The Colorado Symphony is in financial trouble. Indeed, big enough trouble that it assembled an emergency 11- member committee earlier this year to lay out what it needs to do differently to simply survive.

The conclusions are grim. Unless the symphony works fast to slash salaries, find new sources of cash and ultimately change the way it does business, its very existence is in question.

“If the Colorado Symphony does not adopt all of the above recommendations in full and achieve success in their implementation, it faces a high probability of demise within the next two years,” said the committee’s report, an internal document obtained by The Denver Post.

We’re talking dead: a major city without a symphony orchestra.

James Palermo, who has been the symphony’s chief executive since March 2009, tried to soften some of the report’s findings in an interview last week, but it is impossible to ignore its sobering numbers.

In its recently concluded fiscal year, with an operating budget of about $12 million, the symphony ran a $647,000 deficit. To make matters worse, it has accumulated $1.2 million in debt, which, as of July, was offset by a cash reserve of just $16,000.

To overcome an immediate cash crisis and establish what the orchestra believes can be — indeed, has to be — a balanced budget in 2011-12, management and its musicians are renegotiating portions of a labor agreement that was just ratified in March.

But it’s clear that it’s going to take more than tweaking the musicians’ contract to solve the orchestra’s long-term problems. It could mean a complete restructuring of how the players are paid and an examination of everything from new kinds of concerts to a renewed urgency in overhauling Boettcher Concert Hall.

“Year-end financial results indicate that a single prolonged strategy isn’t sufficient to secure a full turnaround of the organization,” the report states. “Sustainability requires comprehensive, organization- wide focus, effort and commitment.”

Who or what is to blame for this financial mess? Two obvious factors are the recession and its continuing aftermath, which have made ticket buyers and donors less willing or able to part with their money.

“Some of the pickle they are in right now is because people who made multi-year (contribution) commitments have reneged on those commitments,” said Jim Copenhaver, a former executive director of the symphony who is now an arts consultant.

At the same time, it’s true that the Colorado Symphony has done a better job than most orchestras selling tickets. Earned income increased nearly 19 percent, from $4.55 million in 2009-10 to $5.4 million in 2010-11, a big achievement in a tough field where just holding even is considered a success.

The orchestra managed such sales growth by enlivening its new “Inside the Score” series with actors and projections, boosting its web presence and plugging into the Groupon craze and amping up its pops series with acts like singer-songwriter Brandi Carlile and the indie-rock band Airborne Toxic Event.

Still, the efforts have fallen short. And while it’s true that other orchestras are facing equally tough financial challenges, many are weathering the storm without debilitating deficits.

Copenhaver places an “enormous amount” of the blame for the problems in Denver at the feet of the symphony’s board and management, especially Palermo.

“I don’t think you can call him a chief executive officer without saying you are totally responsible for the success of this place,” Copenhaver said. “And that means great concerts on the stage, but it also means that you’ve got a healthy organization that people want to be a part of.”

Here is a look at some of the key issues affecting the symphony’s long-term outlook:

Labor costs

Unlike many businesses that can enlarge or reduce their workforces as needed, the 79-member Colorado Symphony cannot significantly cut players. An orchestra, by definition, is a large group of musicians, with fixed sections. It is impossible, for example, to simply eliminate the viola or clarinet sections.

At the same time, it’s easy to wonder how much more the symphony’s musicians can give up financially. In 2009-10, base full-time salaries were cut to $41,000, an amount that remains in effect this year. That compares with $83,000 in 2010-11 in Dallas and $72,000 in Indianapolis.

Considering that symphony members are highly trained musicians with at least a master’s degree, it’s hard to expect them to work for much less.

What seems to be on the table (neither management or the musicians’ union will discuss the particulars of the negotiations), is the orchestra’s desire for more flexibility in scheduling.

As it stands, a full-time musician can take part in up to eight rehearsals or performances (“services” in orchestra parlance) in most weeks, but the labor contract contains an array of caveats, including restrictions on the times of day when rehearsals can be scheduled.

In the longer term, it is possible that the orchestra is even hoping to eliminate full-time musicians entirely and switch to paying the entire orchestra on a per-service basis.

