Aug. 26--Civic leaders have stepped in with a provisional plan to bring Philadelphia Theatre Company back from the brink of financial collapse, and, possibly, secure its long-term viability.
The rescue plan, which ties new financial support to a re-organization of the company, was instigated by philanthropist Suzanne Roberts, mother of Comcast chairman Brian Roberts and a longtime patron of the company, and was fleshed out with help from Comcast executive vice president David L. Cohen. It calls for arts consultant Michael M. Kaiser, departing president of Washington'sKennedy Center, to develop a new business plan that is more detailed than the analysis he has already provided at the behest of the Roberts family.
Certain key changes in leadership are required. And Suzanne Roberts -- whose name is emblazoned on the theater's marquee -- would grant, along with her husband, Ralph, $2.5 million in new money to the company, which had said it was out of cash. Funds will be doled out as certain conditions are met.
The Robertses already are the company's biggest private donors, and had previously offered Philadelphia Theatre Company (PTC) a $5 million grant contingent on certain conditions, which they said PTC failed to meet.
Suzanne Roberts said Monday that her love for PTC stretched back four decades, and that "we think it is very important that they get a chance for the future. When our foundation was asked to help Philadelphia Theatre Company, we wanted to make sure that there would be a plan to reorganize the company operations and get back on solid ground financially. That was the only way Ralph and I could agree."
The deal falls into place as a significant wild card remains outstanding: The company's 365-seat Suzanne Roberts Theatre at Broad and Lombard Streets is in foreclosure and continues to be marketed for sale by TD Bank, with an asking price of $7.5 million. Assistance from the Robertses depends not only on the willingness of a new owner to allow PTC to continue to occupy the space, but also on that owner's doing so at a rental rate as low as $1 per year for five years.
PTC board chairman E. Gerald Riesenbach said that while he was unaware of a specific agreement by the bank to make the sale contingent on PTC's continued residency, it has signaled "through a lot of people a desire to find a buyer that would keep us in the building."
PTC and TD Bank have approved the terms of the deal, which includes the bank's releasing its claim on the remaining mortgage debt, according to Kevin Feeley, spokesman for Ralph and Suzanne Roberts. Tax returns show that debt at about $11 million. Currently, TD Bank has agreed only to arrange for PTC to remain in the building through the end of the calendar year, he said. The bank did not respond to requests for comment.
The resolution comes not a moment too soon. PTC is about to open its 40th season, and a recent analysis of its finances by Kaiser paints a picture of a company about to go under. In addition to the mortgage debt, the company has struggled to meet payroll, and has outstanding loans to board members totaling $684,000 and accounts payable totaling $825,000 -- large sums for a company of PTC's modest size. (Its 2012 budget was just under $5 million.)
"Unless there is a comprehensive resolution within the next couple of weeks, PTC is likely to close its doors," the reorganization plan stated, before the parties involved approved it. "And if that occurs, it is unlikely that they will ever open again."
The Robertses have agreed to pay $750,000 of their $2.5 million pledge over the next five months as long as none of that money is used to repay loans from PTC insiders, including board members, and provided that PTC retains Kaiser as a consultant, allows access to its personnel and financial records by the audit firm KPMG (which is working pro bono), and meets other conditions.
The reorganization plan says the company's problems resulted from having a home it could not afford; insufficient earned and contributed income; and "poor business management and planning."
Kaiser has concluded that while it is possible to reorganize the company, even then its ultimate success is not assured. Among the measures called for are leadership changes through re-formation of the board, and a critical evaluation of current staffing levels and personnel; the drafting of "an honest, comprehensive" turnaround plan; creation of "real marketing and development" functions; and the $2.5 million to stabilize finances over a three- to five-year period.
"It looks like if they could bring in a total of another $1 million to $1.5 million a year they would be a happier, healthier organization, and I don't believe that is an unrealistic aim in the next couple of years," Kaiser said Monday.
What is required, the plan states, is "the full cooperation -- and acceptance of some pain -- by all stakeholders, including PTC and TD, as well as a significant new and generous commitment from the [Roberts] foundation. But without acceptance of all of the components of the plan, PTC will not survive."
Kaiser said his work will involve an element of artistic planning. "I am not a theater director, so it's not like, 'Why aren't you doing this play versus that play?' For me, it's more about planning farther out for larger productions and how to use that time to plan for more ambitious work that they currently can't do because of financial constraints."
Riesenbach said he was grateful for the Robertses' support. "We recognize that opportunities come with change, and we will address them as we understand what they are. There is no question a lot has to happen, but without this step nothing would be able to happen."
(c)2014 The Philadelphia Inquirer
Visit The Philadelphia Inquirer at www.philly.com
Distributed by MCT Information Services