Future Talk : Uncertainties of booking mix and funding pose questions for center managers

Managers of the Orange County Performing Arts Center predict that next week’s opening will usher in a time of considerable struggle, financial and artistic.

“Everybody thinks we just throw our doors open and we’re home free,” says Thomas R. Kendrick, the center’s executive director, “but it won’t happen that way.”

The main hurdle, Kendrick says, will be raising money to run the facility during the 5 to 10 years before the center can tap its projected endowment of $64 million. The endowment--to pay for performances and day-to-day operations--is being assembled mostly from pledges from donors’ estates.

By contrast, there are a number of successful new arts centers that have not depended to such an extent on deferred pledges for their endowments. For example, the Tennessee Performing Arts Center in Nashville opened in 1980 with $5 million already earning interest.

Says Kendrick: “The center does not have certain sources of funding that other centers do. Nobody wishes more than I do that we had that $64-million endowment in place. I’m cautioning everybody that we’re still going to need a high level of subsidy for years to come.”

Because the center is privately funded, it is not required to publicize its financial ups and downs. Yet the challenges facing its manager could be gleaned from recent interviews with Kendrick and managers of similar centers around the country.

Financial success for regional and civic arts centers, almost always nonprofit institutions, usually means minimizing their deficit. Operating at too much of a loss can start a downward spiral, eroding programming flexibility and community confidence. “If you want no deficit at all, well, that’s easy--just close our doors,” says one center official who asked not to be named.

Performing arts centers depend on a variety of income sources, which include mixtures of programming and operating subsidies from corporations; public funding; a percentage of the box-office take from events that the center funds; rent paid by outside sponsoring organizations, such as the Orange County Philharmonic Society, and earnings from parking lots, restaurants and liquor concessions.

It is ironic that Kendrick should now run an arts center that has no independent sources of income, such as parking lots or restaurants. When he was operations manager for the John F. Kennedy Center for the Performing Arts in Washington, he says, he counseled planners of new centers about the benefits of such moneymakers. Kendrick says that the Kennedy Center made about $1.5 million a year from parking spaces it owned.

Two parking lots serving the Orange County center are owned by C. J. Segerstrom & Sons, the center’s largest donor to date. So, parking yields no financial benefit to the center.

There is no restaurant. A gift shop is planned but will not begin operating in the immediate future, Kendrick says. (Len Bedsow, who preceded Kendrick as executive director, says it was decided that the cost of parking lots would push the center’s fund-raising goal too high. Bedsow says that there is no restaurant because he had little confidence that one in the center could succeed.)

No plan exists for the center to receive public funding in the near future. After all, seeking such help could well undermine the center’s much-touted status as a symbol of private cultural enterprise. Yet Kendrick says that center officials are exploring whether the center could eventually receive a share of the tax that Costa Mesa imposes on users of hotel rooms. “The subject has been raised” with local officials, says Kendrick, who declines to discuss the matter further.

The City of Costa Mesa imposes a 6% bed tax. Orange County imposes an 8% transient-occupancy tax in unincorporated areas, but Kendrick says that no approaches have been made to the county.

Kendrick was hesitant to give a detailed breakdown of the center’s budget projections, saying that they would be “rough and preliminary estimates.” Yet he did offer some figures that he says reflect planning for 1987, the center’s first full calendar year.

Operations (utilities, personnel, etc.) and programming that year will cost roughly $9.5 million, Kendrick says. He estimates that close to half of that--$4.5 million--will have to come from contributions. (That is about the share that Kendrick hopes will be sustained annually at least until the endowment begins to earn substantial interest). Roughly $4 million will come from events funded by the center itself. About $800,000 will come from rent paid by outside sponsoring organizations; another $200,000 will derive from the center’s five bars, which will serve drinks during intermissions.

As for the $4.5 million subsidy, Kendrick said in an interview in early July that the Orange County center did not have a development staff in place to raise the monies. And he admits that even when one is in place, the road will be uphill for reasons that include the following:

As a rule, it is much easier to lure contributions for construction than for programming.

There is no guarantee that the center can remain the county’s No. 1 philanthropic priority--even in the arts. It must compete increasingly with local arts groups that have become more aggressive in their search for funding, spurred by the chance to book into the center.

When asking for programming subsidies, the center will also compete with its own search for money to build a second, 1,000-seat theater.

On the bright side, the center is said to have received at least $1.5 million in donations that can be used for programming, and it expects to make $1 million more from the opening-night concert, a benefit for which tickets were priced from $250 to $2,000.

“Looking at this first year, we are in good shape,” Kendrick says.

Sources familiar with aspects of the center’s fund raising say the Guilds and other volunteer groups can be looked to for another $500,000 annually.

There are those in Orange County arts circles who say that the center’s board of directors didn’t think hard enough and early enough about finding sources of money for the center’s operating and programming expenses in its early years. “They didn’t think about where the money was going to come from,” says one critical observer, who asked not to be named. “They talk about the endowment, but that’s years away.” To that, center officials respond that raising enough money to build the structure was a massive effort, one that still requires most of their fund-raising energies.

They say that the center is off to a strong start, assembling a first season studded with cultural jewels, from diva Leontyne Price to New York City Ballet.

Yet veteran managers of arts centers say that high-toned first-season bookings do not necessarily point to a rosy future for a performing arts center. A group of center officials consulted one such experienced manager, Marlow Burt, president of the Kentucky Center for the Arts in Louisville. Burt and his staff discussed the nuts and bolts of operations and programming with Orange County Center President and Chief Executive Officer Timothy L. Strader and other center officials when they visited Louisville in 1985 at Kendrick’s urging.

“No one worries too much about the first year, or even the first two,” Burt said in an interview with The Times.

