Updated 10.11.2024
Additional information from our town hall (watch video)
Question: How much did you raise?
Answer: We’re still waiting for a number of pledges to actually arrive. It’s clear that we exceeded our goal. We’ll announce the total as soon as we know. Any funds in excess of the $600,000 will be applied to our normal annual fundraising goals, since those are sure to take a bit of a hit in the wake of this appeal.
Question: Is the board responsible for this situation?
Answer: The Board has relied (and continues to rely) upon Virginia Rep's staff to provide financial reports so that it can monitor the organization's financial strength. While the Board knew the organization was operating in a deficit, it did not understand the extent of the deficit until Klaus joined the staff and conducted his review of the financials and raised alarm bells. We are grateful for Klaus and the generosity of the Richmond community to allow us the opportunity to right the ship before it was too late.
Our first step in this process is that we have hired Warren and Whitney, a consulting firm in Richmond that provides finance and accounting services to nonprofits. Among other things, Warren and Whitey will help us to ensure that our staff is preparing accurate and timely financial information, and that strong controls are in place.
Question: I read that you had surpluses in the years prior to 2024. What happened?
Answer: Those surpluses lack context. Coming out of the pandemic, from 2021-23 the theatre took in nearly 5 million dollars in capital funds for this building, and millions more from the federal government’s Shuttered Venue Grant Program, PPP program, and other employment credits. Those millions distort the simplified financial picture you see on a 990 or audit report. Not for profit theatres don’t “make” money. They may see small surpluses in a given year if they have a big hit, but ticket revenue almost never pays the bills. That’s why we fundraise.
Question: Why $600,000?
Answer: Based on our new forecasting, this will be our deficit through the end of 2024, and will help us address our immediate needs and arrears. But most importantly, it will give us time to make necessary changes to our structure and programming to make the second half of our season viable.
Question: Will the $600,000 cure everything?
Answer: This fundraising will assure our ability to operate through the end of the year, and give us the time to make the changes necessary to stabilize. There is always a risk that we will still fail, and can only promise our diligence and energy to stop that from happening.
Question: Are you selling the Virginia Rep Center?
Answer: The board has granted Klaus the authority to explore a sale, including engaging a seller’s agent and reviewing offers. A final decision to sell will still require the explicit authorization of the board.
Question: Should you sell the Virginia Rep Center?
Answer: Frankly, yes. The ambition and mission of acquiring the Center was a noble one, and initial due diligence pointed to it being an achievable goal. But it has turned out to be much more expensive to operate than was foreseen, and the cost of necessary renovations and mitigations will run into the millions. At this moment, Virginia Rep simply doesn’t have the wherewithal to take on that expense. it’s about survival, and selling the Center means we can eliminate our debt, and recapitalize the company for the future.
Question: What will happen to the Childrens and Family Programming if you sell the Center?
Answer: Every program and every part of Virginia Rep will shrink until we put our house in order. But nothing will go away. We will continue to present family and children's programs and education programs. Depending on the terms and schedule of a sale, at some point the family programming will need to move to an interim site. We are working on that now. But it is our plan to have a permanent site in place as soon as possible.
Question: Is there any way you can keep the Center?
Answer: Yes. If an angel donor came in and covered the cost of renovations, as well as providing sufficient sustainment support, we could keep it. But that’s a huge ask. This building is extremely inefficient, expensive to heat and cool, and presents technical issues to our productions. In our analysis, it will always cost substantially more to run than our programs can bring in. That is a hard situation for an organization looking to eliminate deficits and run sustainably.
Question: Why not sell one or more of your Broad Street properties?
Answer: The November Theatre is the core of our organization. It is a professional theatre space with a large stage, a fly system, etc. The buildings on either side of it contain our primary workshops for scenery, costumes, etc, or are used as expanded lobby and rehearsal space. If we didn’t own them, we’d need to rent them just to operate. They are also small, and don’t have the sale value we see here on Hermitage. But perhaps most importantly, while it may seem ambitious in the context of our current difficulties, we have the ambition to develop our block of Broad St, and be a lynchpin of the Arts District revitalization plan.
Question: What happens if you can’t sell the Rep Center.
Answer: If we can’t sell the Rep center, or otherwise recapitalize the company, we won’t survive beyond this season.
Why is attendance down?
Answer: It’s an industry-wide problem. Even the biggest and strongest regional theatres are way down compared to pre-pandemic levels. In the aftermath of Covid, as an industry we have not yet made the case to the public that sharing a live experience with your community is better than sitting on the couch. Don’t get me wrong, I love my couch, so I get it. We have to do a better job, and we have to be in it for the long haul. This will take a few years yet, and we will have to be really smart and innovative in how we program.
Side note: There are some things doing well. One-time events, big-name concerts, etc. And Broadway touring is doing slightly better than we are, though still not anywhere near where they want to be.
What are the typical expenses of a production and what number of tickets need to be sold to make revenue?
Answer: Typical expenses vary a great deal depending on the size and type of production. Leaving aside fixed costs like administration, facilities, and full-time staff, for us it can range anywhere from as little as $50,000 to almost ten times that for a big holiday musical.
