Thank you for your interest in Flat Rock Playhouse. The Playhouse is an important part of our community that provides significant economic impact to Henderson County, enhances the quality of life of its citizens, and offers all of us unique entertainment, cultural and educational opportunities. The Playhouse is a part of who we are as a community and helps set us apart from other communities in North Carolina.
Our theater employs 30 full-time and over 200 part-time employees (actors, directors, technicians, musicians, etc.) with an annual payroll of just under $2 million. The Playhouse draws approximately 96,000 patrons annually to performances at the Mainstage in Flat Rock and the Playhouse Downtown on Main Street in Hendersonville. It collects the zip code of every ticket buyer, and through this data it is known that approximately 60%, or 57,600, of our patrons are visiting from outside Henderson County. That is a total annual economic infusion to county businesses of $3.7 million from tourists who spend $1.2 million dollars in local hotels, motels and inns.* The balance of tickets sold annually (approximately 40,000) are to individuals from Henderson County, making it a true community gathering place for a substantial portion of the county’s population. Overall, the Playhouse provides an estimated $10 million in economic impact annually to the benefit of the tax payers of Henderson County. The Playhouse is part of an industry that generates $22.3 billion dollars nationally every year for local, state and federal governments.*
The Playhouse also provides numerous educational opportunities for children of all ages through its YouTheatre classes (www.YTrocks.com) and its summer intern and apprentice programs; highly regarding throughout the United States. These classes and programs not only offer students an opportunity to pursue a career in the arts and culture industry, they also offer young people a unique chance to learn self-confidence, poise, and team work. The education programs at the Playhouse define its past and our future.
In 2008, the Board of Trustees were faced with a number of critical challenges. Some were unique to Flat Rock Playhouse while others were part of broader national trends:
- The Playhouse and community were in shock after the suicide of the Playhouse founder’s son, Robin Farquhar.
- The average age of our patrons was rising and it was becoming increasingly difficult to entice younger generations to attend live theatre.
- More and more entertainment options meant more competition for ticket revenue.
- Aging facilities were requiring more upkeep while much of the equipment and structures were becoming increasingly obsolete.
- The new YouTheatre building was going to increases the cost of the YouTheatre education mission. A five-year capital campaign for YouTheatre began in 2005. The building was completed in the summer of 2008. Pledges for the new YouTheatre building were very strong, but left approximately $500,000 unfunded. Grants that were predicted to fund the program did not materialize.
- YouTheatre enrollment was declining rapidly. The YouTheatre Director who had been with the Playhouse for many years moved to another organization just as the new Playhouse YouTheatre building was coming online.
- The annual budget was relying very heavily on ticket sales, making up over 90% of our annual revenue. Most theaters in the country earn less than 60% of its income from ticket sales.
- The Playhouse only had the tickets sales to shows on the MainStage as a revenue source, with no opportunities for diversification. Further, producing shows to attract a younger audience on the Mainstage could alienate the existing audience base.
- Despite fifty-six years of history, the theater had less than 400 donors regularly supporting the Playhouse.
In the fall of 2009 the board tasked the new Artistic Director by implementing changes to address the challenges. The plan was:
- Increase organizational capacity to allow for higher production quality, better information systems, a broader range of programming choices, more effective facilities, and more robust education programming.
- Diversify income sources to guard against future economic downturns
- Create a fundraising infrastructure capable of eventually raising 30%-40% of the budget
- Build clear bridges to funders and businesses by participating in the development of Downtown and demonstrating the significant Flat Rock Playhouse economic impact to the community.
- Completely revamp the education program to substantially increase enrollment
- Create new entertainment series to attract a younger audience without alienating existing Mainstage customers.
With these goals in mind, the Trustees approved a 2010 budget with the following key components:
- Capital investments – update aging sound, lighting and electrical systems, replacing aging or obsolete production equipment; remodel the dining facility to increase room/board revenue; remodel rehearsal space to create a “second stage” to accommodate the new music series and larger rehearsals; create more capacity in costumes, props and scenic departments. Address ongoing issues with Men’s restroom (women’s had already been updated); Total capital investment of $240,000.
- Program five fewer productions with more performances per production in an effort to maximize per show profitability. Fewer productions allows for increased production quality.
- Develop the Music on the Rock concert series at a low ($20.00) price point to create a point of entry for a larger audience base.
- Introduce Downtown Hendersonville to Flat Rock Playhouse through a single production at the Historic County Courthouse.
- Hire new YouTheatre instructors that provide a multi-disciplinary program focused on student growth and retention.
- Additional programming and increased production quality would produce a 7% increase in ticket sales (from 93,348 tickets in 2009 to 100,000 in 2010) and would allow for a modest price ticket price increase of $4.50 ($25.00/ticket to $29.50/ticket) related to subscription sales.
- Hire additional staff for Marketing to promote shows (Nov 2009) and a dedicated Development Director to begin to build a fundraising infrastructure (March 2010).
