The relationship between Bank of America (BAC) and the Nashville Symphony Orchestra has descended into dissonance.
B of A last Friday began foreclosure proceedings on the Schermerhorn Symphony Center, the orchestra's home. The Nashville Symphony Association owes about $82 million on the 1,844 -seat neoclassical building, which opened seven years ago at a cost of nearly $124 million.
Since then the Grammy Award-winning symphony has prospered artistically but struggled financially. A flood that inundated Nashville in May 2010 closed the Schermerhorn for seven months and caused $40 million in damage. The deluge coincided with the economic downturn and a falloff in fundraising. The association lost $11.7 million in the fiscal year that ended July 31, according to news reports.
"Difficult macroeconomic conditions over the last few years have impacted revenues, donation levels and the value of our investments," Ed Goodrich, the symphony's chairman, and Alan Valentine, its chief executive, wrote in March in a message posted on the symphony's website. Symphony officials did not comment for this article.
The symphony in March said it would not renew a letter of credit from B of A and other banks
that backed the bonds on the Schermerhorn Center. B of A plans to auction the symphony center on June 28 unless the association and its lenders can reach a deal.
"The bank group has been in discussions for some time with the orchestra to help it resolve its debt on an acceptable basis and operate at a sustainable level," B of A spokeswoman Shirley Norton says in an email. "However, [the association] is in default and has been unwilling or unable to repay the debt."
The foreclosure is "a last resort," adds Norton, who says discussions are continuing. Norton declined to identify other lenders that belong to the bank group.
Musicians who play in the symphony blasted the banks' move. "Such hardball is absurd," the Nashville Musicians Association said in a statement posted last Friday on its website. "As readers, interested symphony patrons and musicians weave through numbers (some inaccurate) with lots of zeros and terms like deficit, default and bankruptcy, the common thread that most of us understand is banks, ruthless bankers and foreclosure."
The musicians noted that B of A is slated to sponsor the symphony's Pops series scheduled to begin in September.
Mayor Karl Dean, who has urged the parties to mediate their differences, has suggested a solution that may lie with some other banks that maintain a big presence in Music City. Regions Financial (RF) holds the large share of deposits in the market, followed by B of A and SunTrust Banks (STI), according to the Federal Deposit Insurance Corp. A Regions spokesman declined to say whether the bank is involved in negotiations over the orchestra's financial future. A SunTrust spokesman did not respond to a request for comment.
M&T Bank (MTB) rescued a struggling symphony in the company's hometown of Buffalo when Robert Wilmers in 1983 took over as chief executive and made support for the city's cultural institutions part of the bank's mission.
Dean has alluded to as much. "The Schermerhorn Symphony Center is right in the middle of Nashville's future," he wrote to the association. "Similarly, the banks that are owed money are an integral part of our community."