Classical music's ethically compromised funders
Despite the economic turmoil classical music remains financially dependant on the banking and financial services sector. Exclusive Overgrown Path research shows that 45% of corporate sponsorship for ten leading orchestras in Europe and North America comes from the banking and financial services sector. This is more than five times greater than from any other corporate funding source.
A second funding tier comprises companies from the automotive and media industries, with each sector accounting for around 8% of sponsorship. Below that a third tier is made up of companies from the aerospace & defence, pharmaceutical, retail, utility and law sectors. As the research analyses source rather than revenue (see explanatory note below) it is likely that the fiscal contribution of the banking and financial services corporations is considerably greater than 50%.
A number of the corporate funders, both in the banking sector and elsewhere, have been linked to ethical issues, some of which are noted in the supporting material below. This raises the important but little-explored question of what price classical music is prepared to pay for funding. One example of this dilemna is Deutsche Bank, which is exclusive sponsor of the Berlin Philharmonic until 2015, see header image, and also a corporate sponsor of the London Philharmonic.
In 2010 an internal investigation revealed that Deutsche Bank spied on several of its management board and supervisory board members, and on at least one shareholder. One year later the United States government filed suit against Deutsche Bank AG and its wholly owned subsidiary, MortgageIT, Inc. The exact wording of the complaint filed by the US government is that "Deutsche Bank and MortgageIT repeatedly lied to be included in a Government program to select mortgages for insurance by the Government. Once in that program, they recklessly selected mortgages that violated program rules in blatant disregard of whether borrowers could make mortgage payments."
The London Philharmonic also lists JTI as a corporate sponsor without explaining the acronym or linking to the funder's website. JTI is in fact Japan Tobacco International, the world's third largest cigarette company. Their brands include Winston, Mild Seven, Camel, Benson & Hedges and Silk Cut as well as Hamlet cigars. Japan Tobacco International's sponsorship of the London Philharmonic is a five year 'partnership' running until 2013. So cigarette sponsorship is alive and well in classical music, and not just in London. Other organisations receiving funding from JTI include the Salzburg Whitsun Festival and the Ulster Orchestra.
This article sets out to inform rather than condemn. With public funding coming under increasing pressure it is unrealistic to suggest that in the short term orchestras refuse funding from ethically compromised sources. Moreover it can be argued with some truth that it is difficult to find any large corporation that is not in some way ethically compromised. However the acceptance of tobacco money and associated lack of transparency does, in my view, need to be addressed. If this research together with my earlier post Are top musicians sharing the pain? contributes in some small way to the debate on how classical music should be financed it will have achieved its objective.
More on classical music's ethically compromised funders in:
* Whose bread I eat, his song I sing
* Symphony orchestra's king size connections
* Major opera house and singers take tobacco money
* Classical music ignores the breaking news
Research methodology and limitations:
1. Funding sources listed on the websites of the ten orchestras listed below were used giving a sample size of forty sponsors. As absolute revenue amounts are not available there is no weighting by value: for instance the Deutsche Bank contribution to the Berlin Philharmonic will be considerably greater than Smuckers' contribution to the Cleveland Orchestra, yet in the calculation of contribution by source both have equal weight. Despite this it is likely that the results are meaningful in order of magnitude term.
2. The analysis is only for corporate sponsorship and takes no account of public funding. As a guide, in a 2007 interview here Jonathan Reekie of Aldeburgh Music explained that Aldeburgh's funding split was one third comes from box office income, one third from fundraising, and one third from public funding.
3. Sponsors funding more than one orchestra are multiple counted.
4. Choice of orchestras is my own. Orchestras with minimal corporate funding (broadcast and state funded) are not included.
5. I have used best endeavours in compiling this research. Links are provided to all orchestra and corporate sponsor websites and to sources on ethical issues. Collaborative amendment is, as always, welcome.
Supporting Material detailing corporate sponsors by orchestra:
London Philharmonic Orchestra
Aviva - global insurance company based in London.
Deutsche Bank - Germany's largest bank. In 2010 an investigation commissioned by Deutsche Bank revealed that it spied on several of its management board members, supervisory board members and on at least one shareholder. In 2011 the United States government filed suit in federal court against the bank and its wholly owned subsidiary, MortgageIT, Inc for alleged misrepresentations relating to mortgages insured by the Federal Housing Administration.
Faraday- Lloyd's reinsurance syndicate
Fortis - European bank bailed out and nationalised by Dutch government during 2008 banking crisis
JTI - international tobacco division of Japan Tobacco Inc., the world's third largest tobacco company.
Macquarie - provider of banking, financial, advisory, investment and funds management services based in Australia.
