The Bank of ASCAP: ASCAP Authorizes $25 Million in Personal Loan Guarantees

Film Music Magazine • January 11, 2011

In its 2009 Annual Report, ASCAP’s auditors have disclosed that the performing rights society has authorized $25 million in personal loan guarantees for members who have loans with financial institutions. ASCAP’s press department did not respond to emails asking how members can apply for the guarantees or how the society determines which members are eligible for the guarantees. Given the current economic climate and the state of the music industry, the personal loan guarantees may represent an important financial benefit for ASCAP members who are seeking bank loans to maintain or expand their careers.

The note from ASCAP’s auditors Ernst & Young, LLP in the ASCAP 2009 Annual Report states:

MEMBER GUARANTEES
The Society has provided guarantees of payment to financial institutions for personal loans provided to certain of its members. Royalty earnings attributable to each of these members are being distributed directly to the financial institutions as part of the loan repayment terms. To the extent that the cash flows of the future royalty earnings are not sufficient to the financial institutions, payment of each respective member loan may be accelerated by the financial institutions and payment would be guaranteed by the Society. The Society would collect any amounts paid as a result of the guarantee through future royalty earnings of the respective member. As of December 31, 2009, the Society authorized up to $25.0 million in guarantees to be made, of which approximately $23.6 million is outstanding. The fair value of the guarantees is not considered to be material.

The ASCAP personal loan guarantee program raises questions including who is eligible for the guarantees, who approves the guarantees, what the appeal process is (if any) if a member is turned down for a guarantee, and what types and amounts of loans are eligible for the personal loan guarantees. Banks and non-bank lenders who offer loans to musicians based on royalty income in many cases charge high interest rates which could be substantially reduced for those members who receive personal loan guarantees from ASCAP.

In a statement to Film Music Magazine, ASCAP board member Doug Wood said, “All three of the PROs [performing rights societies] exist in a highly competitive environment where fractions of a percentage in terms of market share can mean millions of dollars of revenue over the course of a multi-year, industry-wide licensing agreement. To address growing and very serious competitive concerns, the Board, after a lot of deliberation and consideration of available alternatives, approved this program as the best solution at this time. I think the statement contained in the financial report is appropriate, and is about all that can and should be said publicly about this. If ASCAP members want to talk to me about this in my capacity as a member of the Board, they should feel free to do so.”

Comments

By Les Hurdle on January 11th, 2011 at 9:15 am

DW said>>>> To address growing and very serious competitive concerns, the Board, after a lot of deliberation and consideration of available alternatives, approved this program as the best solution at this time.<<<<< solution to what?

One must presume this money comes out of the general find which means the rest of us are collectively $25M short….. right?

L

By wendy on January 11th, 2011 at 9:53 am

Will help Mr get to all the main source of all connections I need to be the best that I can be ….but remember that Action is the name of the game
If u want it you will get it as long as u make it happen
Action ….is the word of the day
I can do it and I will with the help of film and music
Wendy Ruiz
Thanks
remember. This day …I will prove to my self that I can and I will make it

By Joseph Nicoletti Consulting/Promotion on January 11th, 2011 at 5:04 pm

it would only Be Honest & Truthful For ASCAP to be “OPEN” to all any questions about this Very Important Matter that Touches “ALL” of us in this Songwriting /Publishing Business !,…if this “HELP’ will be availble to it’s Members ,then it should & must be made public,..Joseph Nicoletti Consulting/Promotion P.o.box 386 Laguna Beach California 92652 USA ph 949-715-7036

By Mark Northam on January 11th, 2011 at 5:42 pm

I’d have to agree, Joseph. ASCAP’s unpublished advance program is bad enough, but if ASCAP is going to use financial resources provided by all ASCAP members to provide special financial deals for a select few, they should do it transparently and openly, not secretly behind closed doors with no published rules. ASCAP must not become a piggy bank for its rich and famous members, with the benefits paid for by us all!

By Bruce Wayne on January 16th, 2011 at 5:35 pm

This is what happens when musicians themselves run the organization. Aside from that, an ascap member who earns no royalties would not be a good candidate for any outlaying of money or guarantee. In case you’ve forgotten: ASCAP is not a charity, a 501(c)(3) or a non-profit entity no matter what it claims. Not all members’ money is being used to back these loans because alot of members have no royalties payable to them. Indeed, it is people like Diane Warren, Paul Williams, Hans Zimmer who have the most money at stake because much of the royalties in trust and yet to be paid, belong to them. No one pointed a gun to your head and made you join ascap. If you don’t like how it runs: join another pro, file a lawsuit, complaint to the department of justice. Repeatedly posting here or on the FMPro list will get you nothing. Being insane is repeating the same action and hoping for a different result.

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