The Los Angeles Times reported some sad news yesterday, but not the least bit surprising. News like this was coming for a while now it was just a question of which major theatre would be the first.
Pasadena Playhouse is closing (temporarily?) and considering filing bankruptcy. Unfortunately I think the shuttering of one the oldest theatres in the country – a theatre that has already had one recent turn-around – is a turning point to seeing many more closures and bankruptcies in headlines. Sorry to be such a “Debbie Downer” but very little I am seeing in the industry leaves much hope for the nonprofit theatre community outside of a few large and several very small institutions. Since I am a silver-ling kind of gal, at least Pasadena Playhouse is providing (thus far) a map for how to close your theatre.
I had the pleasure of spending some time chatting with its artistic director Sheldon Epps this past summer over lunch, so I am not surprised that the situation is being handled with respect and responsibility. This is NOT a situation like North Shore Music Theatre which was a disaster waiting to happen and whose board and leadership’s actions were a disgrace to the entire theatre industry. The news of big trouble came out a few months ago, and the company was pretty transparent about it situation.
This is a theatre that on paper looks like many if not most of the theatres in this country. THIS IS WHY I AM WORRIED.
The L.A. Times touches on some specifics (towards the end of this post), but the key issues are the same old ones. Pasadena had a structural deficit in their annual budget because expenses keep going up and the theatre had a fixed capacity for income (Baumol’s cost problem – for more check out this post of Funding Models). They had a logical plan for upgrading their facility and expanding – it wasn’t grandiose; it seemed smart; and had several components that could be responsibly managed. But plans (even good ones) cost money and although “Bricks and Mortar Funds” are “easier” to raise, nothing about fundraising is easy in the arts. The company has a strong relationship with its community and is recognized for the work they do, but this doesn’t translate into increased government support. Most importantly Pasadena Playhouse had Epps at the helm, who appeared to actually be an Artistic Director in the truest definition of the job – I only say “appeared” because I didn’t really get to see him in action, but I did a lot of research before our lunch, and I do believe Epps possessed a tremendous love for his institution and I don’t recall speaking with anyone who had a better understanding of his community. I also feel that he prioritized the institution over his own ego – a rare but true sign of leadership.
I fear many other theatres across the company are not making good or responsible decisions, are not respecting or caring for their communities, and are playing a dangerous game of running up debt, shifting liabilities, running through endowment and restricted funding for general operations. What worries me most is that I fear there are a large amount of theatres that are thisclose to shuttering and they are pretending everything is “hunky-dory” to their community and in some cases to their boards (hmm…sounds a bit like what the banking industry did a few years ago that got the country into so much trouble). When the news breaks that these theatres are closing, I don’t think their communities will care and I will be surprised if there is any major support to try and help them.
In contrast Pasadena does seem to be taking responsible steps and being honest and transparent about the situation which again I credit Epps’ leadership and the true responsibility that he feels to the community.
Pasadena is providing a great example of what to do by what it isn’t doing - not dipping into restricted funds and (this is very important) not keeping unused subscription funds. My only quibble is that there is not enough focus on the fundamental financial dilemma of the theatre (that the financial model we have been using for 50 years doesn’t work and really never did for long-term sustainability). The below quotes are from the L.A. Times coverage:
The Pasadena Playhouse will close Feb. 7 after the final performance of its current show, “Camelot,” as leaders of the 90-year-old landmark theater search for ways out of serious financial difficulties.
Among the options they are considering is a bankruptcy filing.Executive director Stephen Eich said the playhouse is essentially out of cash and faces more than $500,000 in immediate bills, as well as payments on more than $1.5 million in bank loans and other debts that have dogged the nonprofit company since the mid-1990s. Thirty-seven employees learned at a staff meeting Thursday that they would be out of work.
Eich said that tapping into $6 million donated for a capital campaign to refurbish the playhouse was not an option. “It just would not be any way for us to solve the problems of the place,” he said….
The playhouse’s first step, Eich said, will be hiring a lawyer to advise officials on such matters as a possible bankruptcy filing. Eich said he isn’t sure if the playhouse’s 8,000 subscribers will be reimbursed.
The article says they are working on a plan to re-open and goes on to explore some thoughts, but no new ideas yet. I hope they will find some that create long term sustainability, something that really changes how they function, instead of a band-aid, and becomes an example for others rather focusing on a fingers-crossed dream of an angel that funds the status quo or local government funding which would be unstable and not build a foundation for changing the operating model. It would be great to be able to write a post in the future that the Pasadena Playhouse provided not only an example of how to close but also a map in how to rise from the ashes. But the below obviously won’t be it:
The playhouse had pinned its hopes on finding someone who would give $5 million to have the 684-seat main stage named in his or her honor, Eich said, but that hasn’t materialized.
Epps said he hasn’t given up hope of a transforming donation. When the Museum of Contemporary Art in downtown Los Angeles was in a comparable situation, philanthropist Eli Broad stepped in with a $30-million pledge.
“Some irons have been in the fire and are now, but they take a lot of time and cultivation,” Epps said. “We know that despite the economy, those kinds of gifts are made to arts organizations.”
One question, Epps said, is whether the city of Pasadena will be willing to offer financial help. The city currently provides a $1-a-year sublease on the performance spaces of the larger, privately owned theater building.
How did the situation reach this point? And what was that expansion plan? Is this one of those theatres that built a mausoleum that it couldn’t afford to run – the answer is no. Were they planning some crazy expansion – not really. They had serious renovation needs and a more or less reasonable plan for a mid-size theatre. And seemed to be taking things in responsible stages.
It did have an issue that is not uncommon – old debt from the past (read: past mistakes) and no way of fixing the financial model that is the crumbling foundation of the nonprofit theatre environment.
The Pasadena Playhouse’s financial problems surfaced in late September, when it closed a show a week early to save on expenses: “The Night of the Child,” a drama by Charles Randolph-Wright that starred JoBeth Williams.
Eich said at the time that four employees had been laid off, and that the playhouse needed donations of more than $1 million by year’s end to cover up to $600,000 in bills and create a cushion as it headed into the 2010 season.
The nonprofit corporation that now runs the theater had to shoulder about $2.5 million in leftover debt.
Before the downturn, the playhouse had visions of bigger things. In 2007 it announced that architect Frank Gehry was donating his services to design a new, 300- to 400-seat theater to augment the main stage, a 684-seat house in the Spanish Colonial Revival building that is a California historical landmark.
Before tackling that larger project, Gehry was going to redo the existing second stage, the 86-seat Carrie Hamilton Theatre….
Although the playhouse had announced fundraising successes in recent years, including a $3-million gift from an anonymous donor in October 2008, Epps said last fall that some of those were pledges to be paid over a long term.
The playhouse’s debt dates to before the present organization existed. The city bought the building in 1975 and later transferred it to real estate developer David Houk. He relaunched the theater in 1986 as a place to develop shows that would tour other California venues under the banner of Houk’s Theatre Corp. of America. The plan made some headway, but in 1994 it crumbled during a recessionary economy, and in 1995 Houk’s business went bankrupt.
Hopefully Epps will pull off a theatre miracle, but I sort of hope he doesn’t. If Pasadena re-opens (and I hope it does), I would like Epps, his staff and his board to make a visionary shift in how the company functions at all levels that takes steps towards redefining sustainable and acceptable practices in the field. I think we have all relied on miracles too often and too much. Epps has already lead the company through one turnaround but sadly it didn’t last. Maybe he can do it again, make it stick and in doing so help the entire theatre community.
