Detroit Symphony Orchestra reaches successful resolution with its lender syndicate

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Settlement fully satisfies DSO’s obligations on The Max

(DETROIT—May 31, 2012) — With the sounds of Detroit Symphony Orchestra (DSO) concerts and Civic Youth Ensemble rehearsals still reverberating throughout the Max M. Fisher Music Center, the DSO announced Thursday that it has reached a successful resolution with its five-bank lending syndicate.

“When I took the role of chairman in December of 2009, a main objective was to put the DSO on sound financial footing,” said DSO Chairman Stanley Frankel. “With today’s news, we have moved closer to that goal.”

Arthur A. Weiss, Treasurer and Executive Committee member of the DSO, made the announcement Wednesday at a meeting of the DSO Executive Committee.

“This was a complex and carefully considered process,” said Weiss. “The DSO is grateful for the spirit in which our lenders worked with us to resolve our banking differences. This agreement removes a substantial liability from our balance sheet and a significant source of financial strain for the DSO. Most importantly, it represents a new beginning for our 125-year-old community gem.”

“We are pleased that we have been able to reach this agreement with the DSO and the orchestra can continue to play its vital and unique role in this community,” said Brett Bernard, Michigan president for Bank of America.

This resolution is an imperative step in the DSO’s strategic recovery plan that was launched in 2008. A brief summary of the action steps taken in the plan include:

  • The staff workforce and compensation was cut.  In 2009, 39 staff positions, representing roughly one-third of the full-time workforce, were eliminated and permanent salary pay cuts of 10% and 5% were instituted. Substantial changes in healthcare and pension plans were unilaterally imposed.
  • Members of IATSE, the union representing DSO/Orchestra Hall stage hands and technicians, agreed to cuts and freezes.
  • In February of 2010, Music Director Leonard Slatkin agreed to a three-year contract extension through 2013 and a pay cut. He would be conducting more weeks, at lower pay, including a number of free weeks.
  • In April of 2011, following a very substantial 6-month labor stoppage, members of the Detroit Symphony Orchestra agreed to a 3-year concessionary contract of $36.3 million. This represented an 11.3% decrease over the previous 3-year expenditure. The new agreement achieved helpful work rule changes that allowed DSO to address certain aspects of the business model, including community engagement, educational services, and digital media.

“I want to thank our lenders, our Board Leadership, and our law firm partner, Jaffe Raitt Heuer & Weiss, for making this important resolution possible,” said Anne Parsons, DSO President and CEO. “For 125 years, the DSO has been a beacon of pride for Detroit, sounding brightly on the Woodward Corridor. With today’s announcement, I believe we have accomplished a hard-earned opportunity for every stakeholder involved with this remarkable institution. We must now work together to secure a vital and more sustainable future.”

The DSO Annual Fund campaign – which provides a critical 50% of the DSO operating revenues – is within reach of its goals, but must secure $2 million in funds by August 31, 2012. The DSO Board of Directors has appointed Steve Strome, former head of The Handleman Group, as chief architect working with a task force to codify the next building blocks in the DSO’s recovery plan: endowment, capital reserve, and operating recapitalization. Their work will be presented at the December 2012 Annual Meeting of the DSO Governing Members and Board of Directors.

Summer programming for the DSO continues through July at Orchestra Hall, Chene Park, Dearborn, the Grosse Pointes and other communities around Southeastern Michigan.

For concert information, or to make a donation, visit www.dso.org

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16 Responses to “Detroit Symphony Orchestra reaches successful resolution with its lender syndicate”

  1. Will CD’s be available for sale from the Kid Rock/DSO concert?

  2. As a supporter and friend of the DSO, I note that in this PR release, there is not one word of substance about the terms of the alledgedly “successful” resolution of the debt issue. Not one word.

    A resaonably well informed person could infer that the banks took most or all of the DSO’s unrestricted endowment and agreed to swallow the rest of the debt. If the deal is something like that, why not just say so, rather than leaving the reader to speculate about why you said nothing of substance about the terms.

  3. avatar Henry Golemba on May 31st, 2012 at 8:36 am

    Did Anne Parsons take a pay cut?

  4. It’s impossible to tell from this release what it was that the bankers did to “resolve our banking differences”.

  5. Cynthia,

    Details regarding a recording of the Kid Rock concert have not been finalized yet, but stay tuned!

  6. Jim,

    Thank you for your note! Of course the DSO wants to share everything we can with our devoted supporters. Our agreement with the banks involves a very strict confidentiality agreement barring us from revealing any terms of the settlement.

  7. Congratulations! My wife and I look forward to many more years of enjoyable Classical concerts at the DSO! However, our auditory canals are not tuned in to the recent trend to include so-called modern classical music….sometimes reflected by a sparser audience and, sadly, in some cases, attendees leaving the performance. Please let the classical series be reflective of the “old” classics which are never too old to me and executed so passionately and professionally by our beloved DSI! Again, congratulations and kudos to the administrative staff of the DSI. You make Detroit proud to be the home of the World Class Detroit Symphony Orchestra! We have traveled in the past with the DSI and miss that venue.

  8. avatar Danice Chisholm on May 31st, 2012 at 11:03 am

    Amen to the questions of Jim, Art and Henry. Management leadaership continues to disappoint. Thanks to the muscians who stayed and continue to give us beautiful music; to the volunteers; and the Board who give their expertise and time.

