Business

Playhouse eyes budget cuts to close gap

By Bill Moss, Published: September 25, 2013

FLAT ROCK — The Flat Rock Playhouse is making budget cuts and widening its fundraising reach to shore up finances in a second straight challenging year.

Despite critical acclaim, wide audience approval and strong box office success of its mid-summer shows, the Playhouse is struggling to reach revenue goals it set for the 2013 season. Last fall, Playhouse leaders announced the theater was in a cash crisis and in danger of closing if it did not raise money. It received large donations from local government bodies and individuals and survived.
A big difference between this year and 2012, Playhouse leaders say, is that administrators have monitored spending throughout the year, made cuts early on when shows fell short of goals and put contingency plans in place.
"I cut $103,000 in quarter 2," said managing director Hillary Hart, who is the financial chief that local contributors said they wanted the Playhouse to hire as a condition for making the grants last year.
After first threatening to withdraw half of a $100,000 commitment it had made in June 2012, the Henderson County Board of Commissioners agreed to release the appropriation. The Hendersonville City Council and the Flat Rock Village Council made donations of the same amount but in each case the elected officials vowed that they would not donate at that level again. This year, for the budgets that went into effect July 1, the county gave $20,000, Hendersonville gave $10,000 and Flat Rock gave nothing.
Playhouse officials would not quantify the shortfall they are dealing with now — Hart said the number changes by the day based on ticket sales, expense cuts and fundraising — but they acknowledge that the $270,000 loss of public support from the local boards has made the 2013 numbers much more challenging. The negative effect goes beyond the immediate budget, they say, because state and national donors look first at local financial support to measure how an arts organization is doing.
"It's a pyramid," said Rob Wood, vice president of the Board of Trustees. Large donors look at the local base of support.
"We're still dealing with the huge cash deficit we began the year with, and even with the successful season we've had it is difficult to do in small bites," Wood said. "We've made good progress, we got our vendors paid off from 2012 and we've made a lot of progress but it's still a struggle and at the end of the day we still don't have any cash."

Wood said in an email after the print edition of the Lightning was published on Sept. 25 that he meant the theater has no cash reserves, not that it had no cash. He said in the email that Playhouse leaders last December, "We said we needed a million dollars and we've collected just over half of that.... It's more like $600k & change," not $850,000 as the print version of the Lightning said.

When Lorna Luft, the singer who was scheduled to perform "Songs My Mother Taught Me," had to withdraw because of breast cancer treatment, the Playhouse scrambled to substitute a show. "Souvenir," in its place, was a box office dud.
"'Souvenir' was just a drain," Wood said. "We were thinking that would give us a nice little cash basis. ... It just died. That was kind of the loss that started all of this. Thank goodness Hillary was there to keep us ahead of it."
Hart ordered cuts to make up for the loss. "Evita" and "Les Miserables" thrilled the audience, drew critical raves and filled seats — setting box office records for their time frame. Then "Deathtrap" fell short of goal, leaving the theater to push the stone uphill again.
The theater is still trying to recover from a $1.4 million drop in box office revenue in 2010.
"We've been trying to emphasize that we have been needing this all year. It's just a continuation of what we started last December," Wood said. "We've got to get the rest of that. The bad news is we don't have it yet. It's that same continuing story of a not-for-profit that doesn't have an endowment and doesn't have access to cash."
Wood said a private fundraiser Sunday night in Asheville featuring is the kind of outreach that the Playhouse needs more of, showing new donors the quality of the Playhouse performers.
Public support, Hart said, is vital to the theater's future.
Last month, she pleaded with the Flat Rock Village Council to reconsider its decision to zero out Playhouse funding.
"Although we have hit many of our sales goals this season, and some shows even broke Playhouse box office records for their same time slot in previous years, our third quarter is no different than the beginning of the year and we still need to find additional ways to stay financially stable," she said. "Over the season we have been making budget cuts to various departments and finding ways to create cost savings without sacrificing the quality of our shows or the customer experience that our patrons expect.
"As I have always stated, it may become necessary for our budget cuts to include things like staff furloughs, salary reductions or even staff layoffs," she said. "We are having an open dialogue with the staff right now about how the Playhouse is implementing budget cuts, including staffing."
Two studies have shown that the Playhouse has an economic impact of about $10 million a year, attracting tourists for overnight stays and generating income for restaurants and shops. The average local government support for nonprofit theaters was $264,683, or 3.7 percent of a theater's annual budget. The 2013-14 local government support for the Playhouse of $30,000 amounts to .75 percent of its $4 million budget.
Flat Rock Mayor Bob Staton, who is also a member of the Playhouse Board of Trustees, said he favors making an annual grant to the official State Theatre of North Carolina across the road from Village Hall.
"I have been for a long time been in favor of putting something in the budget for the Flat Rock Playhouse," he said. "Back when Ray Shaw was mayor we did make a contribution and the contribution was $10,000."
The council had a regular budget appropriation of $35,000 a year for "community support" but decided last year to stop giving to any nonprofits because they surmised too many would ask.
"We're always worried about it," Staton said of the Playhouse. "As a board member it's a concern and as a resident of Flat Rock it's a concern because we know how important the Playhouse is to Flat Rock and it's also very important to the entire community."

Jason Ferguson, the public relations and social media director for the Playhouse, noted in an email that the theater had received numerous awards both for its art and its community contributions. They included:

• TripAdvisor - Ranked #1 Attraction in Flat Rock.
• TripAdvisor - Playhouse Downtown Ranked #2 Attraction in Hendersonville
• TripAdvisor - Certificate of Excellence 2013
• AAA Gem Status
• Mountain Xpress WNC Awards - #2 Best Visual or Performing Arts Camp
• Mountain Xpress WNC Awards - #2 Reason to Visit Your Town (Hville & Flat Rock)
• Mountain Xpress WNC Awards - #1 Business That Gives Back To The Community (Hendersonville and Flat Rock).