The Philadelphia Orchestra Association files for Chapter 11 Bankruptcy Protection
(Philadelphia, April 16, 2011)—The Philadelphia Orchestra, one of the leading orchestras in the world and renowned for its acclaimed performances, historic international tours, and best-selling recordings, today announced the decision of its Board of Directors to file for Chapter 11 bankruptcy protection in the United States Bankruptcy Court. This decision was based upon several critical financial challenges currently facing the organization, specifically its rapidly dwindling operating funds and a structural deficit of $14.5 million. Although The Philadelphia Orchestra has no long-term debt, it is operating at a significant loss based upon declining ticket revenues, decreased donations, eroding endowment income, pension obligations, contractual agreements, and increased operational costs. The decision to file will allow The Philadelphia Orchestra to continue to make incredible music while the organization and its finances are restructured. All remaining concerts for the 2010-11 season, including this evening’s performance of Mahler’s Symphony No. 4, will go on as scheduled.
“We have made the difficult, but necessary, decision to enter into a reorganization process,” said Richard B. Worley, chairman of The Philadelphia Orchestra Association’s (POA) Board of Directors. “Faced with such substantial financial challenges beyond the growing structural deficit and a lack of additional operational funds available to The Philadelphia Orchestra, the Board of Directors has chosen this path as the best means to help reset our financial obligations. This is a first step forward toward financial health and stability for this great Orchestra.”
In addition to the POA Board of Directors voting to restructure, the Boards of Directors for the Academy of Music (AOM), a subsidiary of the POA, and Encore Series Incorporated (ESI), the non-profit agency under the POA that presents the Peter Nero and the Philly Pops concert series, have also voted today to enter into reorganization. All three entities filed jointly in United States Bankruptcy Court.
“This Orchestra is an icon of Philadelphia and an international treasure,” said Allison Vulgamore, president and chief executive officer of The Philadelphia Orchestra Association. “Its presence is vital to the city’s reputation and more, it is a keystone of the Center City district, with its many businesses and cultural institutions. We are committed to sustaining this world-class jewel and we have a strategic plan that will move the Orchestra forward with vision and purpose. This plan will grow audiences by enhancing the concert experience and connecting patrons with the music in fresh,innovative ways. It will also encourage mutually beneficial patron relationships and reposition the Orchestra on sound financial footing. While there is much work to be done, we are well-prepared to execute this plan and we are confident that it will allow us to successfully emerge from this process.”
The Orchestra also announced today that it will launch “Listen with Your Heart,” a public fundraising campaign. “Acclaimed artists and conductors define The Philadelphia Orchestra,” said Vulgamore. “It is their world-class talent— and our desire to more intimately share that talent with our patrons—that will drive this fundraising campaign and our strategic plan. This Orchestra has had extraordinary yesterdays of which we are immensely proud. We need the City of Philadelphia to recognize that the Orchestra has an extraordinary today under the current leadership of Charles Dutoit and a remarkable tomorrow with the arrival of Yannick Nézet-Séguin in 2012. We need your support to ensure that this City, our musicians, and this organization retain their world stature.”
The decision to restructure the Orchestra now ensures that there is sufficient funding to successfully complete the 2010-11 concert season in June. Again, no concerts have been postponed and/or cancelled due to this decision and The Philadelphia Orchestra Association does not anticipate having to take any such action for the remaining performances of The Philadelphia Orchestra or Peter Nero and the Philly Pops. Further, the POA intends to place all revenues for the upcoming 2011-12 concert season in escrow until these performances take place. This decision serves to provide additional comfort to patrons that the POA intends to stage a 2011-12 season.
“Although at a crossroads, we believe that this decision allows us to begin a new chapter for the Orchestra,” said Worley. “This new chapter will be defined by its financial health as well as an even greater investment in the art and a re-commitment to the innovation for which The Philadelphia Orchestra has always been known. We ask the citizens of Philadelphia to join with us as we fight for this cultural institution—an institution that has helped define this city’s greatness.”
(Published courtesy of the Philadelphia Orchestra)