IN downtown Louisville, Ky., far from the bustle of Broadway, Jon Jory eased into a chair in his office, carved from a former bank building, and laced his fingers around a coffee cup. The artistic director of the Actors Theatre of Louisville was in the final days of the theater's annual new play festival. But Mr. Jory was not so concerned with new plays as with discovering a new financial structure for his theater.
``The American [nonprofit] theater has in the past 20 years proved itself capable of serving large numbers of people and serving them well,'' says Jory. ``But the dead-on economic fact is that this theater still needs more money than it makes to do its work. If this were a logical world, we would have proved that we deserve a funding structure like the [wholly government-funded] European theaters.''
But Jory and the hundreds of other nonprofit theater directors around the country know this wish is not to be. Indeed, the movement that sprouted some 20 years ago with fresh artistic goals, fueled by fistfuls of federal and foundation money, is facing a decidedly different situation today. The movement that had hoped to provide its audiences with art removed from the demands of the marketplace has increasingly found itself coming under commercial pressures.
Financially, it has been hit by a one-two punch. As funds from the two principal sources for the theaters, federal government and private foundations, have dwindled, the theaters' operating budgets -- in part because of their own success -- have increased. Deficits have swelled.
Last year, more than 200 nonprofit theaters posted a collective deficit in excess of $4 million -- the fourth such deficit in as many years. Consequently, artistic directors and their boards increasingly look to the bottom line. ``When [economics] becomes a significant thought in choosing a season,'' says Robert Brustein, artistic director of the American Repertory Theatre (ART) in Cambridge, Mass., ``then the differences between us and the commercial theater begin to fade.''
Initially, the nonprofits responded with belt-tightening moves, including truncated seasons and scaled-back productions. The deficit ``comes right off the stage,'' says William Wingate, executive managing director of the Center Theater Group/Mark Taper Forum in Los Angeles.
But such moves have been insufficient to tame runaway budgets. This is particularly true in light of additional federal cuts mandated by the federal Gramm-Rudman-Hollings budget-balancing act -- which currently includes a 9 percent reduction in theater funding -- as well as shifts in corporate giving, theaters' second-largest source of unearned income.
The recent surge of corporate mergers and acquisitions, as well as declines in the oil industry, have eliminated or sharply reduced funding from many major corporations, including Esmark, Gulf, Exxon, Mobil, and Arco.
Nonprofit theaters are responding in a variety of ways. In the past five years, they have raised ticket prices an average of 65 percent. Nonetheless, some 30 regional theaters have ceased operation, while a handful of others, such as the New Playwrights' Theatre, are on shaky financial footing. All the theaters are redoubling fund-raising efforts.
For nine nonprofit theaters, including the ART, Trinity Square Repertory Company in Providence, R.I., and the Milwaukee Repertory Theater, the effort has paid off with the receipt of ``ongoing ensemble'' grants from the National Endowment for the Arts. (The grant is actually a series of five one-year grants.)
Other theaters, including Washington's Arena Stage, have launched aggressive endowment drives. Some are merging administrative operations or sharing production costs. The recent National Alliance of Musical Theatre Producers, a 60-member consortium of music theaters and opera companies, was formed specifically to help with co-production.
Still others have begun revenue-enhancing plans. The Mark Taper Forum launched an in-house film and video production arm, Taper Media Enterprises, which it hopes to eventually spin off as a for-profit venture.
For many nonprofit theaters, however, the chief revenue-generating opportunity lies in the transfer of a play to a commercial stage. Ever since the Arena Stage production of ``The Great White Hope'' moved to Broadway in 1968, nonprofit theaters have been sending their wares to market -- and generating equal amounts of income and controversy.
In the past five seasons alone, more than 70 plays and musicals have transferred from Off Broadway and regional theaters to Broadway. ``A Chorus Line,'' ``La Cage Aux Folles,'' ``Sunday in the Park with George,'' ``Big River,'' `` 'Night Mother,'' and most recently, ``Loot,'' all originated in a noncommercial theaters. Although some Broadway transfers -- such as ``Ma Rainey's Black Bottom'' -- never return significant income to the originating theater, others -- like ``A Chorus Line'' and ``Children of a Lesser God'' -- can generate hundreds of thousands, and sometimes millions, of dollars, for the producer and the originating theater. (According to industry experts, a standard rate of return for the nonprofit theater is 1.5 percent of the profits.)
Such an arrangement, while beneficial to the individual theater, has raised questions for the industry, such as whether the process corrupts nonprofit theaters' artistic aims. The answers so far are mixed. Some directors, such as Kyle Rennick of New York's WPA Theater, the originating theater for ``Little Shop of Horrors,'' insist that the vagaries of the marketplace make it impossible for a nonprofit theater to count on income from transferring its plays. Others, including the ART's Brustein, are not sure. ``There is no question that if a theater has sent one play to Broadway, it is only human to look for another,'' he says.
Despite all these income-enhancing efforts, however, artistic directors maintain that theaters are being forced by finances into fundamental changes. The onset of full-fledged administrations, hefty subscriptions, lengthy donor lists, and powerful boards of directors have all brought challenges. As the nonprofit theaters have become institutionalized, the possibility for conflict between artistic and financial needs has grown.
``When subscriptions decline by 2,000 to 3,000 and that translates into a $200,000 deficit, boards [of directors] don't like it,'' says Jory. Indeed, many observers cite the recent departure of Liviu Ciulei, the critically acclaimed Romanian artistic director of the Guthrie Theater in Minneapolis, as an example of conflict between boards and artistic directors.
But institutionalized or not, all the nonprofits face a financially uncertain decade ahead. ``All the theaters have reached the limits of their growth,'' Jory says. ``But it is the next five years that will determine how much we must scale back.''