Theaters in Crisis: Layoffs, Cost Cuts Imperil Nonprofit Stage Companies Across U.S.
Nonprofit leaders across the country are sounding the alarm bell as theaters near a point of financial crisis.
Center Theatre Group in Los Angeles sounded an early alarm, as one of the country’s largest nonprofit theater organizations, when it announced in June that it would be pausing programming at the Mark Taper Forum, its smallest theater known for promoting new work, starting next season and laying off 10 percent of staff across the organization. The Public Theater in New York, another giant among nonprofits, followed shortly thereafter, announcing in July that it would cut 19 percent of staff, after having already paused its Under the Radar festival, featuring experimental work.
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Other well-known nonprofits such as the Oregon Shakespeare Festival in Ashland, Oregon; Lookingglass Theatre Company in Chicago; and the Brooklyn Academy of Music, among many others, have also had to undergo cost-cutting measures, layoffs and large-scale fundraising campaigns.
Without a new model for producing theater, nonprofit leaders warn this may be the tip of the iceberg.
“I think over the next six months, you’re going to see a whole lot more than what we’ve already seen,” said Danny Feldman, producing artistic director at the Pasadena Playhouse.
At issue is the fact that attendance has not returned to pre-pandemic levels, which is a problem as theaters increasingly depend on single ticket sales as part of their financial model. Additionally, the costs of producing theater are rising, due to inflation as well as labor shortages.
While some theaters employ dynamic ticket pricing, where prices increase with demand, there is still a desire to provide an accessible ticket entry point to the community, which means ticket prices largely can’t keep up with the rising costs. Some have endowments, but much of that funding has restricted usage.
These factors are all converging now, since many theaters were able to buffer costs in the preceding years with government funding, such as the the Shuttered Venue Operators Grant, which offered grants of up to $10 million, and the Paycheck Protection Program, which allowed them to keep paying bills and employees even when theaters were closed during the pandemic. That funding has now run out.
At Center Theatre Group, CEO Meghan Pressman said the large size of the organization allowed leaders to see the writing on the wall earlier than other theaters. Though they had hoped for a change in trends this spring, attendance at all three theaters in the organization is still down about 20 percent from pre-pandemic levels and subscriptions are down an average of 40 percent. There’s also been a correlated drop in donations.
This amounted to a $12 million to $13 million budget gap in the last fiscal year, which ended in June and was supported in part by extraordinary funds, such as government grants as well as state and local funders. If no changes were made to reduce costs, the theater group was on track to see a similar gap next year.
In the past, Center Theatre Group has been able to use its Ahmanson Theatre, which hosts many touring productions of Broadway shows, to offset some of the costs at the Taper Forum, which almost always operates at a loss. But ticket sales at the Ahmanson have also taken a hit. And the losses at the Taper next season were expected to escalate, with a projected loss of $700,000 to $1 million per production, compared to typical losses that run in the low $100,000s, leading to the decision to pause programming.
“What we’re finding, and this is pretty common across the country, is that the big hits, we still have them, but they’re not hitting as high numbers as they necessarily did before the pandemic and the lows are hitting deeper lows,” Pressman said.
There are varying ideas on why audience numbers are down. Pressman notes that surveyed attendees at the Center Theatre Group are no longer complaining about fear of illness or of COVID-19 in the way that they were about a year ago. But more broadly, theater leaders think habits may have changed.
“They’re not engaging in cultural participation in the same way that they did,” Pressman said.
One criticism of the nonprofit theater field amid these budgeting shortfalls is that the organizations are not run well, or that they spend too heavily on staffing and executive salaries. However, Feldman counters that nonprofit leaders “do a lot with a little” compared to commercial theaters and are now contending with even fewer resources.
Larger theaters are able to shoulder some of the losses, for now, by reducing programming and making cuts, while some smaller and midsized theaters are sending out the fundraising alarm.
Like others across the country, the Oregon Shakespeare Festival, which has three theaters, including an outdoor Elizabethan theater, has been contending with rising costs, supply chain delays and labor shortages as it emerges from the pandemic. These issues have been compounded by the increasing frequency of wildfire smoke, which has led to canceled performances at its outdoor venue.
