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In a startling move, the New Jersey Symphony Orchestra, faced with crushing debt and the specter of bankruptcy, is looking to sell the "Golden Age" collection of rare stringed instruments it bought from philanthropist Herbert Axelrod in an unprecedented $17 million deal four years ago.
The decision, disclosed yesterday by the orchestra's president and chief executive officer, André Gremillet, is an unexpected about-face for an institution that had staked its future on the collection's centuries-old violins, violas and cellos.
Gremillet said the decision to sell was the right one for the struggling organization, which has not seen a hoped-for surge in audiences or donations since the blockbuster deal.
Citing a strong international market for fine stringed instruments, Gremillet said the NJSO expects it will make a profit on the sale, providing financial stability for years to come.
"It was not an easy decision to make, but it is clear to me and the board (of trustees) that we have to ... be responsible," Gremillet told The Star-Ledger.
The move adds another twist to one of the most unusual sagas in the history of modern orchestras.
Completed in February 2003, the purchase was meant to propel the NJSO into the top tier of orchestras worldwide. Instead, the NJSO faced questions about the collection's overall value and about the authenticity of specific instruments. Unwelcome headlines of another kind emerged when Axelrod, a former pet-products magnate in Monmouth County, was indicted for tax fraud in an unrelated case and went to prison.
Gremillet, who arrived at the NJSO in January, is looking to distance the orchestra from its troubles.
Ideally, he said, the orchestra can sell the instruments to investors or collectors who are willing to lend them back for NJSO use, an arrangement not uncommon in Europe and the Far East.
Neeme Järvi, the NJSO's acclaimed music director, said he is saddened by the decision to sell. The purchase of the instruments was one of the reasons he came to New Jersey two years ago from his longtime post at the Detroit Symphony, where he was conducting yesterday.
"I liked the idea to buy the instruments," Järvi said by phone. "No other American orchestra had achieved this idea. But how it was managed, that was complicated. It's a shame that in New Jersey, one of the richest areas of the United States, we can't find" supporters.
The deal under which the NJSO originally purchased the instruments came under scrutiny in 2004, after Axelrod was indicted for tax fraud and fled the country.
Federal investigators interviewed NJSO officials about the deal and seized files related to the instruments and their sale.
Axelrod was arrested in Berlin in June 2004 and was held there for five months. He struck a plea bargain upon his return to the United States and served 16 months in prison.
UNWELCOME PUBLICITY
The Golden Age collection consists of 30 instruments, including a dozen violins made by Antonio Stradivari. At the time of the sale, the orchestra and Axelrod placed the collection's value at $50 million.
But in a Star-Ledger report, published in August 2004, top violin experts disputed the collection's appraised value and the authenticity of five of the instruments. The report prompted the orchestra to conduct an internal investigation, which found "fundamental flaws" in the appraisal process and lowered the value of the collection to $18 million.
The orchestra had hoped the instruments would be a boon to marketing and fundraising, attracting more donors and concert patrons. Instead, a turn in the economy and the negative publicity about the collection exacerbated the NJSO's financial problems. Ticket revenue dropped three years in a row, and the organization's deficit grew to $3.9 million.
Gremillet said the trend is slowly reversing. Though the NJSO will perform 21 fewer concerts this season than two years ago, ticket sales have surpassed the 2005 mark and subscriptions are up, he said.
NJSO officials believe the improvements are the result of Järvi's tenure and his popularity with the musicians and audiences. He has one more year on his three-year contract, which the symphony would like to renew.
Järvi was coy when asked whether the instruments' sale would cause him to reconsider his affiliation with the orchestra.
"It's very possible, but I haven't thought about it yet," said Järvi, who is chief conductor of the Hague Residentie Orchestra in the Netherlands in addition to his ongoing relationships with Detroit and the Sweden Gothenburg Symphony.
RIGHT OF FIRST REFUSAL
Axelrod, who now lives in Zurich, Switzerland, said Victor Parsonnet, chairman of the NJSO board, called him a month ago and asked him to waive a requirement that the orchestra keep the instruments for at least 10 years.
"According to Dr. Parsonnet, they were going bankrupt, so what could I do?" Axelrod said. "I gave them permission to do whatever they have to do to save the orchestra."
Under the revised agreement, Axelrod maintains the right of first refusal. If the orchestra finds a buyer for one or all of the instruments, he can pay that same amount to purchase them himself.
"If the price is right, I will definitely buy at least one instrument to play myself," he said.
The NJSO has hired Stewart Pollens, retired conservator at the Metropolitan Museum of Art, to handle the sale. Pollens said he already has received calls from investors, collections and a virtuoso musician.
Gremillet said the decision to sell is not intended as a short-term fix, but as an opportunity to put the orchestra on sound financial footing. Orchestra officials believe that by selling while the market is hot, they can recoup their almost $20 million investment -- $17 million in loans and $2.8 million in financing charges -- and still have a nest egg for the future. The instrument debt now stands at $12 million.
Experts say the orchestra's reading of the market is correct, but they question the notion of a big profit.
Stefan Hersh, a professor at Roosevelt University in Chicago and consultant to those who buy and sell rare strings, said the market has seen a steep appreciation, but "I would say a four-year window to make money is a pretty narrow window. The simple reality is it's not going to happen quickly. It's not like a year from now they'll be sitting on a big pot of money."
Some connected to the orchestra said they are disappointed with the decision, even if they understand the fiscal pressures that led to it.
"If you're in a forced-choice mode, it would seem to me preferable to sell a few instruments to keep the orchestra going," said Josh Weston, one of the donors who supported the purchase. "Objective one, in my opinion, is do whatever it takes to take this quality orchestra and keep it on a financially viable keel."
Principal cellist Jonathan Spitz, who called the purchase "audacious, wonderfully crazy," said the decision to put the instruments up for sale is "terribly disappointing."
"I spent considerable time on three different cellos from the collection. All ... are wonderful and, yes, better than what I can afford to buy for myself," he said. "But if we can really use our ... investment to solidify the orchestra's finances, that's a wonderful thing."
Staff writer Mark Mueller contributed to this report. Peggy McGlone may be reached at pmcglone@starledger.com or (973) 392-5982.