BRADENTON, Fla. — Persistent financial pressures that turned the outlook negative on bonds issued for Atlanta's Woodruff Arts Center are feeding discord that has postponed the Atlanta Symphony Orchestra's 2014-15 season.
At the nonprofit Woodruff center, home base for the Grammy-winning ASO, musicians have been locked out since Sept. 7 when their contract expired. The season opening concert on Sept. 25 has been canceled, along with 16 other performances through Nov. 8.
The situation echoes that of 2012, when musicians agreed to 14% average salary reductions, reducing their ranks to 88 from 95, and other cost-cutting measures.
Despite those actions, the Woodruff center continues to have operating deficits of more than $2 million a year driven by the symphony division, Moody's Investors Service said in November. It affirmed the center's A2 ratings and changed the outlook to negative from stable.
"The negative outlook is primarily based on the ongoing deficit operations of the Atlanta Symphony Orchestra, a division that comprised 31% of operating expenses in fiscal 2013," said Moody's analyst Dennis Gephardt. "While other divisions are operating at close to breakeven, the ASO's deficits are an ongoing drag on overall performance."
Moody's rates $188 million of the center's bonds. Gephardt said deficit operations were expected to continue in fiscal 2014.
Comments from the Woodruff center were not immediately available on Monday.
The Atlanta Symphony has had "significant operating deficits" for the last 12 years caused, in large part, by adhering to a traditional operating model that hasn't changed for decades, according to information posted online by management concerning the contract impasse.
As an example, ticket sales for the classical, pops, family and holiday concerts in fiscal 2014 were approximately $4 million while production and marketing costs were nearly $22 million, management said, adding that the figures do not include $3.7 million in financial support provided by the Woodruff Arts Center.
The current impasse is over 4.5% salary increases over four years proposed by management versus 15% over five years proposed by the musicians' union, information on ASO's website said.
Other disputes include contributions to health care costs and the size of the ensemble.
The ASO is facing the same challenges that many other major orchestras have faced due to diminished financial support from public and private sectors, which often leads to heated negotiations between management and musicians, Atlanta Mayor Kasim Reed said last week.
"However, tough negotiations do not have to result in a strike or lockout," said Reed. "I urge both sides to return to the bargaining table, realizing that the ASO's financial solvency and musical excellence are intertwined, not opposing forces.
"A protracted lockout is not good for the ASO and not good for Atlanta," Reed added.