🔒Do-or-Die Time: COVID crisis compounds, but also clarifies, Long Wharf Theatre financial crisis

In early March, New Haven’s Tony Award-honored Long Wharf Theater confronted the biggest crisis in the organization’s 56-year history.

“Basically, our survival is on the line,” said the theater’s artistic director, Jacob G. Padrón, at the time. Padrón began his tenure at the New Haven theater just last year.

“We are in a really, really risky place,” said managing director Kit Ingui. “We are at a moment where, if we don't make a shift and change something, then we are faced with the question; How much longer can the theater go on?”

With a decade-long string of deficits — some in the $1 million range, $3 million in accumulated debt, declining attendance and an endowment that was about half of what it was at its high-water mark — the storied not-for-profit theater faced a do-or-die dilemma. Come up with a plan and resources to right and sustain the theater — or bring down the curtain for good.

Just as the theater was about to go public with a $5.5 million “Stabilization Initiative” — in which it had already raised $2.3 million — the coronavirus pandemic put the brakes on performances, necessitated slicing the staff and scrambled its new plans for survival.

“The fundraising for the stabilization plan is not in the forefront now,” says Laura Pappano, LWT’s board chair. “What we’re doing is what many organizations across the country are doing, which is grappling with their immediate needs.”

The new survival strategy is two-fold: reaching out to donors and cutting costs.

The theater cancelled its two final shows of the 2019-20 season. Staffing was cut from 47 full-time and 18 part-time employees to 26 full-time and four part-time positions, including seasonal staff. The permanent loss was seven full-time and one part-time employees.

“We still need to kick into gear and continue the Sustainability Initiative at some point down the line but we’re looking at our immediate future right now,” says Ingui. “We are projecting a $750,000 change in our income potential [because of the pandemic].”

Part of the loss is offset by the staffing cuts and by not producing the two spring shows. June’s annual fundraising gala — now an online event — is also expected to bring in a six-figure assist. As for help beyond the local level, Ingui says it’s too early to tell what emergency funding from state and federal sources will be delivered.

“Assuming the gala is successful, we should be able to hit the $750,000 mark and make it to the [close of the] fiscal year June 30,” she says. “We will still end with a deficit as anticipated in early March, but it would not be significantly worse than what we forecast [then].”

Systemic Problems

Before the pandemic, the theater had lofty hopes the new stabilization plan would set it on a more secure financial footing.

“We’ve had some real systemic operational challenges for a number of years,” says Padrón.

The theater’s $3 million in accumulated debt was mostly covered with a line of credit. But more threatening were the seemingly never-ending deficits — including last year’s $1 million in red ink, followed by another projected for this fiscal year.

Long Wharf’s previous deficits were managed with withdrawals from the theater’s endowment and support from donors. But the endowment piggy bank is closed. At its height five years ago the endowment stood at $17 million compared to its present total of $9 million. Now, “The majority of what is left [in the endowment] is restricted,” says Ingui.

Last year an outside consultant assessed the theater’s financial needs and offered options to get its finances in better shape. That’s when the “Sustainability Initiative” — with the goal of raising $5.5 million over two years — was born.

The plan included revitalizing marketing, updating the website, strengthening audience development, stimulating artistic innovation and undertaking a number of capital improvements, such as new seating and other audience amenities for Stage II. The plan would also include building a $1.5 million working capital reserve.

“That reserve would protect ourselves from having to borrow against ourselves and it would be replenished each year,” explains Ingui. “It would be used to basically cover cash flow. None of the $5.5 million would be directed at $3 million debt, which is currently secured at the moment. But if all goes well we would like to make some payments toward it,” he adds.

New ‘Emerging Season’

Because of the uncertainty of when actors, crew members, staffers and audiences will feel comfortable returning to Long Wharf’s two theaters, the 2020-21 season — which was announced just days before the shutdown in March and included four of the five productions to be mounted in the smaller 200-seat Stage II theater — will now become the theater’s 2021-22 season.

“Doing four of the five shows in Stage II under the current conditions was not just very realistic,” says Ingui.

But there will be Long Wharf shows before the fall of 2021, with plans for an “emerging season” with productions at various other New Haven venues and sites when conditions allow.

“We are looking at bringing Long Wharf out of the theater and into the community,” Ingui explains.

Even before the pandemic, the previously announced season took into account the theater’s financial crisis, by tapping into partnerships with other groups and only the final show of the season — a revival of the musical Jelly’s Last Jam — to be presented in the larger (408-seat) mainstage space. Ingui now says LWT is reassessing to determine whether the four productions previously earmarked for Stage II can be presented on the main stage when that season begins in autumn 2021.

Other plays — several in partnerships with other theater organizations — include the world premiere of Monet Hurst-Mendoza’s Totera, in association with the Sol Project; Night’s Dream, a stripped-down version of A Midsummer Night’s Dream; The Elaborate Entrance of Chad Deity, in association with New Haven’s Collective Consciousness Theatre; and Queen, in association with the National Asian-American Theatre Co.

“We’re really trying to galvanize the community,” says Padrón, who took over as artistic director in February 2019. “We want to get folks inspired because the important message is that we’re going to get through this in partnership with the community.”

In the meantime Padrón is engaged in a number of online projects to keep connected to the theater’s fans and supporters. One is sponsored by the Doris Duke Foundation, in collaboration with four other leading theaters: New York’s Public Theater, Baltimore Center Stage, St. Louis Rep and Washington D.C.’s Wooly Mammoth Theatre.

“We decided that each theater company would commission five to seven playwrights to create five- to 10-minute plays that we will post online to a website,” Padrón explains. ”People could download these joyful, family-friendly plays so they can read them with family and friends. We’re calling that ‘Play at Home,’ and we will continue to think about what are the ways we can stay virtually connected.”

“Long Wharf is going through a crisis, but we’re not alone now,” says Kit Ingui. “We felt we were in a unique situation [in March], but now we’re in something pretty terrible together. This [pandemic] has revealed the unsustainability of our operating model.

“It’s not just Long Wharf, but regional theater in America,” Ingui adds. “But we think by centering the art-making and the artist in our community is how we will move forward.”