For a show to do well in our spaces, we really need to sell 65% of the total tickets. That means selling out or nearly on Saturday and Sunday, and about 40% on a week night. But even then, it’s important to remember that even then the shows don’t “make” money. We, and every theatre like us, also depends on contributions to bridge the gap.
Is this a governing Board? Do you have an accountant on the Board?
Answer: The Board sets strategy and oversees the management of the Virginia Rep to make sure it is consistent with Virginia Rep's mission. The Board hired a staff, run by a managing director (Klaus) and artistic director (Rick Hammerly), and delegated the day-to-day management of Virginia Rep to management. This is consistent with Virginia law and Virginia Rep's bylaws.
Original Appeal Questions 9.2024
Question: Are your shows still running?
Answer: Yes!!! Misery runs until September 29th, and they were painting the set today for Grace for President. Come see the shows! They’re great, and your attendance helps us immeasurably.
Question: Do you still perform at Hanover Tavern?
Answer: Yes. This season we have scheduled Ken Ludwig's Moriarty and Dial M for Murder.
Question: 11 Days? Seriously? Why didn’t this come out months ago?
Answer: I arrived in Richmond on August 1, and it took a couple of weeks of hiding in a windowless room with spreadsheets and bank statements to get the full picture. As soon as realization dawned, I partnered with our new development director to reach out to every foundation, major donor, bank, and anyone else who might be able to intervene. Things all came to a head at a board meeting just a few days ago where I presented them with my findings and with a stark choice - come up with some bridge capital, or face closure. The 11 days are just reality. I really wish it was different.
Question: How did VA Rep get here?
Answer: A perfect storm, combining a difficult moment for theatres, and a lack of the reserves and/or endowments you would normally expect in an organization of this size. We’re not exaggerating when we say the slow return of audiences after the pandemic is the leading cause. Our total audience is down 40% from the 2018-19 season. We are seeing year-over-year growth, but we’re not nearly back. All our costs have risen, just like yours have. And we’ve been working hard to make sure we’re paying living wages. We have further to go on that too, but are committed to it.
Comment: But you showed a surplus in some previous years, even after the pandemic…
Response: True. But what propublica doesn’t show you is that the vast majority of the surplus was a capital campaign to acquire our building on Hermitage. That money wasn’t for shows, it was for a building. Generally, not-for-profit theatres spend what they take in. And some seasons you get lucky and have a surplus.
Question: Is it a debt or a deficit?
Answer: Great question. Words matter. Virginia Rep does have debt - both long term mortgage debt on our two main facilities, and short term late bills with many of our vendors. What we talk about in our press release is deficit, meaning we spent more than we earned. But most of last season’s deficit was paid out of our (now depleted) reserves. We can still fix some of the anticipated deficit for the upcoming season (see below).
Question: Is the new building the problem?
Answer: We’re evaluating that. It is expensive to run, and needs millions in capital improvements and mitigations. But I will say I truly admire the ambition and mission that led to its acquisition.
Question: Why don’t you just sell some of your buildings?
Answer: Everything is on the table. But I should say that some of the buildings people are mentioning on social media are not actually ours, but are rented as storage, shop space, or apartments for visiting cast (much cheaper than hotels). Also, two of our buildings still have mortgages, limiting the potential proceeds from a sale. And finally, if we do survive, our buildings on Broad Street will be central to a potential growth plan where we partner with our neighbors to create parking, retail, and restaurant space - a real cornerstone of Arts District revitalization. A pipe dream in this moment no doubt, but worth striving for. And like I lead off with, everything is still on the table.
Question: So what's the plan?
Answer: Put simply, it's “shrink to grow". We are building a new plan and budget for the second half of our upcoming season, seeking to preserve what we can, but reducing the overall scale to a sustainable level. We will focus on our core mission of programming for adults, families, and children. We then will need to design a 25-26 season that lives within its means, while focusing fundraising efforts on building a reserve.
Question: What if I give you money and you close anyway?
Answer: This one is tough. I’ll start by saying that we are sequestering every dollar we raise in this campaign until such time as we decide whether we’re going to make it. That decision will be very soon. Hopefully we’ll get there. Alternatively, it’s possible that we’ll get substantially - but not all the way - there, and still decide to try and make it. This is a constant discussion. All I can really promise is that we will not throw your money down a hole. We’re here to save a theatre company and nothing else.
Question: Why did you stop touring?
Answer: We’ve paused touring while we figure out how to do it sustainably. Rising costs (including wages, fuel, lodging, food) and a crumbling old van fleet meant that the program lost more than 50k last year, and was going to lose a lot more in the season to come. Touring is in our DNA, and we will work hard to bring it back.
Comment: The community has a lot of questions. How about a town hall?
Answer: I would love that. Scheduling it this quickly could be a challenge, but we’ll try. If not, Rick and I may try to do an AMA on Reddit or another platform.
There was confusion about where the $1.7 Million deficit came from
The confusion was unintentional, and relates to the use of the word "legacy" (referring to before my arrival) rather than "last season". We immediately corrected it when it was brought to our attention.