I’ve been staying away from too much in-depth analysis of numbers, because I obviously don’t know much about non-profit nitty-gritty. Happily, however, Mary does, and she offered to take a look at some of the public documents discussing the Orchestra’s finances, so that we might at least try to figure some of this stuff out on our own. Hey, if management isn’t going to answer our questions, what else are we supposed to do?

You can take a look at some of the forms she refers to online. Unfortunately I can’t link directly to them, but if you sign up for a free account with Guidestar, and look up the Minnesota Orchestral Association, you can download some of the documents she mentions. If you have any questions or refutations to make, the comment section is open, and Mary will answer you directly, and I will edit the original article as needed. How’s that for service? I’d be so delighted if management would do the same for us, but for some reason that’s too much to ask… Anyway. Many thanks to Mary for contributing such an interesting piece. I hope we get some answers to the questions she raises, and soon.


Minnesota Orchestra’s management has told us they are making “difficult and necessary decisions” and can only spend what they earn. So what do we know about the Minnesota Orchestra’s finances? Tax returns and audited financial statements give us some answers, but unfortunately more questions. There will be plenty of numbers in this post, but I’ll try my best to explain terms.

Remember that I’m not an accountant and certainly not a CPA. I am a person who cares deeply about the Minnesota Orchestra, and who likes to dig through nonprofit tax returns and financials. They can tell you a lot about the organization as long as you have a lot of time and either a translator or a basic understanding of nonprofit finance.

Endowment Income – Is That the Problem?

Management has pointed to the 2008 recession and the resulting decrease in endowment revenue as a key problem. The Orchestra’s endowment lost $12.9 million that year (reported on the 2008-2009 tax forms which are available at Guidestar). They’ve since experienced modest gains of $6.3 and $5.6 million (990, Schedule D, Part V).

But endowment challenges are much larger than a one-time decrease in size. Organizations assume they will receive a certain amount of income from the endowment each year. Those estimates can be conservative, assuming smaller returns, or they can be wildly optimistic. Looking at the Orchestra’s strategic plan, those 2008-09 investments were projected to be $201.4 million. The actual assets were $135.3 million, a difference of $52.2 million before the market tanked. The $12.9 million loss was piled on top of that. The 2007 projections are somewhere between overly optimistic, flawed, and just plain wrong. Perhaps this was the genesis of the financial problems.

Let’s get to how that impacts us today. Back in 2009, our endowment “paycheck” was lowered by 13% compared to our projections. Then things got even worse and our 2012 “paycheck” is expected to be 45% lower. They know the 2007 projections are wrong, but just keep using them. Why do they appear in the 2011 Strategic Plan? Do management and the Board have a new set of projections for future years? A review by an investment analyst, which is typically not part of an audit, is needed.

The Endowment Draw and Two More Questions

Comparing tax returns to media statements and the Minnesota Orchestra website raises two more questions. The draw on the endowment (the income or “paycheck” I mentioned above) has been excessive according to management. They are correct that a 19% draw could deplete the endowment in just over five years. That one is simple math.

According to our friend the 990, the endowment distributions (read “draw”) were 16.3%, 9.4% and 7.8% from 2008-09 through 2010-11 (Schedule D, Part V). As I pointed out in the comments section of Emily’s earlier post on the endowment, the draw amounts released by Minnesota Orchestra do not match their tax forms. That means percentages are off as well. Yes, we once again need that accountant.

Now onto an item that – at least for me – is really troubling. Audited financial statements list “Board Designated Draws from Investments” in the Statement of Operating Activities. Think of this as the amount taken from the endowment (draw) to support concerts, education programs and the day-to-day business of an orchestra (operating activities). In 2008-09 and 2009-10, amounts reported on the financial statements are fairly close to those on tax forms.

But the difference in 2010-11 is just over $6 million. You read that right. The Board withdrew $12.1 million from the endowment, but only $6 million was used to run the Orchestra. I’ve scoured the financial statements and don’t know where the remaining $6.1 million was spent. The money was used somewhere – but where? Financing long-term debt? Expenses related to the Hall renovation? Why did the Board and management decide to withdraw such a large amount in 2011 and only use half for the operations of the Orchestra?

Now is a great time to reiterate that I’m not a CPA. A clarification from an accountant would be wonderful. Perhaps closer to necessary.

For those who like to verify my figures, unfortunately the audited financial statements are not available on the Orchestra’s website or on Guidestar. I’d suggest requesting a copy from the Minnesota Orchestra.

Turning To Investments

Minnesota Orchestra owns plenty of stock. In the 2010-11 and 2009-10 years, Minnesota Orchestra reported gains (or income) of $7.8 million and $2.8 million when they sold securities (Form 990, part VIII). We don’t exactly know how that income was used, but I think we can all agree that bringing in more money is a good thing.

Unfortunately, 2008-09 is again the spoiler. The Orchestra sold a large amount of stock at a $13.9 million loss. It is well known advice to buy stocks low and sell high, and the 2008 market was low as a contrabassoon. It’s possible the stock was on its way to becoming a penny stock. But why would they own such a volatile, risky stock? It could be a bad decision or bad investment advice – to the tune of almost $14 million. I know you’re ready with my next line. A review by an investment analyst would certainly help explain some things.

