IRS Move Threatens to Sack Key Stage Funding Source

For most of the United States, football season ended with Sunday’s Super Bowl.

But arts organizations in San Diego and across the nation are still anxiously awaiting the outcome of the Mobil Cotton Bowl’s battle with the Internal Revenue Service.

The IRS has told the organizers of the Mobil Cotton Bowl, played in Dallas each New Year’s Day, that corporate sponsorship fees are taxable as unrelated business income because the sponsors are receiving the benefit of advertising.

The Mobil Cotton Bowl, like local arts institutions, is nonprofit. But that doesn’t matter. If the ruling stands in what may prove to be a test case, other nonprofit groups also might have to pay as federal taxes about 34% of the money they are given.

And that’s what’s making everyone nervous.

For if including the name Mobil in Mobil Cotton Bowl constitutes advertising, does that mean that AT&T;’s New Plays For The Nineties series (which sponsored plays at the Old Globe Theatre and the La Jolla Playhouse) constitutes advertising too? What about Wells Fargo’s sponsorship of the Old Globe’s Teatro Meta program last year? Or Pacific Telesis Foundation’s sponsorship of Teatro Meta this year? Or Mervyn’s underwriting of the San Diego Rep’s “A Christmas Carol” for the past five years? Or AT&T;’s role as producing partner for the Rep’s upcoming “Ruby’s Bucket of Blood”?

Chris Christman, a spokesman for AT&T; corporate event marketing manger James Peterson in New York said AT&T; officials “are aware of what is happening” but that Peterson “would rather not speculate as to what effect this could have on corporate giving. We have not received anything official from the IRS.”

In the meantime, the New York-based Theatre Communications Group has sent out a memo to members warning them of the IRS taxation of the Mobil Cotton Bowl. The Washington, D.C.-based American Arts Alliance, a consortium of performing and exhibiting arts institutions, is forming a coalition preparing for a fight that might extend to arts institutions. Bruce Bernstien, a tax partner with Arthur Andersen & Co. in Dallas, who represents the Cotton Bowl Athletic Assn., has already challenged the IRS ruling and is waiting for a response on the district level.

Nobody is fighting in San Diego yet, but in this theater community where most companies are already living on the edge, some express fear that this could push them over the precipice.

Adrian Stewart, managing director of the financially struggling San Diego Repertory Theatre, said that San Diego received about $2.5 million in one year from corporations, according to a 1989 survey sponsored by the San Diego Arts and Culture Coalition.

“This makes one more difficulty in raising funds, and in this community and in this environment that is a cause for great concern. Every dollar counts. Any reduction is something to worry about,” Stewart said.

Thomas Hall, managing director of the Old Globe Theatre, president of the League of Resident Theatres and member of the California Arts Council, said the issue sends a chilling message to arts and cultural organizations nationwide.

For the past 10 years, the federal and state governments have been promoting the message that the private sector must step in to replace government funding of nonprofit institutions, Hall said. Private individuals have cut back on giving in the wake of the recession. Now if the money from corporations is to be taxed, that could leave arts organizations with nowhere to turn.

“There was a certain understanding,” Hall said. “When there were subsidies, we had a certain understanding as to where our money was coming from. Over a 10-year period, we have made certain adjustments. The corporate community has picked up the task. Now here we go again. We’re losing both sides. It’s a frightening situation if it comes to fruition.”

“Two Shakespearean Actors,” the Lincoln Center Theatre play directed by Old Globe artistic director Jack O’Brien, will close as originally scheduled on Feb. 9 according to Lincoln Center press rep Merle Debuskey.

The reviews couldn’t be much better, but to continue the show would mean transforming it from a nonprofit production to a commercial run. And the support just isn’t there from the full-price ticket buyer to keep this expensive 27-actor show going, Debuskey said.

While the show is playing to near-capacity houses, most of the patrons come from the Lincoln Center Theater’s 40,000 membership. Patrons pay just $25 to be members and can thereafter see any production they wish for $10 a ticket. At those prices, the show can’t go on, Debuskey said.

The show may be taped for public broadcasting, but only if arrangements are made before the show closes, he added.

PROGRAM NOTES: When single tickets for “The Music of Andrew Lloyd Webber” went on sale Monday, San Diego Playgoers set a record for ticket sales that day. The Tony-award winning show, featuring music from “The Phantom of the Opera,” “Cats,” “Evita” and “Jesus Christ Superstar,” runs March 17-22 at the San Diego Civic Theatre. The only seats still left for the Friday and Saturday night performances are in the upper and lower balconies. But plenty of good seats are still available for the final Sunday night show--because that was supposed to be the one night Michael Crawford would not perform. Now, it turns out, he will be in every show--Sunday included. For tickets, call 236-6510 or 278-TIXS. . . .

Christopher Reeve will appear as one of the narrators in “Heart Strings,” a touring musical fund-raiser for the fight against AIDS Feb. 8 at Copley Symphony Hall. For tickets, call 236-7060. . . .

Neil Simon’s “Jake’s Women,” which premiered at the Old Globe Theatre March 8, 1990, opens on Broadway two years later, on March 17 at the Neil Simon Theatre. Alan Alda stars as the Simon-like writer, caught between the women in his life. . . .

The Performing Arts Theatre of the Handicapped is opening two new acting workshops, one at the organization’s Carlsbad headquarters at 7634 El Camino Real Mondays at 7 p.m. and the other in Los Angeles. The programs are free to the disabled and available to the able-bodied with some scholarships available. For information, call 753-3386.

CRITIC’S CHOICE

A DOUBLE DOSE OF MOLIERE

Journey from the wacky to the wonderful with barely a moment (if that) to catch your breath. The Old Globe offers an exuberant, luscious look at two sides of Moliere, segueing without intermission from the early tomfoolery of “The Flying Doctor” to the more mature, elegant satire of “School for Husbands.” This handsomely acted and directed production has its excesses but is, overall, a feast for the eyes and the heart. At 8 p.m. Tuesday-Saturday and 7 p.m. Sundays with Saturday/Sunday matinees at 2 p.m. through March 1 at the Old Globe Theatre, Balboa Park, 239-2255.