Tuesday, March 11, 2003 - Page updated at 12:00 AM

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The drama behind the scenes at ACT

Seattle Times theater critic

According to supporters of ACT Theatre, the company is making progress in its scramble to raise the $1.5 million needed to save the playhouse from drowning in red ink. If ACT succeeds in its search for backers, it will mount a new season that begins in June.

But many interested observers, here and across the country, are asking how one of Seattle's premier stage companies got into such a perilous fix in the first place.

Interviews with more than a dozen actors, directors, board members and administrators, and a review of board minutes supplied by ACT, paint a picture of a theater hit by a "perfect storm" — a confluence of difficult circumstances and dubious internal decisions, including ACT's 1996 move to a new facility, swelling artistic ambitions, shifts of leadership, overdependence on credit and the post-9/11 recession.

These conditions led to disaster in recent weeks, when ACT suddenly laid off most of its staff, canceled plans to bring in a newly hired and nationally respected artistic director, and posted a $1.7 million debt. The theater also made the stunning admission on Feb. 14 that it had only $3,000 left in its checking account — a shocker for an organization that in 2002 had a nearly $6 million budget, more than 60 employees, and a facility bustling with theatrical activity.

A new nest

Some trace the genesis of ACT's crisis back to the 1980s, when its trustees and managing director Susan Trapnell concurred that the modest-size professional theater needed to move and grow. The company's 450-seat theater on Roy Street, founded in 1965 by teacher-director Gregory Falls and his wife Jean Falls, had hosted some of the first Seattle renditions of plays by Tom Stoppard, Harold Pinter, Sam Shepard and other major authors.

It also nurtured and showcased the talents of a generation of gifted Seattle actors. But the facility was cramped and in disrepair.

The ACT board chose not to refurbish the venue, and after a lengthy search agreed to buy the derelict Eagles building on Seventh Avenue and Union Street and renovate it into a spiffy, multi-stage complex. But reactions to the plan were mixed.

According to longtime ACT performer Laurence Ballard and others, many artists (and patrons) didn't want ACT to trade its unpretentious "mom and pop" theater for a glitzier, downtown show palace. Others worried about the high cost of maintaining the sprawling Eagles building, which would hold two 400-seat theaters and two small-scale cabaret spaces, but not a larger mainstage hall that could generate substantially more revenue.

The rift was serious enough to spark the forced resignation of artistic director Jeff Steitzer, who had misgivings about the project.

Yet despite Steitzer's departure, ACT's $30 million funding campaign for the venture was a success. And the handsome new downtown facility (named Kreielsheimer Place) opened to a fanfare of publicity in 1996.

Changes at the top

But the triumphant move was marred by two rocky initial seasons at Kreielsheimer Place. New artistic director Peggy Shannon's first productions there were disappointments, critically and at the box office. By the time Shannon resigned in 1997, Trapnell said, the organization had its first operating deficit and attendance plummeted. (Subscriptions dropped from a high of 11,400 in 1996 to 9,000 in 1997).

Seeking its third artistic head in three years, a leader who could revitalize ACT, the trustees selected the ebullient, well-connected East Coast director Gordon Edelstein.

"Gordon created a tremendously positive energy at ACT," said actor-director Kurt Beattie, who became Edelstein's associate artistic director in 2000. "The place was almost moribund when he arrived, and he filled it with life and theater."

But it came at a price.

ACT's budget shot up as Edelstein raised production values and presented shows with more "star power": famed actors (Julie Harris, Jane Alexander), trendy experimental artists (director Joanne Akalaitis, composer Phillip Glass), and a pop music icon (Randy Newman).

At first, the investment seemed to pay off. Subscriptions and single-ticket sales rose. And some ACT premieres ("The Syringa Tree," "In the Penal Colony") went on to successful runs in New York.

In the labor-intensive world of nonprofit theater, however, costs can easily outstrip income. ACT's tax documents reveal a rapidly growing gap between revenues and expenses — $56,000 in 1999, $600,000 in 2000 and a whopping $950,000 in 2001.

It didn't help that in recent seasons the theater lost several longtime guardians of its finances. Trustees Don Patterson and Keith Larsen retired from the board, and veteran manager Trapnell moved on to the Guthrie Theatre in Minneapolis.

"Basically, when I left, we did a business plan," Trapnell said. "We had to develop revenue of major proportions, get up to 14,000 subscribers, or we had to change the operating model. We knew we had a $500,000 problem, and the problem wasn't addressed."

"We were always battling the bottom line and a deficit," Edelstein says. "It was very frightening at times, but most other big theaters in town are in that situation, too. We were trying to be frugal, and things always seemed manageable."

