Nashville Symphony, Bank of America announce deal, reduce mortgage to $20 million

Monday, June 24, 2013 at 10:59am

The Nashville Symphony and its creditors announced a deal on Monday to restructure its debt and avoid forclosure on the Schermerhorn Symphony Center.

“After months of discussion with our lenders, we are pleased to have reached a comprehensive resolution that represents the best path forward for all parties involved,” said Ed Goodrich, chairman of the Nashville Symphony Association. “With a healthier balance sheet, the Symphony will be in a better position to pursue its cultural mission of engaging the community, enriching audiences and shaping cultural life through musical excellence and educational vision.”

Terms of the settlement were not released, but a new $20 million mortgage was filed with the Davidson County Register of Deeds just before noon on Monday.

Multiple sources told The City Paper that Bank of America will write off between $30 million and $40 million of the more than $80 million in debt related to the construction of the Schermerhorn. It was not announced where the gap between the new mortgage and the old loan will be made up, but the Nashville Business Journal reported on Saturday that longtime patron Martha Ingram was involved in the final settlement.

As first reported by The City Paper, the two sides reached an agreement last Friday on a new deal after the symphony began cutting costs, laying off a number of food service employees.

Goodrich hinted at more cuts to come in a statement.

“The symphony still has a lot of work to do to further reduce costs and will continue to need significant financial support from our donors in the years ahead to remain sustainable over the long term,” he said.

The symphony began negotiations with its musicians union last week. The current contract expires on July 31.

Mayor Karl Dean praised both sides for the deal.

“I commend and appreciate all the parties involved for the way they have worked to bring about this very positive result,” he said. “I also want to say a special word of thanks to the heads of the local banks that were involved for their leadership in this effort.”

 

13 Comments on this post:

By: JeffF on 6/24/13 at 12:30

I would hope that a bank would not write off that large amount of money. That is bad for people who expect interest on their accounts and shareholders who expect something other than charity for their retirement accounts.

By: JeffF on 6/24/13 at 12:31

At the very least I hoped someone was able to tell the musicians and their union to shut up and start acting like grown ups.

By: courier37027 on 6/24/13 at 12:35

At next bailoiuyt we become owners of symphony cebter. Because that GM ownership we share is really working out well for taxpayers.

(Sarcasm)

By: JohnGalt on 6/24/13 at 2:13

This writeoff will not cause even a hiccup on the bank's balance sheet, Jeff. Your investment in them is as safe as it ever was...whatever that is.

By: JeffF on 6/24/13 at 6:01

Makes me ill to see the uninformed and business illiterate get away with not paying for their stuff. It's the housing crash all over again but with cellos instead of porch sofas.

By: TennesseeJed on 6/25/13 at 4:20

Bank of America and many of its banking brethren would probably qualify as uninformed business illiterates to some degree themselves judging by their role in the last financial crisis. This actually seems like an extension of that whole mess; just as the banks loaned large mortgage amounts to borrowers with no capacity to pay it back, Bank of America loaned enough money to a humble midsized orchestra to build a world-class symphonic palace, a sum that they, like millions of other mortgagees, could not handle.

By: Wild Bill on 6/25/13 at 8:40

The key part of the story is this.

"but the Nashville Business Journal reported on Saturday that longtime patron Martha Ingram was involved in the final settlement."

Lets see, how does that work? Oh yeah, Mrs. Ingram tells Bank America I will deposit say a billion dollars in your bank for the next 5 years and on the down low I will co-sign for the renegotiated $20,000,000 loan.

This kind of belly up financial story with Opera house has been repeated for the last 1000 years. You would think that the banks would stay away from these kind of deals. But big money people, like MS Ingram, put a lot of pressure on bank officers to make the deal.

I bet 3 years from now they can't pay the note on the $20 million.

By: BigPapa on 6/25/13 at 9:48

Well Martha stepped in when it sounded like she'd moved on.. didnt we all think this how it would end up?

It is pretty sickening when you see a place rack up $80M in debt and get off the hook. Had it been a regular person in debt for $200,000 they'd take everything you got. If you know the right folks they just say "awww dont worry 'bout it! We know you just got in a tight spot.."

By: Left-of-Local on 6/25/13 at 10:56

Here's an idea.

STOP PRICING THE REGULAR MIDDLE CLASS PUBLIC OUT OF YOUR DAMN SHOWS AND YOU WILL MAKE MORE MONEY. Period.

Thanks for playing.

By: jonw on 6/25/13 at 11:46

The Nashville Symphony: A place for the social climbers without enough demand to pay the bills.

By: BigPapa on 6/25/13 at 12:41

Why should they make money when they know they'll get bailed out even if they're close to $100M in debt.
There's zero risk, so there's zero motivation to make any real change.

By: BenDover on 6/26/13 at 8:21

I think the bank had to look at the reality that even though they were owed $80M on the place the best way to recover anything at all was to cut a deal with the benefactors to write off a portion of the debt.

That building is really only of that value to a very specific customer and that customer in Nashville is the Nashville Symphony.

An empty symphony building with padlocks on the front door serves no one.

Hindsight would say that they should never have left TPAC. Can't change the past though.

By: TNReader on 6/26/13 at 9:17

Ben you are spot on. The leverage the Symphony had is that the pool of potential buyers of the building is extremely limited.

I hope that Martha uses her leverage to fire Valentine and his nearly 400k compensation and get a good manager to run the operations. Also, Nashville does not need a 450k conductor. Get some up and coming future star.