Business

Playhouse appeals for help as cash crisis worsens

A scene from 'Zelda'

By Bill Moss, Published: November 15, 2012

FLAT ROCK —  Flat Rock Playhouse faces a financial crisis that caused the theater's leaders this week to appeal for help meeting the bills for the remainder of the year and staying alive for next season.

The Playhouse hosted a meeting Tuesday night in the rehearsal hall on the campus of the 60-year-old theater in which the chairman and top administrator said the organization is out of cash and needs donations and strong ticket sales to make payroll and finish the 2012 season.

The immediate need for cash, Playhouse board chairman Bill McKibbin said in an interview, is about $250,000. To shore up the organization financially and ensure that it can withstand revenue hits, reduce debt and become stable longterm would require about $1 million.
"We're just out of cash, that's where we are," McKibbin said in an interview. "We really need to say that more eloquently but in black and white, that's where we are."
McKibbin and Vincent Marini, the artistic producing director, trace the organization's financial trouble to a terrible financial year in 2010, when the theater came up 17,000 tickets short and lost $1.3 million. It lost about $500,000 last year, McKibbin said, and is fighting to reach break-even this year with one big show to go — a new version of "The Nutcracker" created by Broadway choreographer and East Henderson High School and YouTheatre alumnus Chase Brock.

Trouble started in 2010
The financial trouble for the professional theater started under a circus tent by the charismatic actor and entrepreneur Robroy Farquhar in the early 1950s has been brewing in a serious way for at least three years, although some veteran leaders say the organization has always struggled to make payroll when ticket sales fell short. The Playhouse refinanced its debt through United Community Bank in 2011, and now owes $2.6 million.
The financial trouble hit home to Playhouse actors and staff last week when payroll checks bounced, a situation the administration quickly fixed.
"We did have a block of checks we sent out that were not covered by the bank, which was due to a lack of communication between us and the bank, through no fault of the bank," McKibbin said. "We'll take responsibility for it. We've sent letters to vendors. We'll continue to work with our vendors to try to stay as current as we can. It's just becoming harder and harder."
"Our budget for this year was to break even, we started the year with very low cash, and we need to finish the year strong to break even. We've climbed a long way out of the hole but we still have the cash problem. How to mitigate that hole is the challenge."
The Playhouse signaled the cash flow trouble in early summer when it launched a $300,000 30-day  funding blitz. McKibbin's mother, Peggy McKibbin, had pledged $60,000 if donors would give $300,000. The effort raised only $120,000, although Mrs. McKibbin went ahead and made the $60,000 donation anyway.
"Right now we're kind of out of options," McKibbin said. "We've had loans from the board. It's hard to go back to board members. The challenge of refinancing would be very very difficult, having just refinanced in 2011, and having difficulty with cash makes it very hard to go out and refinance.
"The city, the donors and the county have all given, patrons have given. I'm not really sure what our options are, and that's a terrible thing to say, but we're looking for folks who may have some options."

Board conflict

The cash crisis has caused conflict on the board.
Bill Moyer, the former county commissioner who sat on the Playhouse finance committee, resigned from the board two weeks ago over differences in how to shore up the business.
"I made some recommendations on what they needed to do," he said. "The board is not inclined to follow so I thought it was best just to step aside. They have tried a lot of ways and I give them credit for what they've done to raise money. You're coming into the off-season and they're out of balance."
He recommended more cost cutting and said the board should consider changing the leadership at the top and replacing Marini. The board refused, Moyer said.
McKibbin said in the bigger picture Marini has done more to stanch the bleeding than he gets credit for. Revenue improved from 2010 to 2011 by $850,000, though the theater still lost $499,000, and the theater is close to reaching the break-even mark for 2012.
"The community does not need to be polarized anymore," McKibbin said. "Whether they like Vincent or they don't like Vincent, whether they like the Playhouse or don't like the Playhouse, I think what the community needs to look at is what do they want the Playhouse to be for community going forward?
"Do they want it to continue the momentum it's had for the last two years, which really feeds on the success that it's had for the last 50-60 years, or do we want to let one bad year, for whatever reason — if people want to say it's mismanagement or bad leadership, blame it on me, that's fine — but we've been moving in the right direction since 2010. Do we want to continue that? Then the community needs to let the organization know where it wants to be going forward."