The budget for 2010 planned for an Operating Fund Balance loss of ($153,000). Ultimately experienced, was a shortfall of 22,000 ticket sales (18,000 less than 2009), which resulted in a loss of over $850,000 in patron related income and an overall operating loss of ($1,438,049). There has been much discussion about the cause of this loss, which is detailed above. And there has been much debate as to whether or not the Playhouse made the wrong decision in 2010…to make so many changes so fast.
Since 2009, those decisions have ultimately resulted in a 66% increase in enrollment at YouTheatre, a 234% increase in fundraising dollars, a 21% increase in subscription revenue, and the largest audience in the theater’s history in 2011 (with a chance to break that record in 2012). Still, the cost to the theater in 2010 was catastrophic. It is agreed that the Playhouse could have and should have handled those changes differently. Losing 18,000 patrons during that one year was partly the result of the economy, but it was also likely the result of the amount of change the organization was going through. The Board of Trustees take full responsibility for that and apologizes to our patrons and employees that the theater suffered so badly that year.
The result of the loss in 2010 was truly painful. Going into 2010 the Playhouse had unallocated cash reserves of approximately $550,000. It did not have sufficient cash to absorb the operational loss of $1.4 million. Instead of closing the doors in 2010, the Trustees and staff worked to mitigate the losses. Specifically adding more of what was selling – downtown shows in the Historic Courthouse were selling at close to 100% so two additional shows in the Courthouse were added; and Music on the Rock Performances were doing much better than expected so that programming was also expanded. Changes were made to the last three shows of the season on the Mainstage replacing two large musicals and one play, with one mid-sized musical and two low production cost plays.
In 2011 the Trustees and staff regrouped with a new budget that identified reductions in expenses of approximately $746,000. The Playhouse continued adding what was selling well – more shows Downtown, and an expansion of the Music On The Rock series. The Playhouse refinanced its debt in March including approximately $700,000 remaining on the note for the construction of the YouTheatre building completed in 2008 plus $550,000 in short term debt, a $200,000 note for sound and light equipment to reduce our annual lease expenditure and a $500,000 Line of Credit. The collateral used for the refinance was the 14 +/- acres and buildings of the main campus with an appraised value of approximately $4.2 million. While refinancing helped, it did not replace the majority of the cash lost in 2010 and the organization was forced to use a substantial portion of the credit line upon completing the refinance.
Daily operations through 2011 were, and still are, extremely challenging due to a lack of operating cash. The year-end results for 2011 were encouraging. Staff recaptured lost ticket sales, finishing 2011 with 95,753 tickets sold, the most in the theater’s history. This was largely due to the expansion of the Music On The Rock series; and the opening of the Downtown space, which allowed opportunity to offer plays and musicals with significantly lower production costs and greater profit margin potential than the existing Mainstage. The theater finished the year almost $1 million dollars ahead of the previous year, but still had to absorb a loss without any cash reserves. Regaining the 18,000 patrons lost in 2010 was viewed as a major accomplishment for the staff and board.
The budget for 2012 was not overly ambitious, with the goal of continuing to work toward a breakeven year. In light of the catastrophic year in 2010, achieving a breakeven season would be a significant improvement. Substantial progress toward this goal has been made. The trend for the theater’s Income Statement is moving in the right direction and many of the initiatives implemented in 2010 to address the challenges identified in 2008 are showing promise. Specifically, ticket sales are on target to reach over 94,000 patrons; season subscription revenue is at an all-time high; production quality is strong and is garnering new donors and community partnerships; new sources of revenue are working (Downtown, Music On The Rock, Touring Programming) with very strong profit margins; enrollment at YouTheatre is up to the highest levels in the program’s history; contributions are three times greater than in 2009, thanks to doubling the number of donors; and there has been a substantially increase in group sales and marketing/business partnerships which have resulted in new potential markets for our product.
In November of this year, the difficult decision was made to go “public” with the message that the Playhouse must finish the 2012 season strong to be able to move effectively into 2013. Three initiatives need to occur in unison for this to be successful:
1) Strong ticket sales for the two remaining 2012 Christmas shows – Nutcracker and Celtic Christmas
2) Strong 2013 Season Subscription renewals, which we feel confident about because the 2013 season line-up is the strongest in years. http://www.flatrockplayhouse.org/2013-flat-rock-playhouse-season/
3) Strong year-end donations with a goal of $250,000.
Even with the financial trends moving in the right direction, much work remains to be done on the Balance Sheet. The organization must replace the cash lost in 2010 to effectively operate in the years to come. While the decision to go “public” and ask for assistance has not been easy, it was the right thing to do.
This theater is bigger than its staff, its management or its board. This theater is a unique community resource and economic driver that must be preserved. The Playhouse has been working a business plan that will make it sustainable for the long term. Thank you for your support and by working together, we can overcome this challenge.