The Hippodrome, which dates back to 1914, has terrific turn-of-the-century architectural charm. It also has a whopping utility bill, about $800,000 to $1 million a year. A large part of that payment stems from an agreement to put the $4 million cost of hooking the renovated building up to steam and chilled water loops onto the monthly bills. Paying off this $4 million debt has drastically increased operating costs, and eventually pushed up the rent that management has charged shows. The high rent caused touring productions and some local troupes to find other venues.
The resulting loss of shows, shorter runs and fewer tickets sales has not only stung Broadway Across America, but it also hurt the Stadium Authority, which gets revenue from ticket sales, money that goes to service the bonds that financed the renovation. This was our own "Spiderman: Turn off the Dark" in miniature — huge production costs for a product not enough people were willing to see.
So, just as that ballyhooed Broadway extravaganza went through a major rewrite, the finances of the Hippodrome are being revised. The state would pick up $250,000 a year in utility bills for 13 years, and Broadway Across America would agree to generate at least $440,000 in annual revenue for the state to service the bonds. The bonds are also being refinanced at a lower rate and converted from 20 to 25 years.
These maneuvers are designed to lower the rent, attract more productions to the Hippodrome, draw crowds and, oh yes, pay the bills.
This is not a sure thing; the Hippodrome is going to have some work to do to lure shows and, with them, audiences. Even if this deal is approved, the theater's annual utility bill will be a hefty $600,000, more than big Broadway theaters typically have to pay. Then there are the crowds, which have been dwindling from a high of 402,566 in 2005-2006 to 184,000 for the last fiscal year. The recession has been tough on ticket sales at many theaters — if you're having trouble paying your mortgage, touring Broadway shows are probably not at the top of your family's priority list. On the bright side, the Hippodrome has a relatively high number of season ticket holders, 9,000, which ranks third among the 42 markets where Broadway Across America operates.
A vibrant Hippodrome is good for the city's west side, an area of shops, restaurants and theaters that is being revitalized, although at a much slower pace than many anticipated. It also is good for the region, bringing culture to the citizenry. The Stadium Authority already has taken a large stake in the success of the Hippodrome and is taking a slight additional risk in this recrafted agreement. If the shows and crowds don't come, it will be on the hook to service the bonds. But the risk of doing nothing is greater than the risk of approving this plan. Compared to the amount the state has already invested, this deal is a small one, and without it, the theater could be on the quick road to bankruptcy.
Jeff Daniel, a vice president of Broadway Across America, feels the new arrangements will lower costs and quickly make the Hippodrome a more inviting venue for producers and presenters. "This is a major move and gives us a chance to pull our neck out of the noose, " he said. "It is a financial arrangement that is done right."