A proposed merger of two of the nation's major actors' unions could be facing a first-year deficit of $5 million, possibly leading to revision of the new organization's dues and fees structure to remove the debt.
Three Screen Actors Guild (SAG) board members and a top staff executive have confirmed the deficit figure, and that SAG itself may operate in the red this fiscal year, with an excess of expenditure over revenue of about 10 percent, or $1.5-$2 million. But their views of the situation's seriousness differ markedly, according to their position on the merger.
SAG's national board of directors had said last week that it wanted to see new financial projections before recommending approval of merging with the American Federation of Radio and Television Artists (AFTRA). In a press statement, the SAG board called for further review of the merged union's financial structure by both SAG and AFTRA's national finance committees. The board's release said nothing about a possible deficit, but only that both unions "have moved to substantially increase member services," which required "an updated comparison of the projected reserves and revenues of the merged union."
However, a concerned SAG member, choosing to remain anonymous, informed Back Stage last week that the dues schedule under the proposed merger would not cover expenses, thus causing the projected $5 million deficit.
Maureen Donnelly, a member of both SAG and AFTRA boards and SAG's finance committee, indicated that an early merger debt was logical. Reached at her home in New York, Donnelly said, "If you look at an organization that will be projected to have, at this point, over $32 million in liquid assets with a projected $50 million operating budget," the $5 million first-year deficit is reasonable, she explained.
Donnelly, who has worked for merger since the mid-1980s, added: "In the first year, there can be no economy of scale; you're going with both unions' staffs, real estate"--i.e., certain overlappings which would eventually be pared down. "The economies that will kick in to prevent deficit spending will take two or three years to occur."
John Sucke, executive director of SAG-New York, agreed with Donnelly, and pointed out that the present budget and dues structure projections were prepared two years ago, when merger agreement documents began taking form and a joint board of directors was put in place to oversee the merger process.
"In the interim, both unions have increased staff to add more extensive services," Sucke noted. "When you take the figures from two years ago and consider the increased level of staffing and services, that produces the $5.2 million deficit."
In late 1996, the unions announced the new multi-tiered dues structure which would take place under the merger. It called for minimum payments of $200 annually for low-income members, with a maximum fee of $2,400 a year for the highest-paid members.
"The dues structure's going to have to be revised, and we're also talking about the initiation fees," Sucke said, adding he felt much of the deficit could be removed through increasing the initiation assessment, which presently runs close to $1,200. Any raise in dues will mainly affect SAG's upper-level earners, Sucke said, feeling that "$200 is probably the most you could expect to raise" from members on the lowest-earning level, who now pay $85.
The $200 minimum dues would cover the merged union's members earning less than $10,000. While no figure was immediately available on the number of SAG members earning that specific figure, a June story in The Hollywood Reporter on SAG's latest earnings data reported that 74,000, or 73 percent of its members, had earnings of less than $5,001 last year. Only 12 percent of all SAG members earned more than $20,000.
Some performers and advocates, such as those in Los Angeles' Performers Alliance, are against the merger, mainly because of the new dues structure, and have siezed on this deficit revelation as further evidence that pro-merger voices at SAG--including SAG president Richard Masur--are intent to force a merger vote on members.
"There are people on both coasts trying to blow this out of proportion, like Chicken Little and the sky is falling," said Donnelly of the naysayers.
Roger Armbrust is News Editor for Back Stage.