“They’re unusual because the building has a certain novelty appeal and people will go. Look at the long-range plan.”

Burt repeatedly stressed that community enthusiasm for building an arts center, even if it produces a physically impressive building, does not automatically translate into a successful facility. “All you have now is a pretty heap of stone and glass,” he continued. “I’m sure it looks fine, but the key, the thing by which it will live or die, is programming.”

Beyond what it can spend, a center’s programming effectiveness depends on what kind of center its founders envision. There is the constituent-dominated center, whose agenda is largely shaped by the needs of local performing groups. And then there are presenting houses, which focus on giving out-of-town groups a place to perform.

“We want to be both,” Kendrick says. “That’s very important to us, to have a real mixture.”

He says a balance of popular entertainment and ambitious cultural fare is also agoal. It’s a prudent objective, according to operators of other arts centers, because popular entertainment usually must support the cultural aspirations of such facilities.

Classical music is expected to play a major part in the center’s programming, but classical music is an unpredictable draw in many performing arts markets, even when the name glitters. Kentucky Center’s Burt still can’t get over the shock of losing $10,000 last year on a concert featuring Pinchas Zukerman and the St. Paul Chamber Orchestra. He spent $20,000 to bring them to Louisville and sold only 1,000 of the hall’s 2,400 seats. “They made the best sound I’ve ever heard on this stage, and they bombed,” Burt says. “I didn’t know what happened. I still don’t.”

Meanwhile, local and national surveys show that Broadway-style musicals are the most popular attractions at such centers. And popularity, of course, can translate into money.

With 3,000 seats, the Orange County Center’s main theater was purposely built large enough for the big audiences that musicals generally draw. Whether to build a 2,000- or 3,000-seat theater was one of the major debates when the theater was first planned, according to Strader.

But there are few successful musicals these days, compared to the number when the center was being planned in the late 1970s. The problems include high production costs and the loss of artists to Hollywood and other greener pastures.

The 1977-1978 Broadway season saw the premieres of only a few musicals that could be called hits, including “Ain’t Misbehavin’,” “Beatlemania,” “The Best Little Whorehouse in Texas” and “Dancin’.” As for musical shows that opened on Broadway during the 1985-1986 season, there was the “Tango Argentino” and very little else.

Programming is the lifeblood of an arts center such as the one in Costa Mesa, say arts-center officials around the country. Yet programming is also just about the biggest headache.

“Programming for a multipurpose arts center in this day and age and in this economic climate is like doing a jigsaw puzzle while doing a balancing act,” Kendrick says. “It’s very hard to put all the pieces into place.”

And the two pieces that give managers trouble, Kendrick says, are musicals and performances of classical music.

Agents for classical groups and performers generally book their clients a year or more in advance. The producers of musicals rarely get definite about the details of their tours more than six months before opening night.

While booking concerts, center directors usually try to leave stretches of one or two weeks open for the musicals. But that can be difficult.

For example, Feb. 2, 1987, the date that the Chicago Symphony could come to the center, was one that Kendrick wanted to save for a musical. But Kendrick sacrificed the evening for the concert, which is being presented by the Orange County Philharmonic Society.

“We wanted very badly to help the Philharmonic Society and give the center a premier attraction,” Kendrick says.

Along with the many scheduling conflicts, the center must contend with its proximity to Los Angeles, a major market for two of the leading producers of musicals--the Schubert and Nederlander organizations. Both own theaters in Los Angeles. It is still not known how much of a market there will be for a show in Orange County after it has played in Los Angeles for a year or more.

The center did not bite last April when a New York agent handling “Cats” made preliminary inquiries about interest in the smash musical. The show opened in Los Angeles in January, 1985.

“The question for us isn’t whether it has been in Los Angeles,” Kendrick says, “but for how long. ‘Cats’ has been there a long time.”

“Singing in the Rain” is scheduled to run in Los Angeles Dec. 9-27, yet Kendrick says he is negotiating to bring the show to the Orange County Center in early 1987.

Most New York producers would not bring a musical from New York straight to Orange County, because a long run is generally required to amortize transportation and production costs. A multipurpose center cannot handle long runs.

This need by arts centers for musicals that can run one or two weeks has been the key to the rise of Pace Theatricals Inc. Since its inception four years ago, the Houston-based production company has put on shows in 15 American cities.

Pace develops a lineup of five to 10 musicals and takes them on the road. Nashville and Louisville are two Pace cities. Pace has had its eye on the Southern California market, and is said to view the Orange County center as a prize contract.

Meanwhile, Kendrick says the center is also looking to lucrative alternatives to musicals: popular musicians who are not superstars to the extent that they require a 10,000-seat theater but who can fill 3,000 seats. “Somebody like Gordon Lightfoot would give you an idea of what we’re talking about,” he says, stressing that he was throwing out the name only as an example.

The amount of music and opera that the center will produce has been the subject of speculation. Local arts groups are concerned that if the center becomes a more active presenter, there could be fewer dates available to them. Kendrick says the number of events that the center presents will increase over the years.

Kendrick even went so far as to say that the center may eventually join with similar facilities around the country to produce musicals and opera--investing in the events from their inception.

As a mere landlord to other sponsoring groups, the center has less financial exposure than when it presents a show itself. When renting to nonprofit groups, the center will take a basic fee of $2,500 or 10% of gross ticket sales, whichever is greater. For commercial renters, profit-making arts groups that might want to use the center, it would be $5,000 or 15% of gross ticket sales.

“We are trying to be fair to the local groups,” Kendrick says. “It will be an educational process for them and us to see what kind of audience is out there and how well they can do. It will take time.

“People have to realize you don’t build a nationally recognized center in one day or even one year. But I think that the potential here is remarkable.”