Is Minnesota Orchestra Management Lying To Us, Part 3: Yes

Yesterday proved to be an important day. Graydon Royce penned and published the single most important article yet written about the orchestral apocalypse. So go read it. Now. Please.

Let’s all take a moment to acknowledge that Graydon Royce is the King of Minnesota Orchestra Investigative Reporting.

Your crown, dear sir.

The article begins:

For four years, the Minnesota Orchestra board has walked a tightrope between managing public perceptions about its financial health and making its case to cut musicians’ salaries.

I’m not writing in a newspaper, and I’m not speaking on behalf of anyone but myself, and I don’t need to be delicate, so please, allow me…

The Minnesota Orchestral Association lied to the public about its fiscal health in order to get what it wanted. Yes, I know that we’ve sidestepped the L-word in the past. I wrote “obfuscations” once; the MOA then wrote about “misrepresentations“. So I’m going to be the first to be blunt, and say lie. They lied. They lied, as in “they presented false information with the intention of deceiving.”

THEY LIED TO US.

*deep breath*

Okay, sorry. That’s been bottled up inside me for the last three months, and it feels mighty good to get it out of my system.

“Balances in 2009 and 2010 would support our state bonding aspirations,” Bryan Ebensteiner, vice president of finance, told the orchestra’s executive committee in September 2009, “while the deficits in 2011 and 2012 would demonstrate the need to reset the business model.”

Translation: If we tell people that we’re doing better than we actually are – in other words, if we lie to them – then we can get what we want: i.e., a taxpayer-funded lobby, weakened union, and a “reset business model.” Go, us!

Several issues were at stake between 2009 and 2011.

The orchestra was in the midst of a capital campaign to remodel Orchestra Hall, launch artistic initiatives and build up its endowment. Showing balanced budgets would enhance the orchestra’s image with individual and corporate donors and with the Minnesota Legislature, which in 2010 was asked to consider a $14 million bonding request for the building project.

Translation: If we lie about the state of our finances, people will be more likely to donate to us, and the Minnesota Legislature will be more likely to approve our requests for $14,000,000. Go, us!

In an interview last week, Board Chairman Jon Campbell rejected suggestions that the board had manipulated deficits for strategic and public-relations reasons.

Hey, Mr. Campbell. You may be interested in reading what Mr. Ebensteiner said above. Manipulating deficits is exactly what he’s describing. If Mr. Ebensteiner wasn’t manipulating the deficits for strategic and public-relations reasons, then…what on earth was he doing? Was he just bored one day, and decided he’d entertain himself by planning ahead what years the Minnesota Orchestra would post deficits? Or maybe you’re accusing Mr. Ebensteiner of lying?

“If it was a cover-up, would we have been that transparent in the minutes?” said Campbell.

Yeah, I’ve got a better question: if it wasn’t a cover-up, would you have covered up your financial problems? Isn’t that kinda the definition of a cover-up: covering up something?

Also, I wonder… Back in 2009, was the board really thinking that a reporter would be scouring through 1200 pages of information in 2012? Do you think they thought this article would ever be written? Do you really think the board was playing that long and clever of a game? You know what I think about that idea. Remember the “winning” article?

“We spent countless hours with attorneys to make sure we understood the state law about how endowments work, and the accountants had to agree with our approach to give us an unqualified audit.”

So we’re supposed to trust you…because you talked with attorneys and accountants to see how far you could push this whole thing while still remaining within the bounds of the law? How comforting! There’s nothing sleazy about this at all!

State Sen. Scott Dibble, DFL-Minneapolis, who championed the bonding request, said he was not disturbed that the orchestra had been balancing the budget with larger endowment draws.

“No, not on the face of it,” he said. “It would depend on the nature of the deficit, how serious it was; is it indicative of management troubles or an unstable organization? In the recession, nonprofits were doing lots of things to address operating deficits.”

I encourage Sen. Dibble to take a looksie at this blog. *thumbs up*

[In 2007,] so secure was the board’s sense of the future that it had just signed a deal to raise musicians’ salaries 25 percent over five years. The orchestra was entering “a new Golden Age,” gushed outgoing Chairman Paul Grangaard.

Really? I get to mock the whole “golden age” thing again?

What Paul Grangaard thought we were entering in 2007

What Michael Henson said we were in in 2010

Where both Paul Grangaard and Michael Henson think we are in 2012

In January 2009, Campbell, then finance committee chair, told the board it needed to decide whether to show operating losses or take larger-than-normal endowment draws.

Yikes; what a dilemma. Well, I’m sure that whatever the board chose to do, they were open and honest with everyone about it. I mean, they wouldn’t mislead politicians or corporations or hardworking patrons, or you know, hire a public-relations firm to handle –

In 2011, after choosing to balance its budget the previous two years, the board retained the public-relations firm Padilla Speer Beardsley to determine “what size of deficit to report publicly, between $2.9 million and $4.3 million.”

Sigh.

Quick question… Why did the board hire a public-relations firm to determine what size of deficit to report if they were not manipulating the reporting of deficits for public-relations reasons?

Campbell said it is not unusual to consult professionals on reporting news and claimed that “there was no attempt at manipulation.”

You know, maybe I’m unspeakably naive, but it’s my understanding that it’s the job of a PR firm to manipulate public opinion. Here’s the definition of PR from Wikipedia: “The aim of public relations by a company often is to persuade the public, investors, partners, employees, and other stakeholders to maintain a certain point of view about it, its leadership, products, or of political decisions.” Apparently Mr. Campbell doesn’t believe there’s any equivalence between manipulation and “persuading the public…to maintain a certain point of view.” Have fun selling that argument, Mr. Campbell! Sure am glad I don’t have to!

I’m also curious…how many orchestras in the United States hire PR firms to decide how to report their deficits?