The Wrap-Up…And More Numbers Coming

For those who’ve stuck with me through this post, you might wonder why I spent so much time and effort on the endowment. It’s because the Orchestra’s management emphasized the shrinking endowment as a key factor in sending their books into the red. So far we’ve confirmed the endowment decreased during the recession. But we’ve also looked at faulty estimates, endowment draws not matching tax returns, some bad investment advice, and an endowment draw where only half the funds go to the work of the Orchestra. If you came here for answers…well hopefully the title gave you a hint.

There are other problems cited by management, including declining ticket revenue, musicians’ salaries, and donors’ restrictions on their gifts. But that means digging into the financials, tax forms and media statements again. Trying to digest too many numbers at once jumbles everything for me, so I’m going with manageable chunks. Check in later for the current state of Orchestral Apocalypse (thank you, Emily, for what you’ve been doing!) and for a few more facts and figures.


You’re welcome, Mary, and thank you!

So…what do you think? I’m in absolutely no position to judge; this kind of stuff is way beyond my personal sphere of expertise. (I do, however, trust Mary.) Are there any experts out there who can help to shed some light on what’s going on? Have any other patrons been looking at the documents that Mary references? If so, what did you find? Now would certainly be an excellent time to hear directly from the MOA…

You can read Part II of Mary’s series here.


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A Layman’s Guide to the Minnesota Orchestra Lockout

Someone asked me the other day – “So what’s this whole Minnesota Orchestra lockout thing about?”



“How long do you have?” I wanted to ask.

So I’m giving myself a challenge: to summarize the lockout from my perspective in 2000 words. I’ll give myself bonus points if I can stay under 1500.


The Minnesota Orchestra musicians’ 2007-2012 contract expired on September 30. Rumors had abounded for months that the orchestra was facing serious financial trouble, and that management would be seeking sharp concessions from their musicians (despite the fact that, within the last five years, the orchestra has cemented its reputation as one of the greatest in the world). Within the last year, a large number of players have either retired or left the orchestra outright, suggesting internal strife. In the spring of 2012, sixteen non-musician employees were laid off. Nationally renowned arts consultant Drew McManus feared that these employees were being used as pawns in the negotiating game. On August 27 the orchestra’s blog, written by conductor Sarah Hicks and violist Sam Bergman, was suddenly shut down; neither author was given the chance to write a good-bye post. Management said it was because their website was being redesigned. Fans knew better. So even from the outside, it was obvious that negotiations were tense.

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The Key and the Lockout: The Minnesota Orchestra Musicians In Concert, Oct 18

As many of my readers know, I was diagnosed with several incurable chronic illnesses when I was a child. In my teens, I went through a physical, emotional, and spiritual agony as I desperately tried to come to terms with what these diagnoses meant. I faced a future not just of constant pain and exhaustion, but perpetual poverty, societal scorn, and a black, ever-simmering self-loathing. In short, I faced an acute narrowing of possibility: a future spent in a dark and lonely limited cell.

My story is not unique. Every single human being wrestles with something akin to this at some time in their life, whether they’re dealing with death or divorce or discrimination, or something equally devastating. The unlucky ones stumble in the darkness until they finally collapse, and a kind of light within them goes out. But the lucky ones find a key – and escape.

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The Mysterious Disappearing Michael Henson Article!

Today I found out I’ll need to do a lot of re-formatting on this blog, because the link to the oft-cited “Aiming High: Michael Henson Profile” from the July 2010 Gig Magazine has officially broken.

But unfortunately for both Michael Henson and Kim Kardashian, once something is published on the Internet, it never really goes away.

So we still have this cached version… (Edit 10/29: The cache has vanished. So here are the screenshots…)

But we still have this screenshot JPG version (and a PNG version and a GIF version). And also an HTML version. And also a text version. And an RTF version, and a PDF version. And multiple other versions in multiple other formats. Which I won’t share here because that would be overkill and a possible infringement of copyright. But I have them, and I have them all. Stored in multiple places. On multiple computers. And on a flash drive, which I keep tucked in secret pocket in my purse. And all those copies say the exact same thing they said a couple days ago, a couple weeks ago, a couple months ago, and a couple years ago:

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

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 quite a remarkable article.


Look at how this one article – and nothing else – was excised so neatly, so carefully, so fastidiously, from the main Tour Press page.

It’s almost as if Michael Henson never said those contradictory things……….. Almost.

There were 43 articles featured on the Orchestra’s 2010 tour website. As of today, 42 remain. The only one that’s been removed? The Michael Henson one. Do you think that’s coincidence? If the entire tour website had been taken down – or multiple articles had been removed – then maybe it could have been coincidence. Maybe. But just that single article? The one article that has come under very public scrutiny over the last couple of weeks? The one article that so obviously risks undermining the credibility of management’s entire message? Hmm.

