Another symphony contract deadline passes without a deal

Indianapolis Symphony Orchestra musicians’ contract negotiations remain stalled and another week of concerts has been canceled after a Saturday deadline passed with no resolution.

ISO executives and American Federation of Musicians Local 3 negotiators have agreed to many of the financial details in a potential five-year agreement that management announced last week, but they're stuck on a clause that would allow early contract termination.

Musicians had until Saturday evening to decide on the offer.

As part of an agreement in principle, musicians would accept a 32-percent pay cut in the first year of the pact. Starting salaries would drop from $78,000 to $53,000. Pay then would increase every year, reaching $70,000 in year five.

At issue is a management-proposed clause that would allow either side to cancel the contract after the third year.

Use of the clause hinges on the ISO’s ability to boost its fundraising by millions of dollars every year.

The organization usually takes in about $6.5 million every year through its governing body, the Indiana Symphony Society, and a separate arm that manages its endowment, the Indianapolis Symphony Orchestra Foundation.

ISO leaders last week outlined much more aggressive fundraising goals:  $9.8 million in the contract’s first year, $9.7 million the second year, $11 million the third year, $11.7 million the fourth year, and $12.6 the fifth year.

If the symphony collects $5 million by March 31, 2013, management said it will remove the escape clause from the contract.

“The board [of directors] has indicated a steep commitment to step up and find tens of millions of dollars to support the cost of operations over the course of the five years encompassed by the latest offer," board Chairman John Thornburgh said in a prepared statement. "But it only felt comfortable committing to the full extent of it if it could secure an initial showing of support from the community that they were willing to partner with the symphony.

“We all know the symphony is there. We only seek to harness that passion and ensure at least an initial showing of dollars will be there, too.”

The musicians' union is worried management will exercise the out clause, regardless of fundraising results, to terminate the contract before restoring pay to the proposed year-five level, lead negotiator Richard Graef said last week. Starting pay at year three would be $60,000.

Management locked out musicians on Sept. 8, saying the organization could no longer afford its 2009 contract, which expired Sept. 2.

The group has canceled five shows so far this season because of the work stoppage.

Stock market-induced financial woes—encountered at orchestras throughout the U.S.—have pressed the group into significant cutbacks and business model restructuring after the investment-based endowment shriveled from a peak of $120 million.

Management has repeatedly pointed to a struggling endowment, which stood at $80 million at the end of its previous fiscal year on Aug. 31.

A year earlier, the fund was $89 million. After accounting for stock gains, the ISO drew down about 13 percent of its balance, exceeding the 5 percent spending rate experts generally believe is sustainable.

Orchestra expenses represented about 45 percent of the roughly $26 million ISO spent in fiscal 2011. Concert production was another 19 percent.

The musicians argue that cutting into the orchestra’s core product would chase off talent and ultimately ruin the ISO.