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BSO owed vendors $2.1 million as of April, nearly doubling amount owed 19 months ago

BSO owed vendors $2.1 million as of April, nearly doubling amount owed 19 months ago
Baltimore Symphony Orchestra musicians walk the picket line outside the Joseph Meyerhoff Symphony Hall. (Jerry Jackson / Baltimore Sun)

The Baltimore Symphony Orchestra owed its vendors $2.1 million as of late April — a debt nearly double what it was 19 months earlier.

According to a Baltimore Symphony Orchestra financial document obtained by The Baltimore Sun, 39.5 percent of the money the organization owed to tradespeople was more than 60 days overdue as of April 24.

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That’s almost an 81% increase over the $1.2 million the orchestra owed to merchants as of Sept. 25, 2017 . It was not immediately clear when or how the Symphony plans to make good on its bills.

“The BSO is working to pay its vendors, and we are deeply grateful for our many partners who are working patiently with the organization as we address these issues,” Peter Kjome, the symphony’s president and CEO, wrote in an emailed statement. “While intensive efforts continue to address the situation, we would not want to speculate on what the accounts payable balance will be as of September 1, 2019.”

The organization is in the throes of a financial crisis and labor dispute that culminated with the decision by the board of directors to lock the musicians out for the summer beginning on June 17. The disagreement — which for more than a week has resulted in daily picketing outside the orchestra’s offices and performing home at 1212 Cathedral St. — centers on the organization’s proposal to shorten the orchestra’s season from 52 weeks to 40 weeks and cancel a slate of previously scheduled summer concerts. According to Kjome, the changes are necessary because the organization has incurred $16 million* in losses during the past decade.

For several weeks this spring, it appeared that the crisis might be averted. The General Assembly passed House Bill 1404, which provided the orchestra with $3.2 million in additional funds over two years. But Gov. Larry Hogan hesitated to release those funds amid projections that the state could soon face a $961 million deficit. The symphony then began to discuss the possibility of obtaining a $1 million bridge loan from the state to tide the organization over — a sum that conceivably could have paid the musicians’ salaries and benefits this summer.

The paperwork for the loan has not yet been completed. Though Kjome described the discussions as “ongoing,” his email indicated he may be having second thoughts about proceeding with the application.

”There is concern about the BSO taking on additional debt,” Kjome wrote, “and to obtain the loan, the BSO would need to demonstrate the ability to repay the funds within 12 to 18 months, which would in effect represent a loan to the BSO by taxpayers.”

In addition, he wrote, “these funds would not be sufficient to address the BSO’s significant financial challenges.”

Greg Mulligan and Brian Prechtl, co-chairs of the Players Committee, blamed the orchestra’s financial woes on faulty management decisions.

“BSO leaders tout the fact that they have cut $3.9 million from the budget between 2016 and 2018,” they wrote in an opinion piece published in The Sun on June 17. “What they do not state is that the total expenses grew by over $5.2 million between 2014 and 2016. Disastrous decisions made during these years deprived the BSO of significant revenue.”

Mulligan and Prechtl later attributed those “disastrous decisions” to over-spending on the BSO’s centennial celebration in 2016.

More than $5 million, Prechtl said, “went for the centennial. It paid for the big party that organization leadership wanted to have. There was wasteful spending. Our salaries are not the problem.”

Kjome did not begin his job in Baltimore until after the centennial celebration had concluded.

But in an email, Barbara Bozzuto, who chaired the BSO board then and now, acknowledged that the season-long centennial celebration “incurred more costs than other seasons.”

But she added that the orchestra’s financial plight is long-standing and systemic.

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“The BSO has experienced financial challenges for well over a decade,” she wrote, “and these issues are broader than one particular season.”

Most musicians received their final paycheck for the summer earlier this month. Unless a new contract is reached next week, the musicians will lose their health insurance on July 1. Mulligan and Prechtl suspect that the BSO plans to pay its vendors with the money it isn’t spending on their salaries and benefits.

“They’ll pay their bills by taking the shirts off our backs,” Prechtl said.

Kjome didn’t respond directly when asked if the funds saved from salaries would be used to pay the organization’s outstanding debt. He wrote: “Paying our vendors is very much a part of the path to instituting a more viable and stable business model.”

During picketing Monday, Bruce Ridge, the former chairman of the International Conference of Symphony and Opera Musicians, told the locked-out musicians that $100,000 has already been donated to the players by musical organizations in the U.S., Canada and Europe.

“And that’s just in the first week,” he said. “There will be more coming in, because what happens to one of us happens to all of us.”

Mulligan said the money will be disbursed to the musicians through a third-party organization, MusiCares, to avoid placing him and Prechtl in the potentially awkward situation of deciding which specific sums to allocate to which colleagues.

“Not everyone has the same financial needs,” he said.

The first wave of funds given out by the organization is capped at $1,200 per musician, though Mulligan expects additional grants will be made as more funds come in.

For Ivan Stefanovic, the orchestra’s associate principal second violinist, every little bit helps. Stefanovic is the father of three sons who all are studying for careers as musicians. His oldest two are enrolled at Oberlin College and Rice University.

“I’m spending about $1,000 a month for each of them on room and board,” he said. Stefanovic’s youngest son, a student at the Baltimore School for the Arts, will be entering college soon.

“That’s why I’m here picketing, and that’s why my youngest son has been out here with me every day,” he said. “It’s their futures we’re fighting for.”

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