But this approach, like salary cutbacks, could threaten the growing quality of the orchestra, forcing its best musicians to seek employment elsewhere.

Whatever happens, Pete Vriesenga, president of the Denver Musicians Association, wants to make sure that the burden of symphony’s cutbacks do not fall unfairly on the players.

“My goal is make sure no one is carrying more water than another, that it’s a true collaborative community effort to maintain a high-quality orchestra in town,” he said. “But the musicians have sacrificed a lot.”

Classical challenge

Many of the Colorado Symphony’s challenges are not unique. Classical music in general is confronting an increasingly unsustainable combination of escalating costs, sagging philanthropy, aging audiences and declining attendance.

To survive, organizations ranging from the St. Paul (Minn.) Chamber Orchestra to Telling Stories in Denver are restructuring and reaching out to new audiences through collaborations, innovative formats and shifts to non-traditional venues.

The symphony has already undertaken its own innovative ventures such as its “Inside the Score” series and boosted its presence at Red Rocks Amphitheatre and the Arvada Center for the Arts and Humanities. But Palermo said it clearly has to do more.

“What we want to do is find ways for the organization to become more nimble and flexible . . . figuring out how to create a model that is really workable and responds to all the challenges that we’ve all seen across the country,” he said.

Absence at the helm

In July 2008, then-music director Jeffrey Kahane said he wanted to devote more time to his international piano career and revealed he would leave his position at the end of the 2009-10 season.

More than three years have passed since that announcement, and the symphony is still without anybody at the artistic helm, and that absence has inevitably had an adverse effect on the orchestra.

Now the question is: Will this sustainability report hurt the symphony’s ability to land its candidate of choice? Will potential prospects pull back because of the orchestra’s fragile financial state?

The answers are important, because much like a quarterback on a football team, a music director leads the day-to- day activities of an orchestra but also serves as its public face.

Just as John Elway and the Denver Broncos are inextricably linked in the public consciousness here, certain conductors around the country, like Michael Tilson Thomas in San Francisco and Gustavo Dudamel in Los Angeles, are local celebrities who have galvanized interest in their orchestras.

Or take the case of Kent Nagano, who has been music director of the Montreal Symphony since 2006. He is credited with playing a key role in garnering government support for a 2,100-seat concert hall that was inaugurated there earlier this month.

Under Palermo’s guidance, the Colorado Symphony has been auditioning potential music directors for two years, which seems like more than enough time to get the job done. Presumably, someone will be appointed this season.

“Doing the important work of finding the right fit can be time-consuming,” he said. “What we don’t want to do is rush into a choice and not have the right person in place.”

New concert hall

In November 2007, Denver voters approved $60 million for a new concert hall as part of a sweeping $550 million bond issue for infrastructure and other improvements.

Issuance of the bonds is contingent on the symphony raising the $30 million it pledged toward the project, but it has not been able to muster the necessary support.

Leading up to that vote, orchestra leaders drove home the point that its current home, Boettcher Concert Hall, hindered its continued artistic growth. Not only are its acoustics sub-par, it has none of the amenities that today’s audiences expect.

To understand the importance of a concert hall, one need look no further than the Disney Concert Hall in Los Angeles, which has taken what was a secondary American orchestra and substantially boosted its reputation and visibility.

Palermo is confident that once the symphony gets its finances in order, it will be able to secure the money it needs for a Boettcher redo.

“When all those factors align and people are encouraged about the success of the symphony, I think the hall is going to be next step,” he said.

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Palermo believes that by being up front and dealing with the financial issues facing the symphony now, it can avoid default or the overwhelming shortfalls that are crippling some other orchestras.

“We’re launching this study and this quest for a more workable model from a position of strength,” he said. “It’s not like our houses are empty and no one likes the symphony.”

But make no mistake, the symphony is in crisis. And how well Palermo, the board and the rest of the organization deal with it will likely determine whether Denver has an orchestra in five or 10 years.

Kyle MacMillan: 303-954-1675 or kmacmillan@denverpost.com