🔒After two decades of financial challenges, The Bushnell eyes a debt-free existence

David Fay arrived as the new president and CEO of Hartford’s The Bushnell Performing Arts Center in June 2001, just five months before the theater completed a $45-million renovation and expansion.

But Fay also inherited something else from that project: $20 million in debt.

That financial overhang, when mixed with other economic factors over the last two decades such as the tech-bubble burst, shock of Sept. 11, Great Recession and some sizable annual deficits, has bedeviled the institution’s fiscal health ever since.

However, Fay, 67, finally sees a spotlight at the end of the tunnel. If fiscal projections hold up, The Bushnell could retire its debt by March 2022, which would mark a major financial turning point for the 89-year-old theater.

And it’s taken a special fundraising campaign, some surpluses, a stable economy, endowment funds and a musical called “Hamilton” to make it happen.

“Thank god for ‘Hamilton,’ ” Fay says of the musical’s financial impact on the theater.

The Bushnell took on debt early this century because its capital campaign for the renovation — which included construction of the 900-seat Belding Theater and numerous other amenity upgrades — came up $20-million short, Fay said.

Of that amount, $5 million was covered by a short-term loan from Webster Bank, which was paid off in eight years. But the other $15 million in debt, financed by the Connecticut Health and Educational Facilities Authority (CHEFA), has been more of a challenge to manage, says Fay, as the economy starting in late 2008 turned into “meltdown” mode.

At its peak, The Bushnell was making $1.2 million in annual debt payments (by comparison, the theater’s total expenses in recent years averaged around $20 million). When the short-term debt was paid off, annual borrowing costs dropped to $700,000, which was still a millstone for the arts center.

Debt payments contributed to The Bushnell running myriad deficits throughout the last two decades. It also restricted the theater’s financial flexibility.

As of this year, The Bushnell still carries $9.2 million in debt, which comes due in 2022, at which point the theater would either have to refinance or pay it off.

Fay said he is confident The Bushnell will be free and clear of its legacy of debt before the deadline, with plans to pay it off with a mix of further fundraising and budget surpluses.

The “Hamilton” boost

The Bushnell’s debt burden had its most significant impact earlier this decade.

In 2012, Bushnell executives decided to refinance the debt (at a fixed rate of 3.3 percent) and launch “a quiet” fundraising campaign called the “Leadership Gift Initiative.”

It came just in time, says Fay.

“There were a couple of years between 2012 and 2015 that we were losing over a million bucks a year or so,” says Fay. “It was a very difficult time and we were dangling at the precipice but people stepped up in pretty profound ways.”

A total of $13.5 million was raised “to get us stable,” says Fay. About $1 million was targeted for the 2022 debt deadline while other money went “to pay the bills, do capital improvements, grow the company and do program development.” It also set out to build the endowment, which at its height — before the financial crisis — was more than $19 million and during the Great Recession collapsed to $12.9 million. It now sits at $25 million.

Another good sign: For the past few fiscal years, The Bushnell’s ledger has been in the black, says Fay, “and we finished this fiscal year with a $3.2 million surplus.”

Fay said he expects the surpluses to continue, spurred by the news of a Dec. 2020 return engagement of the blockbuster musical “Hamilton,” which should help maintain much of the subscription gains when the show played at The Bushnell last year.

A return engagement next season of the popular “Wicked” musical adds to the hopes for another $3 million surplus, he said.

Fay says some fundraising is still necessary before the 2022 deadline.

“Our goal is by the end of 2020 to have $5 million to $6 million set aside to already pay off the $9.2 million. With the help of anticipated surpluses, that leaves only a few million more to raise,” he says.

Was the expansion worth it?

Given the last two decades of financial struggles, it begs the question: Was the $45-million expansion worth it?

“Absolutely,” says Fay emphatically.

The expansion created a second theater and improved theater-goer amenities, including many more bathrooms. It also created additional classroom and other spaces in order for the center to expand its school and community programs.

The extra theater space also freed up the 2,800-seat Mortensen Hall, allowing for more Broadway touring, which has long been the prime income generator for The Bushnell.

The debt was manageable for a $45-million building project, Fay says — until it wasn’t.

“What happened was the world fell apart,” says Fay, “and the debt became an enormous burden. Up until then, we were managing it OK. The money would have been there.”

Fay says that when Bushnell’s leaders envisioned a second theater and an arts complex in the ‘90s, it was a time “when the stock market was raging and everything was good and it didn’t look like there were any clouds on the horizon.”

“I guarantee you that if our board in 1997 knew definitely that 10 years later there would be a world economic meltdown, they probably would not have said, ‘Let’s build this new building,’ ” Fay said. “But nobody can know those kinds of things. I think in retrospect the board was very responsible in the way they approached building this new building and followed all of the analytics at the time.”

But the end result is what’s important, says Fay.

“There’s no question that this new building has reshaped this institution into a much more contributing and anchoring institution in downtown Hartford and for the region,” he said. “We’re a much more outward looking organization now and there is a sense of real deep community engagement.”

What’s in store for The Bushnell’s future as it prepares for its 90th anniversary next year?

While Fay says The Bushnell does not need another performance space, once the debt is paid off by 2022, “we really have to do a major campaign to build the endowment to once-and-for-all strengthen the balance sheet in a way that solidifies the institution in the long term.”