They're not the first American orchestra to do this, but they are far and away the biggest and most prestigious. I wrote the following summary of their situation on the Well:
The Philadelphia has a number of problems, some of which you might not know unless you have been following the story for a while:Matthew Guerrieri has a typically thoughtful post about the Philly's situation, which I urge you to read. I learned a lot from it, including:
- Declining philanthropy for the arts, which is a problem throughout the world of concert music. It is closely tied everywhere to the aging audience and, I think, to a younger generation of philanthropists who are giving money to medical and social causes (think of the Bill & Melinda Gates Foundation, or Sergey Brin's big donations to Parkison's research, or all the Microsoft and Google millionaires setting up social justice-oriented foundations).
- When the Philly moved from the Academy of Music to the new concert hall, their rent apparently skyrocketed AND they lost income that came to them from certain other shows at the Academy. I would guess that rent is their second biggest cost after labor.
- A serious leadership vacuum at multiple levels. They have been without a permanent music director for a couple of years after Christoph Eschenbach left in a big hurry in 2008. They have a new music director coming in next year, but he is young and comparatively inexperienced at the business side of the business, as it were. That's four years without someone responsible for a consistent artistic vision and directorship.
- They had problems with their executive director and, again, I think there was a period of floundering under someone temporary before Alison Vulgamore joined from the Atlanta Symphony a couple of years back.
- Their current financial crisis quite clearly indicates that there are failures of marketing and long-term development/fund-raising.
- Their problems go back to the strike of 1996.
- The orchestra froze pension fund contributions in 2004. They've managed to avoid dealing fully with that problem for seven years now, and the pension plan is currently underfunded by $21.8 million.
- The Kimmel Center lease is costing more than twice the occupancy costs at the Academy of Music - which the orchestra owns.
Matthew links to an informative article by Peter Dobrin about the orchestra's situation.
I find that I'm appalled by the whole thing. There's the inability of the board and administration to solve these problems during the years they've been developing; obvious major leadership problems. There's the matter of the endowment: how exactly, as Matthew says, are they going to claim poverty when they're sitting on something between $114 million and $140 million, depending on who you believe?
Then there's this: the orchestra is being represented by the law firm Dilworth Paxson. A partner in that law firm, Joseph Jacovini, sits on the orchestra's board of directors. Mr. Jacovini won't be involved in the legal proceedings and won't benefit from any income from the case - but goodness. It sure looks like a conflict of interest and should have been avoided. It is not possible that Dilworth Paxson is the only firm capable of representing the orchestra in this matter.