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At Music Theatre, grand plans gone awry

By Paul Leighton
Staff writer
Published: January 9, 2009

BEVERLY — The plans were grandiose.

North Shore Music Theatre would build a new performing arts center with luxury boxes, an amphitheater with a public garden, a theater arts academy, a smaller theater with studios for visiting composers and writers, and a new restaurant.

The $66 million expansion would turn the nonprofit regional theater at the end of Dunham Road into a "major national performing arts destination," allowing it to host performances by the Boston Symphony and the Boston Ballet and attract up to 1 million paying customers per year.

According to an eight-page master plan distributed to potential donors in 2004, the new "Dunham Woods" complex would "conjure an image of the best in musical theater, in the same way Tanglewood says classical music or Sundance says new films."

More than four years later, the theater is again looking for money — not to pay for an ambitious expansion, but to avoid a shocking closing.

Theater officials announced last month that they need to raise $500,000 by the end of January and another $4 million by April or be forced to close. On Sunday, 54 of the theater's 57 employees will be laid off after the performance of "High School Musical 2," the final show of the season and maybe the final show in the theater's 53-year history.

Ironically, it was the optimism of those expansion plans that began the theater's descent to near-bankruptcy. The theater not only failed to raise the $30 million to $40 million it sought but ended up losing $2 million while trying, according to David Fellows, chairman of the theater's board of trustees.

The organization then went on to lose $1.5 million from a fire that devastated the theater in 2005. That one-two punch put North Shore Music Theatre on such shaky financial ground that it couldn't survive this year's downturn in the economy, Fellows said.

"We were on the razor's edge," he said. "That's why when we went into this last production and sales weren't there, there was no time to react."

'Old money' tough to tap

Fellows said the theater went ahead with the expansion plans in 2004 only after hiring a consultant to study its feasibility. The consultant conducted focus groups across the North Shore and interviewed theater trustees, then concluded the theater could raise $30 million to $40 million, Fellows said.

"So we went ahead," he said.

The theater spent $1.5 million on a fundraising campaign and $1 million on architectural plans. But officials soon discovered it was more difficult to raise money than they thought.

"Everyone said they had $1 million to kick in, but only about two of 20 people who said they did actually kicked in," Fellows said.

Fellows said it's difficult to raise money on the North Shore, where there is a preponderance of "old money" that has been handed down for generations and is "very carefully taken care of." He said the theater had trouble tapping into the larger pool of "Boston money" that had backed much of the Peabody Essex Museum's expansion in Salem.

"In Boston, there's a lot more 'new' money," he said. "When you make your money, you feel you can give it away. But we haven't been able to portray ourselves as 'Greater Boston.'"

The slow fundraising campaign ended for good with the July 2005 fire that destroyed the interior of the theater. Fellows said the fire cost the theater $3 million in ticket sales. The theater had $7 million worth of "business interruption" insurance, he said, so theater officials assumed they would recoup the entire $3 million.

But according to Fellows, the insurance company said the theater needed a $14 million insurance policy — the equivalent of its annual ticket sales — to be fully covered. The insurance company agreed to cover only half the $3 million in lost ticket sales, leaving the theater on the hook for $1.5 million, he said.

"We believed we had a case against the insurance company, but we would have had to pay lawyers," Fellows said. "In the end, we took out a loan."

The theater was rebuilt, but Fellows said handicapped-accessibility requirements and wider seats cut the total number of seats to 1,580, down from the 2,000 before the fire. That reduced the amount of money the theater could make with popular acts. Fellows said the theater barely made any money on Tony Bennett's appearance last month despite the fact that it was sold out.

Anonymous donor

Through all of the turmoil, the theater was kept afloat in part by an anonymous donor — Fellows. Financial statements on file with the state attorney general's office show that Fellows donated $1.55 million to the theater from 2003 to 2006.

Fellows never made those donations public. When asked about them this week, he said he has donated about $2 million since joining the theater's board in 1999. He also loaned the theater $400,000 this year, money he stands to lose if the theater goes bankrupt.

The 55-year-old Fellows, who lives in Beverly, is the executive vice president of Comcast Cable and was the captain of the 1976 Olympic rowing team. He said his philanthropy is inspired in part by people he admires who are generous with their money. In 2001, he ran the Boston Marathon to raise money for a new neurosurgery laser machine that saved his oldest son's life.

"I tell people that I give to hospitals to save lives and I give to the music theater to make lives worth saving," he said. "One of the problems we face in this culture is that Americans think the theater is a luxury and we're cutting back on luxuries. I think the theater is not a luxury, it's a necessity."

The final blow to the theater came when ticket sales to "High School Musical 2" this year fell far short of expectations. The theater had angered many longtime theatergoers by replacing its annual production of "A Christmas Carol" with the Disney show.

Fellows admitted he was surprised by the outcry. But he said the decision made sense in light of the fact the theater sold $2.4 million in tickets to the first "High School Musical" last summer. "A Christmas Carol" had $711,000 in sales in 2007.

"We said we'd probably do at least $2 million (with 'High School Musical 2')," he said.

Instead, the show is expected to make about $650,000 in sales.

Asked why the theater didn't wait until after "A Christmas Carol" to stage "High School Musical 2," Fellows said it would have been difficult logistically to do both.

"If I had to do it over again, knowing the popular outcry at not having 'A Christmas Carol' and looking at the sales of 'High School Musical 2,' I would have looked seriously at putting both on," he said.

Trying to rebuild

The theater announced this week that it has raised $137,682 since launching its Save Our Theatre appeal on Dec. 29. That's almost one-third of the way toward the $500,000 the theater says it needs by the end of the month to stay open.

Fellows said the theater will lay off all but two or three of its 57 full-time employees on Sunday. The ones who remain will be people like the groundskeeper, who can maintain the building. Barry Ivan, the artistic director and executive producer, will stay on only in a one-or-two-days-a-week capacity to assist with fundraising, Fellows said.

"He's an asset I'd like to keep in our hands to rebuild the theater around," he said.

If the theater does reach its $4 million goal and survives for another season, Fellows said it will operate differently in 2009, with a shorter season and fewer employees. The theater will employ only a "skeleton staff" year-round and bring in seasonal employees to help stage the shows.

"We'll try to do the best job we can to keep the theater alive," he said.

NSMT by the numbers

$2 million — amount lost in failed expansion plan in 2004

$1.5 million — amount lost in fire in 2005

$2 million — amount donated by trustee David Fellows since 1999

$100,000 — amount paid to Vince Gill for 2007 appearance

$307,975 — 2007 salary, benefits and expenses of then-executive producer/artistic director Jon Kimbell

Sources: North Shore Music Theatre; financial statements filed with state attorney general's office

TIME LINE

1955 — North Shore Music Theatre opens with "Kiss Me, Kate."

Early '60s — Theater's canvas walls replaced with permanent walls; seating expanded from 1,000 to 1,750.

1983 — Jon Kimbell takes over as executive producer.

2004 — Theater plans $66 million expansion.

2005 — Fire destroys theater's interior.

Feb. 2008 — Kimbell resigns as executive producer/artistic director.

Dec. 29, 2008 — Theater announces financial troubles might force it to close.

Photos