Published: November 04, 2009 09:08 am      

City may save Rosebud Theatre

The Rosebud Theatre in Effingham may not be closing its final curtain after all.

In a packed city council chambers, the Effingham City Council Tuesday night heard a presentation from Dr. Ruben Boyajian, Tom Henderson and Janie Oldfield about the possibility of making the theater a not-for-profit organization. Under their plan, the organization will operate the facility, but the building will be owned by the city.

Arts Connection of Central Illinois, a group recently begun to back the theater as a nonprofit, proposed the city purchase the land, building and equipment for $3.6 million. According to the proposal, the city would pay off the building over 20 years at a 3 percent interest rate, obligating the city to pay $242,000 a year.

The city would then lease the building to the arts group for $1 per year, allowing the theater to reduce overhead costs of rent, real estate taxes and operational expenses.

The theater’s previous investors will receive nothing in return, putting them at a $2.3 million loss. Henderson stressed the money used to purchase the theater will go to pay off the bank notes — not to the investors who put an original $6.4 million into the theater.

“This is an advantage to the city because they will be owning the building,” Henderson said.

Public Property Commissioner Karen Flach was concerned about the theater’s cost to the city and what would happen to the investment if it did not generate enough revenue to keep the doors open.

“We’re going to be stuck with that building and property,” Flach said.

City Attorney Matt Hortenstine and Mayor John Lange said that because the city would own the theater, the city could decide what it wanted to do with the building and and its contents.

After hearing the nearly 45-minute presentation, Hortenstine suggested the council lump all but two action items on the agenda into one motion that approved them all. This not only made the meeting shorter, but it allowed the council to adjourn into executive session more quickly to discuss the purchase of the theater.

Flach and Public Safety Commissioner Merv Gillenwater wanted to wait until the Nov. 17 city council meeting to discuss the purchase, but Hortenstine said that because the organization is on a short deadline, the decision needed to be made as soon as possible.

“If you have any thing to ask or any concerns, I’m pretty sure I’ll have the answers for you in closed session,” said Hortenstine.

The nonprofit entity expects to fund the theater operation, which would still venture to bring in name act, through a number of sources, including individual donations, grants and sponsorships, but most of the funding — 65 percent — is expected to come from tickets sales.

The Arts Connection of Central Illinois, the name of the nonprofit, plans to partner with Ticketmaster to help market and promote stronger ticket sales. The association with Ticketmaster is expected to cost $30,000. But Oldfield believes the cost is worth the outcome, saying the theater previously marketed its own tickets. Oldfield had said earlier the theater’s demise was lack of ticket sales.

“We need to get as many people into this theater as we possibly can,” she said..

The organization also plans to do a market analysis study if the city purchases the property. The study will help the theater learn what programs, ticket packages and promotions the public is interested in. Henderson did not know what the cost of the analysis would be.

Henderson said the organization needs $189,000 to get the the theater started as a nonprofit entity, and approximately $300,000 has already been pledged to the operation.

The theater currently has a loss of $800,000, and Henderson said it will declare bankruptcy. The investors in the theater will not individually declare bankruptcy, but the entity itself will file.

The theater will also lose the annual city grant of approximately $200,000 a year, which was originally designated for marketing purposes. The grant totaled $1.2 million of hotel/motel tax funds.

The organization also is concerned about the current 2010 season ticket holders who purchased tickets before the theater announced it will close on Dec. 5. Henderson said he hopes an agreement can be made in the future to satisfy those ticket holders, but nothing has been decided yet.

“Our big concern is making good with them,” said Henderson.

Approximately $250,000 has been received for 2010 season tickets. To help satisfy those ticket holders, the theater made an agreement to honor 2010 season tickets with the remaining 2009 season shows.

This allowed next year’s ticket holders to use their tickets to see shows scheduled for the remainder of this year. Henderson said approximately $125,000 worth of the advanced ticket sales were traded in for current season tickets.

However, because the Rosebud itself is expected to file for bankruptcy, the 2010 season ticket holders cannot be reimbursed at this time because the theater is prevented from picking and choosing which debts to pay off.

The nonprofit group hopes to appease those ticket holders if an agreement with the city can be reached although the group is not certain how that will be done.

If the city council approves the purchase of the theater within the next month, the Arts Connection plans to get moving right away. Much of the leg-work needed to set up the nonprofit has already taken place.

One of the first steps taken will be establishing a board of directors, and the city will be expected to formally purchase the building between January and March.

Oldfied says the first season is scheduled to begin early next fall, but minor shows may be scheduled in the summer. A theater’s typical year runs from September to May, and the Rosebud is expecting 28 to 40 shows for the first year or 2010-2011 season, including famous live acts and small local productions.

No official action was taken after the closed session, but Economic Development Consultant Hank Stephens said the attitude of the council toward the purchase of the theater was positive. It’s still not clear, however, whether action on the purchase will be on the Nov. 17 council agenda.

The Rosebud Theatre announced Oct. 5, it would be closing Dec. 5, less than two years after its groundbreaking, citing slow ticket sales and the poor economy as reasons for failure. Oldfield became the president and chief executive officer in Jan. 2009, taking Martin Hubbard’s place, who left the Rosebud in November 2008 amidst rumors of the theater’s financial troubles.

Samantha Newburn may be reached at 217-347-7151 ext. 131 or samantha.newburn@effinghamdailynews.com.Samantha Newburn may be reached at 217-347-7151 ext. 131 or samantha.newburn@effinghamdailynews.com