Attendance is back on the rise this year, after being down the previous year, said board chair Diane Yu, but the theater still needed to launch two large-scale fundraising campaigns, of $2.5 million and then an additional $7.3 million, to complete its 2023 season. Now, OSF is looking to raise at least $12 million to $13 million for its 2024 season.
The theater organization had already become more reliant on philanthropy in recent years, as opposed to single ticket sales. OSF has already undergone layoffs and is looking for more ways to cut costs — while noting that there are heavy fixed costs in relation to the buildings and maintenance.
“We’re all going through the same analysis, and we all bemoan the fact there isn’t yet the perfect business model that would work,” Yu said.
One idea to emerge amid the crisis is to turn to the federal government for a bailout, as proposed in a July 19 New York Times guest Op-Ed. It’s an idea that many nonprofit theaters are on board with, particularly when it comes to increased funding for the National Endowment for the Arts, and in turn, increased grants given to the theaters.
“It’s just a changed field,” Feldman said. “The way we look at is we’re on Mars now and the rules of gravity that applied in 2019 into 2020 do not apply anymore and a bunch of us are trying to navigate that and we’re looking for oxygen to help us get through.”
A group of more than 100 nonprofit theaters across the U.S. had already formed the Professional Non-Profit Theater Coalition during the pandemic, in order to lobby for nonprofit theater inclusion in the Shuttered Venue bill. Since then, members of the coalition, including Teresa Coleman Wash, executive artistic director of the Bishop Arts Theatre Center in Dallas, have continued meeting with lawmakers in Washington, D.C., in order to build relationships and familiarity with the theater industry for potential future legislation.
“We are planting seeds that we hope will be fruitful in years to come in really meaningful ways,” Wash said. Her theater has also experienced a downturn in audience numbers, which for now, has been somewhat offset by philanthropic support. But she fears that could end, as she says organizations of color, like her own, do not traditionally receive the same level of outreach.
Additional funding is particularly necessary, Feldman and others argue, as the theaters try to figure out the path forward.
Center Theatre Group has hired Snehal Desai, formerly of L.A.’s historic East West Players, as its new artistic director starting in August and has hope that he will be able to reinvigorate the programming and model there with his “innovative and experimental approach,” Pressman said.
Pasadena Playhouse, which received the 2023 Regional Theatre Tony Award, saw great success with its Sondheim celebration last season, which included two Sondheim productions as well as a Bernadette Peters production. This was a big swing, Feldman notes, with the theater budgeting for a $1 million loss, and ticket sales still came in lower than expected. But that was made up for by increased fundraising and the theater ended up in the black for the year.
“We invested in big art onstage, which was our gamble, and it paid off in a lot of ways,” Feldman said. “But next season is a new season, right? How are we going to continue that, that’s the question we’re asking.”
The theater is currently in the midst of renewing subscribers for the upcoming season and is about two-thirds of the way toward its goal, but will have a better idea on where things stand in September, he said. They’re also looking at hiring film and TV actors, who are now on strike with SAG-AFTRA, for the next couple of shows. There’s interest, Feldman says, but still uncertainty around the timing of the shows and the length of the strike.
The Oregon Shakespeare Festival has hired Tim Bond, who had been associate artistic director at OSF in the past, as its new artistic director, when Nataki Garrett resigned from the position in May after four years at the helm. In addition to the funding crisis, Garrett, who was the first woman of color to lead the organization, had received death threats during her tenure and pushback on her programming, which featured diverse casting and expanded beyond Shakespeare.
Though theaters do not know what the new model is yet moving forward, Pressman said she is somewhat optimistic about the moment, given that nonprofits are banding together and speaking up and that many are choosing to use this as a time of experimentation. However, there’s also a fear of what will happen on the other side of that.
“Times of crisis result in really amazing innovation for an industry, so I feel really excited to see what comes out of that,” Pressman said, “but it’s still really concerning. Companies are really fragile right now, and vulnerable.”
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