VOL. 128 | NO. 63 | Monday, April 01, 2013
Nashville Symphony Facing Financial Hurdle
TRAVIS LOLLER | Associated Press
NASHVILLE (AP) – When Nashville's symphony hall opened in 2006, across the street from the Country Music Hall of Fame and just a short block from the honky-tonks of lower Broadway, the building was praised for its beauty and sound and the potential to upgrade the city's music image.
Seven years later, there is fear it could go on the auction block.
The Nashville Symphony Association recently announced it would not renew a letter of credit with its bank lenders that secured the bonds used to build the Schermerhorn Symphony Center.
Symphonies around the country have had financial troubles since the Great Recession began in December 2007. Even the famed Philadelphia Orchestra declared bankruptcy two years ago, not emerging until last July.
But it would be a mistake to equate what is going on in Nashville with what is happening to orchestras elsewhere, said Drew McManus, a Chicago-based orchestra consultant and commentator.
For one thing, the Nashville Symphony is not broke.
Despite a massive flood in 2010 that put the symphony hall under 24 feet of water and caused $40 million in damage, the symphony has enough cash to support its day-to-day operations for the foreseeable future, symphony President and CEO Alan Valentine said in an emailed response to questions.
It just announced the 2013-14 season and Valentine said the leadership has been "extremely pleased" with season ticket sales.
Through the letter of credit, Bank of America and a group of other banks had guaranteed the symphony hall bonds. In return, the symphony agreed to pay the banks an amount that has not been disclosed publicly.
The letter of credit is set to expire April 30. The decision not to renew it carries risks.
Bob Tuke, a Nashville attorney familiar with the bonds, said the symphony still owes $88 million on the original $102 million bond issue. If the symphony fails to repay Bank of America under the terms of the letter of credit, the bank has the right to foreclose on the symphony hall.
McManus said he doesn't see that happening.
"Practically, it's not a facility you can easily turn over to a buyer," he said. "It's not as though it's a standard apartment building."
In a letter to patrons posted on the symphony's website, Valentine states, "While it is too soon to know exactly what will happen next, we believe this decisive action will create a sense of urgency and focus in the discussions with our lenders."
McManus said many orchestras around the country that have found themselves in financial difficulties have focused on seeking concessions from their musicians rather than the banks.
Musicians in the Minnesota Orchestra have been locked out since Oct. 1 after they rejected a management proposal that would cut salaries by an average of 34 percent.
Some people are surprised to learn that Nashville even has a symphony. But the orchestra has slowly built up a national reputation, playing Carnegie Hall and earning seven Grammys, including two for best orchestral performance.
As early as the 1960s, country artists such as Roy Acuff appeared with the symphony on occasion, and symphony musicians were frequently in the recording studios on Music Row, providing the lush orchestra backdrop that became a trademark part of the Nashville sound.
The symphony hit financial trouble in the late 1980s, even declaring bankruptcy, but emerged in 1995 thanks to the help of country artist Amy Grant, who initiated a series of Christmas concerts, later taking the symphony on tour and donating the funds from those concerts.
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