Thomson Reuters - leading provider of business intelligence, being investigated by EU for anti-competitive activities.
London Symphony Orchestra
Rolls Royce - provider of integrated transport power systems and the world's twenty-third largest defence contractor.
Takeda - Japanese based global pharmaceutical company. In 1999 pleaded guilty to vitamin price fixing in US.
UBS - investment bank which was bailed out by the Swiss government in 2008, has recently been in the news because of a fraud scandal, and has been described by the Guardian as "the big bank that cannot stay out of trouble".
Deutsche Bank - see London Philharmonic Orchestra.
Royal Concertgebouw Orchestra
ING - largest banking/financial services & insurance conglomerate in the world. Was bailed-out to tune of €10bn by Dutch government in 2008.
Unilever - British-Dutch multinational fast moving consumer goods company which has attracted a number of criticisms for its activities from political, environmental and human rights activists.
Volkswagen - car manufacturer, involved in 2005 sex, bribes and corruption scandal.
New York Philharmonic Orchestra
Credit Suisse - multi-national providing private banking and corporate financial services, subject of a 2011 tax evasion enquiry in the US.
Chicago Symphony Orchestra
Bank of America - multinational banking and financial services corporation which is the second largest bank holding company in the United States. In 2009 agreed to pay a $33 million fine, without admission or denial of charges, to the U.S. Securities and Exchange Commission over the non-disclosure of an agreement to pay up to $5.8 billion of bonuses at subsidiary Merrill Lynch. In 2010 agreed $150m (£96.9m) settlement with the US financial watchdog following civil charges it misled shareholders about Merrill's financial position prior to takeover.
ComEd - utility provider owned by Exelon which has received several fines for pollution and security infringements.
BMO Harris Bank - Chicago based retail and corporate bank.
United Airlines - world's largest airline, received Chapter 11 protection from 2002 to 2005.
Los Angeles Philharmonic Orchestra
Accura - Honda luxury car brand
Rolex - luxury wristwatch manufacturer
Amgen - international biotechnolgy company, Amgen CEO Kevin Sharer received compensation package totalling $21.1 million.
Edison International - utility company
Fidelity Investments - American multi-national financial services corporation. In 2007 U.S. brokerages regulator NASD fined four Fidelity-affiliated broker-dealers $3.75 million for alleged registration, supervision and e-mail retention violations.
JP Morgan Chase - American multinational banking corporation.
Northrop Grumman - American global aerospace and defense technology company. Subject of a number of controversies including agreeing to pay a $15 million fine for 110 violations, occurring between September 1998 and November 1998, of the Arms Export Control Act and the International Traffic in Arms Regulations
Pasadena Showcase House for the Arts - all-volunteer garden and house fundraising organisation donating to LA Phil.
Target - retail chain, in 2010 gave $150,000 donation to Minnesota Forward, which used the funds to back Republican state gubernatorial candidate Tom Emmer, who is against gay marriage and has voted against other gay rights initiatives.
The Walt Disney Company - world's largest media conglomerate.
Toyota - world's largest automobile manufacturer.
US Bank - diversified financial services holding company. In 2008, U.S. Bancorp received $6,599,000,000 from the Emergency Economic Stabilization Act.
Baker Hostetler - global law firm based in Cleveland, among the top 10 U.S. law firms for merger and acquisition deals in the oil, gas and oilfield service industries.
Forest City - national real estate management
Smuckers - gift retail chain.
Jones Day - international law firm. Involved in 2008 law suit with BlockShopper over links to partner profiles on company's website.
KeyBank - regional bank based in Cleveland, in 2008 received approximately $2.5 billion in Troubled Asset Relief Program funds.
Medical Mutual - mutual health care insurance
The Plain Dealer - largest circulation Ohio newspaper. Famously removed longstanding music critic after unfavourable review's of orchestra's concerts.
PNC - sixth largest bank by deposits in the United States
Boston Symphony Orchestra
UBS - see London Symphony Orchestra.
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Government money comes from tax, including that on the profits and wages earned in such industries as pornography, junk food, oil, armaments, gambling, tobacco, alcohol etc.
The state is often an active participant in dodgy industries like armaments and gambling. For example, in the UK, the government's huge gambling operation, the National Lottery, is used to fund 'good causes'.
Does ethically compromised money conveniently become ethically cleansed when it has passed through the hands of the state?
In the opinions of those who are given it I suspect so.
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The symphony management decided back in 1999 to build a huge new edifice (very beautiful too) that ended up costing over 200 million$. 54 million is still up the snouts of the Giant Squids and they are task mastering the management to force stringent, draconian reductions in staff, programs and pay, except that of management of course.