From the Executive Director

That Was Then, This Is Now

By Teresa Eyring

Shortly after this issue of American Theatre hits the newsstands, we will—for better or worse—be inhabiting a different world. A new president will be making victory speeches, the credit industry's moment of drama will be (we hope) past its prime, and our country will be turning its attention to how a new administration gets organized to deliver on campaign promises. Perhaps domestic issues such as education, health care, the environment and the arts will make their way to the forefront of our national discourse, and the U.S. will inch toward becoming a more positive and unifying global force.

But my crystal ball tells me that it's given up on predicting. The changes are too rapid, too surprising, too incroyable. Truth be told, there's no way of knowing what challenges we'll face.

This dynamic is at play as we track the financial development of TCG member theatres. Celia Wren's coverage in this issue of TCG's Fiscal Survey and the Theatre Facts report shows that the overall financial picture became ever-so-slightly brighter last fiscal year. For instance, while attendance was still off from pre-2001 levels, it declined only 6 percent in the five-year period ending with 2007, as opposed to 8 percent in the five-year period ending with 2006. Surpluses were posted in 70 percent of the reporting theatres, and the seemingly dire situation with working capital had improved.

But that was 2007, and as one theatre leader observes in Wren's report, "That was a different world." In the time between then and now, the subprime mortgage crisis emerged, attended by economic uncertainty and debate about whether the U.S. had landed squarely in a recession. Bear Stearns was the first Wall Street bank in need of a government bailout. When asked if others would follow suit, the secretary of the treasury said, "I'm convinced that they're going to come out of this situation very strong." Then came Fannie and Freddie.

In an effort to capture a more timely snapshot of theatres' financial state, TCG circulated a mini-survey in September '08 to take the immediate fiscal pulse of the membership. Of 200-plus responding theatres, 65 percent reported break-even or better for FY08, a dip from the previous year. Subscriptions were more up than down, and single-ticket sales were on the rise as well. We also asked theatre leaders if they had lost sleep over certain issues. More than half reported in the affirmative. The leading culprits were workload, concern about the economy, cash flow difficulties and staffing issues.

As these results rolled in, more failed financial-services institutions shocked the system. Newspapers became dominated by EKG-like graphics illustrating spasms in the stock market with repeated failures and government's rush to save the day. Lehman Brothers down, Washington Mutual down...

Meanwhile, theatre leaders are comparing notes on how their organizations will be affected, reminding themselves just how to stay both "on mission" and solvent. And it's hard not to come face to face with this question: If the system can take care of the giant, profit-making, multi-million-dollar, salary-paying entities, where is the safety net for the ones that are delivering tremendous community value for no profit at all?

We've seen some very tangible reminders that our brightest lights can and do disappear. The loss of Minneapolis's Theatre de la Jeune Lune, with $1 million of debt and no rescuer in sight, was one of the major heartbreaks of the past 12 months. While TJL isn't interconnected with the world financial markets and its closing did not herald the downfall of theatres nationwide or a global theatre crisis, its exit is nonetheless a huge loss to artists, artistry and audiences.

Looking ahead—and in the absence of a cooperative crystal ball—here are some financial impacts that we can predict as a result of this year's turbulence.

Theatres have learned to operate effectively in tough conditions, which is why our field has been able to grow so much over many decades of economic ups and downs. But these major cataclysms force many organizations to focus on just hanging on—a posture that could make it difficult for us to take important strides as a field in the years to come.