  9. avatar Joyce Smith on May 31st, 2012 at 2:51 pm

    It seems just about everyone is making a sacrifice of some kind – pay cut, etc. — except Ann Parsons. Shouldn’t she step up to the plate, too.
    ?

  10. avatar R. Schaffer on May 31st, 2012 at 4:09 pm

    I greatly enjoy “modern” classical music. I commend the DSO for the program balance between traditional and modern. I believe that classical music must evolve with the times to survive. If we listen only to works from before 1900, the audience for the music will surely decline as time goes on.

  11. avatar WESLEY PELLING on May 31st, 2012 at 8:00 pm

    I THINK IT’S WONDERFUL THAT SUCH AN ARRANGEMENT WAS MADE BUT FEEL EMPTY NOT KNOWING WHAT THE DSO GAVE UP TO SEAL THE DEAL.

  12. avatar Dennis Bierlein on June 1st, 2012 at 12:45 am

    Just a response to the Colombo’s “the recent trend to include so-called modern classical music” comment.
    I, for one, check out the programming before making any decision on attending area orchestras and, if there isn’t “modern classical music”, it’s a pass for me.
    Let’s face it. I’m 60 years old and the demographic for my age group should be the type that “leaves the performance” but, due to mortality, will one day not even come to the performance. Orchestras are going to have to find a way to encourage/engage the younger audience. Here’s a link on what one conductor is doing ( http://www.stuff.co.nz/dominion-post/culture/performance/6936999/Younger-audiences-sought-for-classical-music ) Then there are the artists like Hilary Hahn’s latest album Silfra.

  13. avatar Stewart Williams on June 1st, 2012 at 7:32 am

    @Danice I’ve read every article, listened to most radio interviews and I would respectfully suggest you GET A GRIP. Ticket sales, UP. Fundraising, UP. International webcast audience, UP. DSO serving more of our community, UP, Debt, GONE. These are all management functions and the result of strong, able, and gifted leadership.

    @Joyce, several articles in 2009 in FREEP and later in 2010 detailed the sacrifice steps taken. Those articles, at the time, clearly articulated everyone’s participation including Ms. Parsons’.

    Let’s all get on the side of music rather than this tired divisive rhetoric.

  14. avatar James Scarpace on June 1st, 2012 at 11:59 am

    DSO management and cheerleader Williams:

    Seems to me that the aforementioned comments are “on the side of music” but suggests that some people are upset and unhappy with MANAGEMENT since 2008! Perhaps the Board should take notice. Also, modern classical music hasn’t captured my interest yet so I’ll skip the classical season again.

  15. I appreciate the DSO concert programming to include newer works along with the the classics or more popular works. As an example, we anticipated John Williams’ Cello Concerto but aside from Robert DeMaine’s virtuosity, found McTee’s Ballet for Orchestra much more enjoyable and interesting. Also loved The Kracken!

  16. avatar Gwendolyn Maddy on June 4th, 2012 at 1:22 pm

    I have been following with great interest the course of the Detroit Symphony’s progress following the Great Recession in 2008. The Detroit Symphony was partnered with my family’s Interlochen Center for the Arts National Music Camp every summer for years and also involved with the winter students at the Interlochen Center for the Arts. The loss of this partnership saddens me. I spoke with Cathy Compton, Violist, at the 50th IAA reunion in May, and told her of my interest in the Detroit Symphony. Specifically, I had tried to purchase season tickets for this past season, but was perplexed as to just what I should buy because of all the different venues, of varying musical quality. Naves of churches, in my own experience as an orchestra player, are difficult because often players in the same section are separated from one another and therefore cannot hear or see one another, and often cannot see the conductor, either, nor he them. This makes for a very difficult experience with checkered musical results, as acoustics and reverberations are also a problem in such venues. I realize reaching out to the communities is a fine idea, but perhaps outdoor shells where the orchestra can be together in the summertime is better than trying to cram them into unsuitable venues in neighborhoods. Why not invite the neighborhoods to sponsor seasonal orchestral performances in their lovely auditorium, with a special afterglow party featuring Bloomfield Hills, for example, to which all attendees and the orchestra are invited? Meet the orchestra, for at least an hour after the performance? A smaller chamber orchestra could go at far less expense to the neighborhoods with guest soloists drawn from the orchestra itself or Detroit, or Chicago, NY or SF or LA to delight the crowds in the neighborhood. I would also suggest that a foursome of demonstrators from the orchestra make the rounds of the public schools and colleges showing how music is made on the four types of instruments – woodwind, strings, brass, and percussion using garden hose and a funnel, strings and a gourd, etc. and demonstrating how all the instruments are played. Kids need to be brought to the orchestra performances, and orchestral performances need to be brought to them and to their parents in all the city’s parks and schools and city centers. Find sponsors from the world’s corporations to fund this, and name the presentations after them individually.I would also like to see the summer season reestablished and the partnership with Interlochen reinstated, as it is mutually beneficial. Detroit Symphony needs to record again, as well, and keep up its international reputation by touring every year or at least every other year until it gets back on its fiscal feet. Spread the music! It’s contagious! Also spread your CDs around liberally, and make sure there’s a Detroit station on tv and radio showing performances 24 7 so the public gets a chance to see what the DSO is all about! Kudos for settling this, but it sounds like you gave away the endowment in exchange for debt reduction, a dicey thing to do. Get busy and raise funds to cover the losses at once!

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