Ignoring the alarms

For many arts groups, the Sept. 11, 2001, terrorist attacks and subsequent economic slide were blaring wake-up blasts. With government and corporate donations dwindling, arts groups wondered if they could still rely on the generosity of well-heeled private "angels" — especially those Seattle arts patrons hit hard by the stock market tumble, and the dot-com crash.

So why didn't ACT Theatre see the handwriting on the wall? Why didn't Edelstein and company plan a leaner, less financially risky 2002 season?

The most common explanation cited by trustees, staffers and former executive director Jim Loder was their imprudent confidence in ACT's ability to keep attracting big donations.

"The signals of trouble were there, but I was probably too optimistic about getting checks written and tickets sold," said Loder. "I shouldn't have been. And we should have been collectively monitoring our finances closely on a day-to-day basis.

"We weren't agile enough to change quickly. And not enough people were standing up to say, 'Hey, wait a minute, we can't take these risks.' "

Institutional vigilance also faltered after December 2001, when Edelstein announced he would leave ACT to rejoin his family in New York and become artistic director of the Long Wharf Theatre in New Haven, Conn. Instead of replacing Edelstein quickly, the board kept him on until June 2002 — though he was spending more time on the East Coast than in Seattle.

On borrowed time

As the board searched for Edelstein's successor, financial problems worsened — problems board minutes indicate were repeatedly raised, but not dealt with. Fatefully, ACT ate through a $1 million line of credit. Guaranteed by Boeing chairman Phil Condit, a board member, the credit line had been a stopgap to pay bills during cash shortfalls, and it was intended to be quickly replenished. But by summer 2002, ACT apparently was paying most bills on credit and not replacing the cash it borrowed.

ACT's coffers were further depleted by a money-losing two-week extension of a poorly reviewed Randy Newman musical and soft ticket sales for its usually reliable holiday cash cow, "A Christmas Carol."

Yet many staff and board members say they were not told of pending financial doom. In April 2002, ACT told the Seattle Times it had a deficit of about $211,000. And as late as this January, Loder publicly estimated ACT spent $500,000 more than it earned in 2002 — a far cry from the $1.7 million debt it posts today.

In October, the board even believed ACT had the resources to hire a new artistic head, respected Los Angeles producer-director Robert Egan. He planned a 2003 season with new works by actress Linda Hunt and dramatist Jon Robin Baitz. As recently as last December, the board was excitedly anticipating Egan's tenure.

Loder, who resigned last month, said he didn't ring the alarm bell sooner because he hoped the theater's annual end-of-the-year funding drive and holiday shows would save the day. Unfortunately, it was a bad time to count on big gifts from rich friends, and by January the theater was laying off most of its staff.

Still, internal communications were so faulty, trustees say they were "shocked" to hear Loder report in a board meeting early this year that ACT was down to its last few thousand dollars. There was no money to hire Egan, who bowed out graciously. And there were no funds to mount a 2003 season, which 5,000 subscribers had already paid for to the tune of $900,000. (If ACT can't mount a 2003 season, its $1.7 million debt would climb to $2.6 million.)

Will the sun come up tomorrow?

Longtime supporters of ACT, including Corporate Council for the Arts director Peter Donnelly, acknowledge the company's mistakes, yet make a strong case for ACT's rescue and survival. Donnelly points out that ACT employs scores of talented local artists each year, has had more than 30 years of solvency, and is capable of creating top-notch drama.

But even vocal advocates of an ACT bailout admit the theater must shift its priorities.

Trapnell, who has returned to Seattle and is volunteering as a full-time adviser to ACT, says the company is circulating a new operating plan focusing on hiring local artists, producing fewer shows and sharing its complex with other arts groups. (Feelers are out to Empty Space Theatre and Book-It Repertory Theatre.)

What's critical, she says, is for ACT to return to its fiscal principles so it can recover from a period of overzealous spending.

"For 33 of its 38 years, ACT was known for its financial caution," Trapnell says. "We lost that coming into this new building — the building was not the problem. We lost that discipline."

Now, she and Beattie (who is volunteering as artistic adviser), say the theater must commit to a leaner, less costly operation, rebuild its community ties and get back to the original "values and mission" of the Seattle-rooted theater Greg Falls envisioned 38 years ago.

"I actually have confidence we can do this," Trapnell says. Yet she and others know that the rescue operation has to happen quickly, and has to succeed. In these rough times for arts groups, a second chance is a valuable and nonrenewable commodity.

Misha Berson:


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