By Camilo Smith
By Craig Malisow
By Jeff Balke
By Angelica Leicht
By Jeff Balke
By Sean Pendergast
By Sean Pendergast
By Jeff Balke
From a handpicked head honcho who was instrumental in securing Eschenbach, to a stopgap job at a smaller orchestra in a blue-collar town, Wax, and some of his board, ultimately may have fallen victim to the very music director whose fame they enjoyed but whose demands they could not always satisfy, at least financially.
"We committed ourselves to more projects than we had revenue coming in to cover," admits Wax. "But at what point do you say no, if it's going to do great harm to the organization?" So the accolades kept rolling in and the money kept rolling out. Like a colt whose legs are too long for its body, the orchestra was growing disproportionately. Local audiences and individual donors were not keeping pace with the artistic development. Things came to a head in 1997.
That was the year the musicians, in a testament to Eschenbach's bewitching baton, swallowed a 7.7 percent pay cut and played without an American Federation of Musicians union contract. Despite the concessions, it was also the year that the organization's debt almost doubled. According to the Houston Symphony Society's IRS reports for its fiscal year ending May 31, 1997, the debt jumped from $4,780,000 to $7,029,666. Part of that was a revolving line of credit at Texas Commerce Bank. Lots of nonprofit arts organizations use a bank line of credit to keep cash flowing while waiting for government and foundation grant cycles and seasonal ticket sales to kick in. The symphony's line of credit for that year capped at $1,029,666, which in itself wasn't a problem. The problem was that the group had overspent to the extent that a separate $3 million long-term note had to be doubled to $6 million, and the organization's endowment was used as security, a guarantee, for the loan.
Endowments, funds usually raised through community campaigns or inheritances, are money in the bank. They are used to secure an organization's operation, allowing a performing arts group or museum to use the interest for special purposes or to make up for cash-flow shortages. The idea is to not touch the principal, and in some cases the board may make that an actual covenant on the endowment.
"It is certainly not recommended to borrow against your endowment," says Grace Chang of the American Symphony Orchestra League, an association that encompasses many of the country's 1,800 orchestras, including the Houston Symphony. "And it is certainly not common." Also not common was the extent to which the Houston Symphony was fading financially.
That same year, even by doubling the loan, the symphony still ran $1,403,124 in the red. The following year, the organization's fiscal year ending May 31, 1998, the orchestra finished the year ahead by $334,594, yet the long-term debt had crept up to $7,689,756. Gifts from individuals, corporations and foundations nudged upward, but ticket sales roughly held steady, bringing in $18.7 million, compared to $17.3 million the previous year. Spending stayed the same, at an average of $18.5 million each year.
Yet some wonder what kind of revenues the symphony could have generated if only it had had better administrators, a thought echoed in a 1998 Houston Chronicleop-ed penned by the then-chairman of the players' negotiating committee, Tom Elliot, who quotes from a 1995 Dini Partners analysis of the organization: "The symphony must either take the necessary steps to upgrade its administrative, marketing and development capabilities to match the quality of [the orchestra] or be forced to scale back its operations."
Likewise, a former corporate granter remembers receiving what amounted to a form letter from the symphony every year asking for money. "Then there's David Gockley [general director of Houston Grand Opera] calling you every week, asking you to lunch. It makes a difference." If Wax was a bit reclusive -- curiously, his advice for his successor is to "have a real presence in the community; you cannot be isolated, you must be part of it" -- then Gockley is the extrovert of the arts scene. Among local arts administrators, Gockley is seen as a sort of Superman, being everywhere at once and schmoozing everyone in sight. That's part of the reason that this year's HGO ball is expected to net close to $1 million, while last season's symphony soiree reportedly took in little more than $600,000. And yet the symphony was pleased with that amount, a fact that's not hard to understand when you hear the stories of a symphony gala in the not-too-distant past that lost money, some say as much as $300,000. Sources say the chair that year was chosen for name appeal, not for her talent at raising money. "She didn't even buy a table herself," says a former board member. But such misguided attempts were not uncommon at the symphony.
"You could fill a bathtub with the stories," says principal tuba player David Kirk. An 18-year veteran of the orchestra, Kirk says musicians would always hear people complain that they gave money to the symphony and never even got a thank-you card. Of equal concern to the players is the graying of their audiences and the elitist images associated with their music. "There are younger ticket buyers and donors out there; an executive director should see that as a necessity, as a hole that needs to be filled," Kirk says.