Sad Violins: Philadelphia Orchestra May File for Bankruptcy

The recession has undermined the pilings supporting many once-stable organizations, ranging from financial institutions to restaurants to newspaper publishers. Now the economy may claim another victim: The Philadelphia Orchestra. The 110-year old cultural mainstay may declare bankruptcy after ticket sales dwindled this season and its endowment failed to meet its goal, according to the Philadelphia Inquirer.While the Philadelphia Orchestra may be the highest-profile U.S. orchestra to reveal financial difficulties during recession, it's certainly not alone. The musicians comprising the Cleveland Orchestra went on strike last week to protest cuts in pay and benefits, although the players and management settled the next day after agreeing on a two-season pay freeze. And the New York Philharmonic, another one of the country's top orchestras, has said last season resulted in a record $4.6 million deficit.

Paid Attendance Has Slumped

With money tight for many households, it's not surprising that orchestras across the country are witnessing lower ticket sales. After all, a seat for the Philadelphia Orchestra's Jan. 29 concert of Beethoven's 5th Symphony can set you back as much as $120, while the cheapest ticket will cost you $43.

But the problem runs deeper than the current downturn, which has only accelerated a trend that's been hurting symphonies for years. Paid attendance to U.S. orchestral performances slumped 8% between 2002 to 2007, according to a December 2009 study from the League of American Orchestras.

Demographics aren't doing U.S. orchestras any favors, either. Ticket buyers drawn from the "greats" and "silent" generations -- those people born between 1901 to 1934 -- have declined because of aging and death. And while Baby Boomers are increasing their classical music ticket purchases, Gen X and Gen Y generations are less likely to attend classical music performances than older generations, the study found.

Symphonies Doing Outreach

Orchestra managers are aware of these trends and haven't been sitting idly by. Many symphonies have developed outreach programs to draw in young families or professionals. The Philadelphia Orchestra offers both a concert series for children and a program for school children and educators, for example. And many orchestras offer discounts to students or families to try to lure younger people to fill their halls' red-velvet seats.

While the Philadelphia Orchestra offered many tickets at a discount, its hall has only reached 62% capacity this season, compared with 80% from the previous season, the Inquirer says. As for now, the Philadelphia Orchestra needs to raise an additional $7 million for its $15 million recovery fund to avoid bankruptcy, the Associated Press reports. Its endowment, meantime, stood at $112 million in November, less than half the $250 million it had hoped to have.

But as the Philadelphia Orchestra's CEO told the Inquirer, bankruptcy isn't the end of the world. "Bankruptcy as a term is a way of reorganizing," she said. "That's why companies do it."

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum