Today, the American Federation of Musicians, Local 60-471 negotiating committee representing musicians of the Pittsburgh Symphony Orchestra (PSO), rejected the last, best and final offer from the Pittsburgh Symphony Orchestra, Inc. (PSI) for a three-year contract.
The last, best and final offer would have ensured that the members of the Pittsburgh Symphony Orchestra remained well compensated, while also maintaining benefits such as 10 weeks of paid vacation time per year, a minimum of 12 weeks of paid sick time per year, paid sabbaticals, pay for overtime and seniority, comprehensive health insurance, and a generous retirement plan. The base salary for PSO musicians is $107,000 with several orchestra members being paid more than double this with overscale. The parties did not reach agreement over the need to reduce wages, the need to transition the current defined benefit plan to a defined contribution plan, or a proposed reduction in number of contracted players through attrition.
In preparation for the labor contract’s expiration date of September 5, negotiation sessions began in February 2016 and continued until September 4, when both sides agreed to a contract extension effective until midnight on September 18. Negotiations resumed on September 13 and continued into September 18, ending in an agreement to continue conversations and involve a federal mediator in the process. Conversations ended on September 29.
“When new leadership stepped in at the Pittsburgh Symphony, we undertook a diagnostic situation assessment that caused us to realize that we are facing an imminent financial crisis. That assessment showed that, due to a combination of forces, we would run out of cash and have to close the doors in May/June 2017.” said Board Chair Devin McGranahan.
The assessment shows the Pittsburgh Symphony is facing a $20.4 million dollar cumulative cash deficit over the next five years. Factors driving that number include:
- The organization currently has a deficit of $1.5 million on a $32 million annual operating budget.
- The orchestra is over $11 million in debt between a $6 million fully extended line of credit and over $5 million in pension loans that are currently being repaid.
- The musicians’ defined pension plan is at great risk due to a decade of low interest rates. As a result, an estimated $10,400,000 in cash is needed to be infused into the plan over the next 5 years with no certainty that this will be enough to fund the plan for the long term.
- The organization has experienced a $1 million decline in state funding (government dollars) since 2009.
- The PSO will lose a $400,000 subsidy from the Pittsburgh Cultural Trust and at least two weeks of Broadway rental at Heinz Hall beginning in 2017-18. At the same time, a one-time gift which was used to fund the orchestra’s last contract cannot be sustained. Both of these factors equate to over $1.2 million additional revenue needed annually, pushing the structural accrual deficit to $2.7 million in the next two years.
“It is extremely important to underscore that management and the Board of Trustees of the Pittsburgh Symphony are unwavering in our collective commitment to our orchestra’s artistic mission and to its excellence-past, present, and future. At the same time, we must squarely confront the very real financial crisis that we are facing. Throughout the negotiation process-beginning in February and ongoing-we have been doing everything possible to work toward a solution which will place the organization on the best possible path to ensure the orchestra’s future,” said Melia Tourangeau, President & CEO, who was appointed to her position in July 2015. “Our strategic plan is a five-year growth model to sustainability. The hard work and success of implementing it this year make us confident that, in that time frame, we can achieve our plan. Our most immediate challenge is that the runway is extremely short to address key financial circumstances, which is why we need the musicians of the PSO to participate in the solution.”
Despite recent progress in earned and contributed revenue, the organization is still significantly short. Progress made in earned and contributed revenue includes:
- After more than 10 years of declining ticket sales to core products, earned revenue for the fiscal year ending August 31, 2016 exceeded budgeted goals by 4% with the PNC Pops leading the way with a 20% increase over last year’s actuals.
- Subscription sales for 2016-2017 are strong and are running ahead of last year in subscriber retention and new acquisition.
- The Annual Fund has increased 25% over the last five years and the PSI experienced a record-breaking fundraising year this season. In other positive contributed revenue developments:
- Donations from individuals have increased by 10% and the total number of donors has increased by nearly 8% since 2013.
- Board giving has almost doubled over the last five years.
- Special event revenue has doubled over the last five years.
In order to chart the course for a fiscally stable Pittsburgh Symphony Orchestra, management has asked that musicians absorb a 15 percent salary concession, and that they agree to transition the current defined benefit plan fully (the plan is already partially closed to new participants) to move to a defined contribution plan with an eight percent contribution for all musicians. Management has also asked to freeze three open positions in the orchestra for the term of this contract.
In turn, management continues to analyze internal expense controls, including prudently cutting expenses where necessary and aligning resources with its new strategic plan. These concessions and structural changes will be leveraged in the community with a comprehensive fundraising campaign to help move the organization to more stable financial footing.
“Pittsburgh Symphony Orchestra musicians are exceptional artists, and deserve every dollar and every benefit we can afford to offer,” said Melia Tourangeau. “At the same time, at this moment in the Pittsburgh Symphony’s history, we absolutely must dedicate ourselves to a course correction to ensure long-term sustainability for the orchestra. We are deeply committed to an orchestra that will continue its leadership role in the industry, in the Pittsburgh community, and around the world. We sincerely regret any inconvenience the musicians’ strike causes our patrons and assure you that management remains committed to reaching an agreement.”
Due to the work stoppage, this weekend’s PNC Pops: The Music of John Williams has been canceled. All ticket holders will be able to exchange their tickets for Heinz Hall performances later in the 2016-2017 season, may donate their tickets to the Pittsburgh Symphony, or may receive a refund. For further information regarding ticket options, ticket holders are asked to call Heinz Hall at 412-392-4900. In addition, pittsburghsymphony.org will have the most up-to-date information and updates for patrons about the status of future concerts.
For updates on the status of negotiations, please visit PSOupdate.com
The PITTSBURGH SYMPHONY ORCHESTRA, known for its artistic excellence for more than 120 years, is credited with a rich history of the world’s finest conductors and musicians, and a strong commitment to the Pittsburgh region and its citizens. Past music directors have included Fritz Reiner (1938-1948), William Steinberg (1952-1976), Andre Previn (1976-1984), Lorin Maazel (1984-1996) and Mariss Jansons (1995-2004). This tradition of outstanding international music directors was furthered in fall 2008, when Austrian conductor Manfred Honeck became music director of the Pittsburgh Symphony. The orchestra has been at the forefront of championing new American works, and gave the first performance of Leonard Bernstein’s Symphony No. 1 “Jeremiah” in 1944 and John Adams’ Short Ride in a Fast Machine in 1986. The Pittsburgh Symphony has a long and illustrious history in the areas of recordings and radio concerts. Its “Pittsburgh Live!” series with Reference Recordings has resulted in back-to-back Grammy Award nominations in 2015 and 2016. As early as 1936, the Pittsburgh Symphony broadcast on the airwaves coast-to-coast and in the late 1970s it made the ground breaking PBS series “Previn and the Pittsburgh.” The orchestra has received increased national attention since 1982 through network radio broadcasts on Public Radio International, produced by Classical WQED-FM 89.3, made possible by the musicians of the Pittsburgh Symphony Orchestra. With a long and distinguished history of touring both domestically and overseas since 1900 — including international tours to Europe, the Far East and South America—the Pittsburgh Symphony continues to be critically acclaimed as one of the world’s greatest orchestras.