Answering the Curtain Call

. June 30, 2014.
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When the Performance Network Theater opened on Washington Street in 1981, those involved did not know that they would become Ann Arbor’s elite source for professional theater. But with the sudden May 22 closing, many are now asking why the theater didn’t recognize the financial burden that forced the closing and take action sooner.

The Performance Network’s 19-member Board of Directors decided the theater was no longer financially viable and called for the sudden shutdown. The remaining performances of Richard III were cancelled and staff were asked to leave the Huron Street location immediately.

Although staff jobs have been cut and the upcoming season has been canceled, the company itself has not called it quits. Board President Ron Maurer says there are no plans to declare bankruptcy.

At this time, financial details have not been made available, but the debt estimates range from $250 to $300 thousand. Also unknown is how much of that debt represents unpaid back taxes. The Board members could be responsible for back taxes owed.

Questions and options

At a community meeting following the closure, the Performance Network’s Associate Artistic Director Carla Milarch, Artistic Director David Wolber and Associate Development Director Logan Ricket answered questions and assessed options for moving forward. They are currently calling their group Theater NOVA, a separate entity from the PNT.

Artistic Director Erin Sabo was not at the meeting and reportedly will not be working with the group.

“She is moving forward on her own individual path,” Milarch said at the meeting.

It is uncertain how far back the unpaid taxes go or why they were not paid, but a look at the organization’s 990 tax form for the 2010-11 tax year show losses totaling over 300 thousand dollars.

Ricket said during the time he has been working with the company’s finances, he’s assisted Sabo with setting up payment agreements.

“I knew there were a number of payment plans with the IRS and with other vendors that were set up, but whether they were carried through or not is the problem,” he stated.

Other issues also added to the theater’s financial woes. Earlier in the year, a burst pipe flooded the theater, lobby and offices. Approximately $3000 was the cost to replace the flooring alone.

Also impacting the budget was the loss of funding from the Michigan Council for Arts and Cultural Affairs. In 2013, they received $15,000 from the Council. But in 2014, for the first time in many years of depending on the funding, they received no Council funding. 

Costly thy habit

Theater companies, in general, rarely run on stable financial ground. “Finances are tricky. The business can be unpredictable: the economy, the variety of offerings in the area, even the weather can have an effect on ticket sales,” said Suzi Peterson, managing director of the Ann Arbor Civic Theater. “You have to budget conservatively, and hopefully you're pleasantly surprised. We've gotten good at operating on a lean budget.”

The PNT also pays Actors’ Equity Association (AEA) members based on the contract the theater has with the organization. Depending on the performance, the theater must hire a certain number of Equity actors at over $300 per week per actor. The AEA represents thousands of theater actors and designers in the U.S.—much of the top talent in the field.

To offset the debt, both Wolber and Milarch explained that they had been actively finding ways to cut the budget before the closure.

“I was working closely with Erin (Sabo) to at least attack the production budget side of it….We had made about $100,000 worth of cuts,” Milarch said.

Wolber said that they reduced staff size and, he made the decision to step down by July 1.

There is much at stake, depending on how PNT decides to move forward. Milarch proposed two options at the meeting. One, PNT sells off its assets to another theater and uses the funds to settle their debts. They could then start a new theater company, not associated with the PNT.

The second option is to raise funds to become solvent enough to continue as the Performance Network with a new staff and a new board.

Both options come with their own set of advantages and drawbacks. Milarch estimated that starting a new company would cost $200 thousand dollars compared to the nearly $300 thousand it would cost to continue the current company.

Choose to continue as the PNT allows the opportunity to make payments. Disbanding means all debts will be called due immediately.

“It’s when you shut down and when you close up, that’s when people say, ‘Okay, I want my money,’” Wolber told the crowd.

Also at issue is whether it would be feasible to continue using the current PNT space if the company reformed as a different entity. The current lease runs until 2020, and while the normal rent rate is roughly $22 per square foot, the lease cost for the space is $3.50 per square foot.

If the PNT folds, the new landlords, Wickfield Properties, would then not have to honor the lease.

Yet, to move forward as the PNT, as a professional theater,  the sole intention of continuing, the group would have to renegotiate the contract with Actors’ Equity. While not impossible, that could be difficult.

“We defaulted on a production and shut down in the middle of a run. Actors’ Equity does not look favorably on that,” Milarch explained.

Just days after the public meeting, Milarch and several members of the theater community met and created a six-part plan to move the Performance Network Theater forward,.

Their proposal included installing Daniel C. Walker as the Executive Director, Carla Milarch as Artistic Director, Logan Ricket in Public Relations, intern Justin Dietzel and David Wells as resident playwright and bookkeeper.

To further cut costs, a shortened season, from seven plays to six, was proposed.

Cloak and dagger

However, unbeknownst to many in the theater community, there was a second proposal chosen unanimously over Milarch and company.

Moving forward, John Manfredi will serve as PNT’s Producing Artistic Director. Suzi Regan will act as Associate Director. Manfredi owns Etico Productions LLC, a theatrical consulting and production company that has partnered with Olympia Entertainment, Palace Sports and Entertainment, Michigan State University and other small professional theaters companies.

As for community supporters of the PNT, the press release stated that Manfredi and the Board would work hard to honor commitments to the patrons, donors and vendors. They warn it will take time, but they have faith that the model implemented will keep the PNT sustainable. What that model is remains uncertain at this time.

“Due to the sensitive nature of negotiations with funders and investors, the sealed bid was delivered confidentially, along with other proposals, to the Board of Directors of the Performance Network Theatre,” according to a letter from the Board.

The Board stated that those who ordered subscriptions would not be disappointed, though details were still forthcoming. The Michigan Shakespeare Festival, Tipping Point Theatre, Two Muses Theatre have offered to honor unused tickets of Richard III.”