President and CEO Michael Henson said the board’s deficit-reporting decisions were strategic.

Really?

Really.

In case you forgot from a few paragraphs ago:

In an interview last week, Board Chairman Jon Campbell rejected suggestions that the board had manipulated deficits for strategic…reasons.

So if I may be allowed to simplify and summarize… Michael Henson: “Our deficits were strategic.” Jon Campbell: “Our deficits were not strategic.” Hmm. These two might want to, you know, talk. Especially right before they both agree to give interviews for a front page story for the state’s largest newspaper. Just sayin’.

“However you want to present the argument, the reality is we have got to change the business model, because our endowment is being spent down,” he [Henson] said.

Hah. Personally, this strikes me as being akin to an arsonist saying, “However you want to present the argument, the reality is that the house is on fire, and we need firefighters to put it out.” Watching Michael Henson has become like watching a malfunctioning version of that classic computer game ELIZA. You type in a question, and Eliza throws out phrase after phrase only vaguely related to that question.

The documents obtained by the Star Tribune reveal that in September 2009, the executive committee contemplated four possible strategies for covering budget imbalances. The favored scenario would be to report balanced budgets for 2009 and 2010, and deficits in 2011 and 2012.

But there were risks. “Negative outcomes would be that the gap between public announcement of balance and the internal reality of deficits in 2009 and 2010 would need to be maneuvered carefully, and that the deficits in 2011 and 2012 might hinder fundraising,” according to the minutes.

It’s foolproof! Except…somebody somewhere forgot about the whole need to “maneuver carefully” bit. Could they have maneuvered any less carefully?

A visual representation of how carefully the MOA maneuvered

You know, they played this game pathetically badly. Even I can see that. Their PR firm during the lockout and the lead-up to it has been just terrible. They never planted any hints of trouble anywhere from 2009-2011, thereby leaving the door wide open to later accusations that they were manipulating their public. They very conspicuously – and very unnecessarily – posted articles in 2010 that trumpeted their financial health, even though they knew the entire house of cards would come falling down in 2012. They then didn’t remove those articles once they changed their narrative. They consistently treated patrons like we were childish idiots, thereby antagonizing us and giving us reason to dig through virtual archives to try to figure out what was really going on. They forgot Google. They forgot about Highbeam Research and EBSCO. They forgot that anyone with an Internet connection, some time to spare, and a passion for the Minnesota Orchestra could invest a couple dozen hours and figure out their little game. They thought people wouldn’t care enough to use Facebook and Twitter to make articles spread around the world like wildfire. They forgot – or wayyy underestimated – Graydon Royce. They thought that people like Alex Ross and Drew McManus and Norman Lebrecht wouldn’t be paying attention. They forgot that people have memories, and actually remember things. Their mismanagement of this was just epic.

So you know what? We’re getting to a point where the musicians are becoming irrelevant…in a way. (And boy, does that feel weird to type.) This conflict is beginning to stand for an even bigger question than the fate of the Minnesota Orchestra, and that question is: if the leaders of a major non-profit lie to politicians, corporations, and individual donors about the state of their finances in order to be better-positioned to get what they want, should those leaders face consequences? Personally, I think they should. I don’t think these kinds of shenanigans are okay. Do you? Feel free to make a counter-argument. Convince this naive idealist otherwise.

So I guess the question now is: where do we go from here? Yesterday’s article established the fact that the leaders of the MOA lied to the entire state of Minnesota over the course of several years. Can we ever trust them again? I can’t. The musicians can’t. Many important donors can’t. The state of Minnesota can’t. How do we get that trust back?

There will be some people who will say, well, okay, maybe the MOA did lie to us, or manipulate numbers, but dwelling on that fact won’t move us forward. I agree with that…to a certain extent. (As tempting as it is, it would be counterproductive to wallow in the absurdity for too long.) But I also believe in the axiom that “those who don’t study history are doomed to repeat it.” And we need to get a clearer unbiased picture of what exactly the history has been, so that we never make the same mistakes again. This is a public trust issue now.

After an airplane crash, the National Transportation Safety Board doesn’t sit back and say, well, we’ll never get back the people who died, so let’s just keep moving forward. No: they get out into the field and they analyze every little detail of the accident, and, if necessary, they change the rules moving forward. I submit that the financial crash that occurred within the MOA ought to be submitted to a similar kind of rigorous analysis, and that the public should be privy to it. If they don’t…how is the MOA expecting to fund-raise when they’ve broken trust with the entire community? If the community doesn’t trust them, where exactly do they think donations are going to come from in future? Because I can guarantee you, Santa’s not going to come to Orchestra Hall with a sack-full of hundred dollar bills. No, I think it’s much more likely he’ll bring coal.

Are massive 30-50% pay-cuts for musicians (and all of the changes in work rules) in the MOA’s contract proposal necessary to save the Minnesota Orchestra? Maybe. I don’t know. But here’s one thing I do know for sure: we now can’t trust a single word the MOA says. Ever. If they lied then, then who’s to say they’re not lying now?

The game is up. And if the MOA doesn’t realize this, then their PR nightmare has only just begun.

***

Annnnnnnnd, just as I was getting ready to post this, the universe decided to prove that last point in a rather dramatic fashion. Robert Levine has a new blog entry up called “Cooking the books“, and its closing paragraph is a doozy.

I lived in the Twin Cities for eight years. It’s a remarkable place, with a remarkable philanthropic culture and infrastructure of non-profit organizations. The people that run the Minnesota Orchestra are a disgrace to that culture. The board should resign and the new board should make its first order of business to fire Michael Henson. Maybe then the orchestra can be run by people with ethical standards above those of the bottom 20% of used car dealerships. The Twin Cities, and the Minnesota Orchestra, deserve better.

As the kids on Tumblr say…