Vendor says Elgin Symphony owes him, too
By Janelle Walker For The Courier-News December 6, 2012 4:16PM
A sample of the work Jim Nonneman of Nonneman Communication, a one-person graphic design firm based in Carol Stream, has done for the Elgin Symphony Orchestra and for which he says the ESO owes him almost $20,000.
Updated: December 7, 2012 9:38AM
ELGIN — David Bearden, Elgin Symphony Orchestra’s chief executive officer, acknowledges the symphony ended its 2011-2012 budget on June 30 with $120,000 owed to various vendors.
“We have steadily peeled those off,” Bearden said this week, leaving $40,000 in bills from the previous budget year outstanding.
One vendor waiting for payment is Jim Nonneman of Nonneman Communication, a one-person graphic design firm based in Carol Stream.
Nonneman says he became so frustrated with the ESO’s non-payment of $19,865.50 for services rendered that he emailed Sean Stegall, Elgin city manager, and other officials in September asking Elgin’s assistance to get paid.
The money ESO owes to Nonneman and others is on top of the nearly $215,000 the symphony owes Elgin for rent at the city-owned Hemmens Cultural Arts Center.
According to Bearden and Cheryl Wendt, director of director of marketing at ESO, the symphony has not paid rental costs at Hemmens, or received financial support from the city, since January 2011. That is when the city started using its yearly allocation to ESO to pay itself for Hemmens rental costs — monies that ran out in May 2011. No ESO allocation was included in the 2012 city budget.
On Nov. 28, the city forwarded the ESO a letter telling the symphony it needed to either set up a payment schedule for back rent or Elgin would need to reconsider its relationship with the organization.
That same letter included information on Elgin’s own look at the ESO’s current budget. The city has determined that the ESO’s “structural deficit is in the range of $750,000 to $1,000,000.”
Bearden said he believes the ESO can turn its finances around by selling more tickets; finding more corporate sponsors, grants and donors; and by cutting administrative costs in addition to securing more governmental funding.
The ESO already has cut half of its administrative budget, by about $500,000, to bring down its overhead, Bearden said. “Two-thirds of the reductions have already taken place and have taken place several months ago.”
The national recession had a significant impact on the ESO, as it has other arts programs around the country, Bearden said.
“What has happened over the last several years is that this organization has lost money. The losses began when the economy started folding up in 2007-2008. … We have had to dig into resources and reserves to make ourselves viable,” Bearden said.
Ticket sales make up about 35 percent of ESO’s total revenue. In the year ending June 20, 2011 — the last fiscal audit available — ticket sales made up $1.04 million of its total $2.5 million revenue. Other revenue sources listed in its 2011 audit include, among others, $580,649 in individual donations, $96,509 in corporate sponsorships, and $325,000 from the Elgin Symphony Foundation — pass-through grants that were also listed as expenditures.
According to its auditors, the ESO spent more in 2010-11 than it was able to bring in. The ESO “incurred a net loss of $675,175 during the year ended June 30, 2011. As of that date, the organization’s current liabilities exceed its current assets by $541,437 and its total liabilities exceeds its total assets by $23,469. Those factors create an uncertainty about the organization’s ability to continue as a going concern,” the auditor’s management letter states.
Another note in the auditor’s management letter refers to a $150,000 line of credit which was converted to a loan at the end of the 2011 fiscal year. That 60-month loan has a 7.24 percent rate, and is collateralized by “substantially all of the business assets of the Elgin Symphony Orchestra.”
Auditors also noted that in 2011, the symphony sold off much of its investments for net proceeds of $742,402 for that year.
ESO also has spent, since 2005, $2 million raised earlier as part of a potential building drive, Bearden said.
That was when the city and ESO were discussing the possibility of rebuilding a new symphony center and cultural arts building for Elgin. As the donations were not restricted to a capital fund, they were spent down, Bearden said. The last of those funds were used as of July 30, 2012, he said.
Nonneman is worried that he will be left holding the bag on the $20,000 owed to him.
“There has been no resolution, and I am not getting return calls or email from David Bearden,” indicating if, or when, those bills will be paid, Nonneman said.
In the meantime, he has borrowed from his family budget to cover his business losses.
Nonneman began working as an outside marketing firm for ESO in October 2010. He said he created season brochures, seating maps, posters, program advertisements, a YouTube season highlight video, and banners — “basically all of their stuff” — for a total of 51 projects through February 2012.
Suddenly last spring, invoices that had been paid in a timely manner before were not being paid and calls to Bearden went unreturned, Nonneman said.
Once he threatened to contact a newspaper and, “I got a call back in five minutes,” Nonneman said.
After a sit-down meeting with Bearden, and a few more checks arrived — one for $3,500, and another for $1,500, Nonneman said. But again, the checks quit coming with the last payment in August.
“I have a wife, kids, a mortgage and a family. I can’t afford to be (the ESO’s) bank,” Nonneman said. That is when he sent the email to Stegall.
The answer given didn’t help Nonneman get paid, but the email did make the city more aware of financial problems at the ESO, Stegall said.
“The city council and I can certainly appreciate the impact of unpaid bills on a small business owner. The frustration you feel is certainly merited and understandable. Furthermore, I can understand why you would be reaching out to other parties seeking assistance with your dilemma. At this point, I wish the city could offer you more than genuine sympathy,” Stegall wrote in his response.
What an independent organization does with it debtors is on the organization, not the city, Stegall said this week. “It does bring the issue to a head,” Stegall said.
Nonneman has spoken with attorneys but turning over 30 to 35 percent of whatever he is able to recover from the symphony didn’t seem to be the best use of his time or resources — even if he could find a lawyer to take on the case, he said.
If the ESO were to declare bankruptcy, he would be far down the list of creditors, Nonneman said.
Bankruptcy is not an option, Bearden said this week.
“To declare bankruptcy … is organizational suicide,” he said.
Recapturing ESO’s donors and corporate sponsorships after a bankruptcy, “would be impossible. It would hurt your customers and your product, and that is the most important asset that you have,” for a symphony, Bearden said.