Taking down this article does nothing, and whoever thought it would should not be in charge of a major orchestra’s website. Anything online is permanent. Period. Even though I may well be making a fool of myself, I’ll never try deleting any of my words here…because I’m tech-savvy enough to know that such a thing is pretty much darn near impossible…especially if someone has good reason to try to use my words against me in future. That’s simultaneously one of the prime glories of the Internet, and one of the prime dangers: despite its seemingly ephemeral nature, it is ridiculously permanent.

The sudden excision becomes even lamer when you look at the comments here. One of my readers actually said on October 3:

I suggest you get ahold of that article on the mnorch website about Michael Henson and post the text directly onto your blog. and keep another record of it somewhere. If this whole fiasco is as conspiracy-esque as we think it could be, management might start hiding more things before real info comes out. It might just be a good idea to have that article handy in case…


Yes. Yes, it was a good idea.


I honestly didn’t think it would come to that, but… I’m glad I followed this paranoid bit of advice, that really wasn’t so paranoid after all.

This is feeling more and more like a John Le Carré novel, and it’s kind of ridiculous. We’re in the middle of an orchestra lockout, for Pete’s sake; not the frigging Cold War.

“You’ll have to assume they’re watching you… Things aren’t always what they seem!”

All this deletion does is remind the public that Michael Henson has not explained the discrepancies between his 2010 words and his 2012 words. It also gives some very potent ammunition to those who believe that management is totally, wildly, veering-on-hilariously inept…and is secretly (very very very secretly) humiliated by it. If management didn’t think Michael Henson’s words could be used to successfully undermine their arguments…then why bother deleting them now?

(Or should I say, trying to delete them?)

It makes a person wonder:

Is someone starting to feel the heat?


There are few things more satisfying than shoehorning a dramatic, totally irrelevant picture of Benedict Cumberbatch into your music blog.


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If you’re just joining us…

This open letter was originally written in October 2012 and last updated 27 August 2013.


Dearest readers,

I’ve been getting a lot more views since the Minnesota Orchestra lockout began, and I thought I should put up an entry introducing myself, since so many of you are new.

First off, welcome! My name is Emily; I live in Eau Claire, Wisconsin (that’s ninety miles from the Twin Cities, for those of you who aren’t from these parts). I’m 24 and a freelance violinist, violist, writer, historian, and wannabe musicologist. More details on my professional background here. I’m disabled and trying to save up for college, so as of right now, the only education I have is a high school diploma and what I’ve been able to pick up on my own. I’ve blogged about my musical visits to Minneapolis for a couple of years now, but, although I’ve known since spring 2012 that these negotiations would be unusually contentious, I was determined to keep my nose out of any labor disputes for the simple reason they made me sad. But then someone at the Minnesota Orchestra very rudely and suddenly shut down the Inside the Classics blog with the lamest entry that site had ever seen, and I got angry, and I started to write. And write. And write some more. You mess with the Minnesota Orchestra? You mess with me. (By the way, the Minnesota Orchestra has since nuked the blog, as well as its archive…completely unnecessarily. Stay classy, Minnesota Orchestra. Stay classy.) Since the lockout began, this blog has gotten international attention, which is both flattering and, honestly, a bit terrifying. I have no experience analyzing complicated orchestral politics, much less analyzing complicated orchestral politics with people I’ve idolized for years watching me, so I’m relying on my dear readers to nudge me in the right direction if I start veering off-course. (And they have, too, which I’m very grateful for. Thank you, readers!)

I’ve been going to Minnesota Orchestra and SPCO concerts since I was thirteen. Continue reading


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Is Minnesota Orchestra management lying to us?

I’ve ended each day this week by sharing any and all Orchestral Apocalypse ‘012 news with my mother. She wants to be kept up to speed with the situation; she feels just as emotionally, intellectually, and spiritually invested in the Twin Cities orchestral scene as I do.

Last night I was explaining to her about the artistic goals in the Minnesota Orchestra’s Strategic Business Plan Summary. I told her there was a section devoted to “key targets for artistic programming.”

“What are those targets?” she asked.

I opened the document and read them off. “Symphony orchestra of the highest caliber.”

“That doesn’t seem very realistic if management has their way,” she said. “Won’t a lot of musicians leave?”

“Outstanding classical concerts in Orchestra Hall,” I read.

She considered. “They might be outstanding, but they probably won’t be as outstanding as they have been.”

“National & international touring to significant venues…”

“Why would they want to tour if they have so many subs? Wouldn’t that be embarrassing?”

“Live at Orchestra Hall series to feature popular & jazz artists.”

We both shrugged; we don’t care for most popular and jazz artists enough to warrant a two-hour drive to Minneapolis. We can see those here in Eau Claire.

“Exceptional artistic leaders & guest artists…”

“Will they want to work with a demoralized disorganized orchestra?”

“Vital summer & holiday festivals.”

“Meh. Depends what’s on the program, I guess…”

“New concert formats & content.”

“What does that mean?”

“Forward-looking digital and traditional media initiatives to reach broad audiences & raise visibility.”

“Sounds good, but if the quality of the orchestra goes down the crapper, do they really want to be broadcasting that?”

I was going to flip the page forward to read more but I accidentally clicked backward, to this page, and there I found a sentence that I hadn’t read before. And it made me stop dead in my tracks.

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