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“Do Some Orchestras Exaggerate Their Financial Position For Negotiation Leverage?”

A blogging colleague sent me an email last week asking the question in today’s title: “Do some orchestras exaggerate their financial position for negotiation leverage?” The smart alec in me wanted to write back with the following single sentence response: “Does a bear blog in the woods?” But thankfully my conscience kicked in and reminded me that (fortunately) not everyone is so jaded and I shouldn’t be such a schmuck.

The more I thought about the question, the more it dawned on me that if you believe people enter into something like collective bargaining with nothing but the purest of intentions and cleanliest of hearts, there’s no good reason to believe that an orchestra association would willfully exaggerate or even fictionalize an artificial financial position solely for the purpose of garnering a stronger bargaining position.

If you’re one of those people, bless your heart but you might want to stop reading right now.

…really, let today’s post slide by and come back tomorrow.

…last chance; icanhascheezburger.com probably has some really cute kitty vids today.

Okay then; in short, the very sincere and very real answer to the question is “yes.”

That doesn’t mean any one side of the table has the moral high ground for truth, justice, and the American way; it’s pretty much an equal opportunity playing field.

Fortunately, this isn’t abused on a regular basis and to such a degree that results in decades long institutional damage and ill-will, but it does happen.

If you want some recent verification, take a look at the Philadelphia Orchestra bankruptcy proceedings. Throughout the discovery process and subsequent public inspection, there were a number of instances where the association’s position on the institution’s financial condition was determined to be exaggerated. One key element, of which a dispute is ongoing, is the state of funds in the orchestra’s endowment.

The nuts-and-bolts behind creating an artificial financial condition (meaning, made to look worse than they are and vice-versa) are fairly diverse. None of it is illegal but most of it is pretty tough to extract outside of the confines of something like a bankruptcy review; in the end, it’s all smoke and mirrors as debts are still debts and assets are still assets.

There are even instances where folks don’t even realize they are exaggerating a financial position. Good old fashioned accounting errors pop up on fairly regular basis at all size budget orchestras (remember Columbus Symphony in 2004?).

In the end, you’ll be hard pressed to find examples with verifiable evidence of one side or the other playing fast and loose with finances but there’s a reason why: in any good negotiation, even contentious ones, one side must leave a window of opportunity open for the other to exit and save face or the institution will suffer from prolonged stakeholder animosity.

So in cases where either side exaggerates (or even creates) an artificial financial condition, the other side of the table might call them on it, even publicly, but they let it go after the deal is done. In cases like this, any “evidence” uncovered during the negotiation process is quietly removed/reversed and folks just let it go.

It isn’t pretty, but it is what it is.

Trackbacks/Pingbacks

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