Monday, July 14, 2014

Are we in the real estate business or the music business?

According to President Ray Hair's message in the June 2014 International Musician, relocating the AFM New York office has been an ongoing discussion since 1988. Thanks in part to the 99th Convention's $1.2 million annual dues increase, it now seems to be the AFM’s top priority.

President Hair tells stories of real estate purchases by Local 802 and Local 72-147 in the past few decades, saying that any investment by AFM will appreciate and succeed similarly.

The Securities and Exchange Commission (SEC) requires this disclaimer on investment advertising: "Past performance does not predict future results." We should remember this when considering the investment being discussed here.

For example, what evidence exists that the AFM's proposed investment is so deflated in price that it will appreciate similarly to President Hair's examples? How do we know that its mortgage interest, up-front costs, condo fees, and maintenance are appropriate given the AFM's cash flow and treasury?

Rumors persist that President Hair and Secretary Folio have already entered into a purchase and sale agreement, on an empty office-condo property which is encumbered by a lien and needs major renovations. This is a high risk purchase.

I respectfully ask President Hair and Secretary Folio to provide real information (such as price, terms and conditions, etc.) to the AFM membership, rather than salesmanship for a high-risk investment by a union still in serious crisis.