SAN DIEGO — Severing its relationship with the musicians of the orchestra, the San Diego Symphony Assn. has shut the door (at least temporarily) on its orchestra business and moved into the debt repayment business.
In a move that stops just short of going out of business altogether, the association's board of directors has voted to cease orchestra operations immediately and to use its assets to raise money to pay off creditors.
Facing a canceled season, $900,000 in debts and virtually no income, the board Monday refused to file for protection under the U.S. Bankruptcy Code.
Symphony President Herbert J. Solomon said he hoped to avoid the added expenses of bankruptcy and at the same time achieve two priorities: "To pay all of our debts to trade creditors, season ticket holders and banks (and to) seek means to provide high-quality music to our community in a fiscally responsible manner."
At present, the association's only sources of income are its assets--primarily Symphony Hall. It can sell the hall or use it to generate income through rentals or by presenting other events.
Solomon stressed that the symphony--though no longer an orchestra--still exists as a business.
"The association owns valuable assets that are worth more than its debts," he said. The symphony's assets are $8.5 million, its liabilities $6 million, leaving a net worth of $2.5 million, Solomon said. The chief asset--and chief liability--is Symphony Hall, which the symphony values at $7.5 million.
Solomon said the association must depend on the patience of the orchestra's creditors, because it cannot pay all of them immediately. Earlier, symphony officials had estimated that it would take five years--while performing concerts--to raise the money to pay off its debts.
In addition to its $900,000 debt from last season's operations, there's the $400,000 in refunds requested by season ticket holders. Solomon said the symphony was under a "moral obligation" to pay its creditors, such as ticket holders, but he said the association does not have the money to pay them now.
On Nov. 11, the symphony canceled its entire winter concert season because contract talks with musicians reached a stalemate.
Solomon blamed the orchestra's players for Monday's action, saying that "if they had entered into a contract, we would not be here today."
Union leader Gregory Berton said he was not surprised by the action.
"Well, they haven't operated since last summer, anyway," Berton said. "This has happened in other cities and it often works out all right." Berton said many of the orchestra's former players will continue to audition in other cities.
Wesley O. Brustad, executive director of the orchestra, said he hopes to stay "through a solution to this problem," adding that "if the association becomes a real estate operation . . . that's one thing; if it has a musical purpose, that's another. The most important thing now is the debts."
Along with reducing the debt, Brustad said, he planned "adjustments" in the 10-member staff. He has already pared the staff down from a high of 39 earlier this year.
In addition to Brustad's own salary, estimated to be $80,000 annually, the other key salary expense is that of music director and conductor David Atherton, which Solomon said stands at 50% of what Atherton normally would receive if there were concerts. Atherton's minimum salary would have been $237,000 this year.
The board passed a resolution Monday praising Atherton for his "outstanding artistic contributions." The musicians have charged that Atherton's demands for non-wage artistic concessions in the area of hiring and firing have kept them from reaching an agreement with the association.
A likely source of income for the symphony would be renting out the hall, Solomon said. Recent hall rentals have been as high as $2,500 a night. Attractions now booked into the 2,250-seat auditorium include Johnny Mathis (Jan. 23), Joan Rivers (Feb. 1), the Chicago Symphony (Feb. 4) and Tom Jones (Feb. 9).
While the law prohibits creditors from filing petitions of involuntary bankruptcy against nonprofit organizations such as the symphony, they may seek payment in court, a bankruptcy attorney said.