Stakeholders meeting
The stakeholders' meeting at the Playhouse Tuesday night drew about 50 people, including bankers, investment advisers, lawyers, board members and public officials. Among those attending were County Commissioner Mike Edney, Hendersonville City Councilman Ron Stephens, Flat Rock Vice Mayor Nick Weedman and state Rep. Chuck McGrady. Four members of the Tourism Development Authority attended along with the agency's director, Beth Carden.
McKibbin presented the Flat Rock's current situation. Behind him, seated at a table, were Marini and development director Lynn Penny. Seated at a side table were Playhouse administrative and production staffers Dennis Maulden, Bill Munoz, Tom Thompson and Preston Dyar.
The immediate need is for cash to make payroll and fund the Playhouse through the end of the year. That will take strong ticket sales for "The Nutcracker" plus 2013 season ticket sales, which McKibbin says are doing well. The Playhouse has announced an ambitious schedule for 2013 that includes "The Odd Couple," "Les Miserables" and "Cats."
Creating the budget for 2013, Marini and the Board of Directors reduced the number of shows, left room to extend shows that sell well and mostly eliminated scheduling shows on the main stage and downtown at the same time, McKibbin said.
The organization reduced expenses by $746,000 in 2011, $88,000 this year and $369,000 in 2013, mostly by reducing the number of shows. Ticket sales plunged from 94,000 in 2009 to 78,505 in 2010, the year of the biggest financial loss. Sales rebounded to 96,000 last year and stand at 84,620 now. The 2012 goal is 94,400.
"What we need is an infusion of cash, or strong ticket sales to get through the rest of the year," McKibbin said. "I'd rather have the ticket sales quite honestly than I would the donations. I'd rather have folks come see the performances, for a lot of different reasons. Either through ticket sales or donations we need to finish the year strong."
The Playhouse is putting a lot of hope on the last show, both because it has to and because it features choreography by a hometown performer and Playhouse product who has made it big on Broadway.
"The Nutcracker should be really good with Chase Brock and all the connections he's got," McKibbin said. "They're rehearsing that now, and it's pretty powerful. It should do well. But it has to do well, it needs to do well, we need the community to come out and support that through ticket sales. We need year-end donations to be strong and we need to move into 2013 with some financial stability."
The second-generation owner of Henderson Oil Co. and the Energy Mart convenience stores, McKibbin says he has spent more time on the Playhouse than he ever imagined. He is finishing up a year as board chairman but has agreed to stay on for another year. Not usually a public speaker, McKibbin has been cast into a role as spokesman sending out the SOS for a community organization beloved by many.
"It's a really delicate balance," he said, "because if we spook everybody then we basically shot ourselves in the head, but if we don't go and tell the community we've basically shot ourselves in the head."
He said he was pleased with the turnout for the stakeholders meeting Tuesday night and hopeful that revenue would materialize, from donations, "Nutcracker" sales and advance season ticket sales for 2013.
"We've had some moments of perhaps a door being cracked, and opportunity could come out of it, we just don't know how much and how fast" he said of efforts he has made with Marini, Penny and other board members. "We're not leaving any rock unturned and we haven't given up, and we want to sell tickets. That's the answer to the whole thing, is to sell tickets."

Marini, the director who came on board in September 2009, said he was hopeful that the community will respond.

"I'm optimistic that we're going to find some solution but I think it's going to be a shared solution," he said. "I don't think it's going to be one entity. The problem isn't new. It's the same problem we discussed five months ago."

Marini said he could not identify in greater detail who might come forward.

"Honestly I believe it's going to be a combination of private foundation, private donors, some public support, government or quasi-government support and a little bit of luck at the box office," he said. "As I said at the meeting, we really have to solve the problem now... We're meeting with every entity we possibly can that will meet with us."

The $2 million hole created in 2010 and 2011 and the debt the Playhouse now carries make for a tough slog.
"We've just been trying to cross the bridge by taking the log behind us and throwing it in front of us," McKibbin said. "The log keeps getting shorter and shorter, and we can't quite get to the bank on the other side."