Irvine May Phase Out Barclay Subsidy : The proposal is one of several being explored by the city, a one-third partner that provides about $400,000 a year toward operating expenses.

The city, facing continuing budget problems, is considering phasing out its subsidy of the Irvine Barclay Theatre.

A phaseout is one of numerous options the city is investigating in a series of meetings with officials of the private operating company that runs the 756-seat theater.

Irvine City Manager Paul O. Brady Jr. said Monday that talks are exploratory, with no decisions expected for several months, and that the city intends to continue its financial support at least through next season.

The city is a one-third partner in the theater--along with UC Irvine and the private Irvine Barclay Theatre Operating Co.--and provides about $400,000 a year toward operating expenses not covered by ticket sales, rental fees and other income.

Irvine also shouldered the lion’s share of the theater’s construction costs: $11.3 million of a total $17.6 million. Opened in 1990, the theater is an important venue for campus and community arts organizations as well as touring dance, music and theater productions.

It has been especially significant in presenting popular music and cutting-edge modern dance and theater groups and has developed a reputation for being more adventuresome than the larger, better-heeled Orange County Performing Arts Center in Costa Mesa.

Brady has had several meetings recently with Doug Rankin, general manager of the Irvine Barclay, and Gary Singer, chairman of the operating company’s board of trustees. The meetings were initiated because the City Council “asked that we look at our commitment” to the theater, Brady said.

“Where this leads, I don’t know at this point,” he said. The city may decide to maintain its current arrangement, could alter it somehow or could pull out entirely by phasing out its subsidy or by selling its share to the university or a private operator.

Rankin said that talks have been constructive and that he doesn’t expect any sudden or dramatic changes.

The city’s $400,000 subsidy constitutes one-fourth of the theater’s $1.6-million annual budget. Rankin said the theater is not yet in a position to take up the slack if the city were to drop out, but it has been working to create an endowment fund and to develop other means of private support.

So far, university officials have not taken part in the talks, but Rankin expects that they will join in the discussion. All partners would have to agree to any changes in the operating agreement.