Detroit Symphony recovery hits roadblock with debt talks

Posted on: September 19, 2011

In Sunday’s (9/18) Detroit Free Press, Mark Stryker writes, “Detroit Symphony Orchestra leaders have long said that fixing the organization’s troubled finances for good meant repairing the business model on three fronts—the musicians’ contract, real estate debt and the endowment.” The musicians contract signed in April was the first step. “Now the DSO has to restructure the $54 million in real estate debt on which it has defaulted, and the orchestra has to rebuild its decimated endowment. In the wake of massive deficits and stock market losses, the value of its unrestricted endowment has fallen to just $19 million—from nearly $60 million in 2008. But orchestra leaders find themselves stymied. Two years-worth of talks with the banks that hold the debt on the Max M. Fisher Music Center have not produced a compromise. And without a bank deal, officials can’t begin the serious groundwork for an endowment campaign. … At the heart of the DSO’s dilemma is a catch-22. The major donors needed to rebuild the orchestra’s endowment won’t pony up their millions if they think the money is going to go straight to the banks rather than support the orchestra. … At the same time, banks would typically view those same donors as a prime source for repaying the debt, said David Blaszkiewicz, president of Invest Detroit, which bankrolls local redevelopment projects.”

Posted September 19, 2011