What started as an existential crisis for Broadway’s nonprofit producers turned into an unexpected windfall.
Thanks to a resurgent but fickle stock market, insurance payouts, cost-cutting and emergency grants from the federal government and foundations in response to Covid-19, Lincoln Center Theater and Roundabout Theatre Co. emerged from the 18-month industry shutdown wealthier than when they entered it.
LCT’s net assets soared by 19 percent, or $31 million, to a record $192 million in the year ending in June 2021, according to an audited financial statement posted on its website. The Roundabout’s net assets rose by 17 percent, or $19 million, to a record $132 million during roughly the same period.
Both companies are high-profile producers of play and musical revivals, new plays and the occasional new musical. Roundabout, whose hits include Stephen Karam’s The Humans and revivals of Kander and Ebb’s Cabaret, controls five venues, three of them on Broadway; LCT, which produced phenomenally successful revivals of My Fair Lady, The King and I and South Pacific, has three theaters, including one on Broadway.
Smaller theater companies also accumulated sizable reserves, which should help as audiences return slowly and inflationary pressures squeeze many industries, including stage production. Many organizations need to replenish staff amid a wave of defections from the industry.
LCT Producing Artistic Director André Bishop and Roundabout Artistic Director and Chief Executive Officer Todd Haimes declined to comment for this story. Broadway’s other nonprofits, Manhattan Theatre Club and Second Stage Theater, haven’t released their 2020-21 financial statements.
Initially, the pandemic was expected to be as disastrous for theater institutions as it was for the freelance workers who lost their livelihoods. Both LCT and the Roundabout suffered a 4 percent drop in net assets in 2019-20, as their seasons ended prematurely and their endowments tanked with financial markets.
But the federal government, normally a bit player in the arts in New York in recent years, stepped up with bipartisan legislation approving Small Business Administration loans to preserve jobs; and with $16 billion of Shuttered Venue Operators Grants — championed by Chuck Schumer, the Brooklyn-based Senate majority leader — to stabilize theaters, production companies and live music venues.
LCT received $5 million from two Paycheck Protection Program loans, most of which is being forgiven. The company made a successful claim for $3 million in business interruption insurance. To cut expenses, when Covid was declared a national emergency and then-Gov. Andrew Cuomo closed theaters, LCT laid off all its performers, production staff and technical crews. Salaries of remaining administrative staff were reduced. (Theaters haven’t yet disclosed executive compensation for 2020.)
The shutdown delayed the first preview of the musical Flying Over Sunset and the opening of LCT’s first-ever opera, Intimate Apparel, a co-commission with the neighboring Metropolitan Opera. Major donors agreed to redirect grants designated for specific purposes or productions to general operating support and video projects. The Howard Gilman Foundation, funded by the Gilman Paper Company fortune, made emergency grants of $100,000 to LCT, Roundabout and others, supplementing its annual operating aid.
Most of LCT’s financial assets stem from the founders of Reader’s Digest magazine, Lila and DeWitt Wallace, who died in the early 1980s and bequeathed their fortune to a variety of organizations. Today, that money’s overseen by a board packed with finance moguls and led by Eric Mindich, a former hedge fund manager who, at 27, was the youngest partner in the history of Goldman Sachs. (In theater circles, he’s somewhat eclipsed by his wife, Stacey Mindich, lead producer of the Tony Award-winning hit Dear Evan Hansen.)
LCT’s latest tax return lists 18 investment funds. Its managers include Adage Capital Partners, a huge hedge fund that buys and sells short Standard & Poor’s 500 stocks and is known for relatively low fees; and Farallon Capital Management, which pursues a variety of strategies and was founded by 2020 presidential hopeful Tom Steyer. In 2020-21, LCT’s endowment, which comprises most of its money, soared by 35 percent, eight percentage points better than the median return for college and university endowments.
Every season, 5 percent of the endowment’s average value over the preceding five years is released for spending. In 2020-21, that appropriation was almost $5 million. Overall, LCT reported its biggest increase in net assets from operations since 2011-12, when its blockbuster play War Horse was running on Broadway.
LCT hasn’t broadcast its good fortune, which includes a Shuttered Venue grant of $8.5 million to be spent this season. In an August 13, 2021 marketing email, and in others preceding it, the Upper West Side nonprofit company said it’s “taken a huge financial hit and we need your help.” Although box office revenue did disappear during the shutdown, the company likely took more of a financial hit when it resumed performances late last year. Ticket sales seldom cover more than a fraction of the cost of not-for-profit productions — with the exceptions of War Horse and Rodgers & Hammerstein revivals for LCT, and Cabaret revivals for Roundabout.
(To its credit, LCT is an industry leader in transparency, posting its audited financials and tax return as soon as they’re finished. Disclosure by other major companies is spotty.)
During the shutdown, the Roundabout secured $7 million in PPP loans, of which at least $5 million was forgiven; $5 million in insurance proceeds and a $10 million SVOG grant. While it has an ambitious slate of shows this season, Roundabout years ago excelled at generating extracurricular income. With its subscription model in long-term decline, it’s stabilized its finances by acquiring real estate — notably Studio 54 and the Henry Miller’s Theatre, which was renamed for Stephen Sondheim — enabling it to become a busy landlord for commercial productions.
“I’m not proud of what I’m about to say, but the landlord-tenant relationship in a theater lease is unbelievably favorable to the landlord,” Haimes said in a 2020 interview with Cindy Lott, the academic director of nonprofit management programs at Columbia University’s School of Professional Studies. “Basically the tenant pays for everything.”
In 2018-19, the Roundabout’s most recent full season, rental income generated $6 million of operating profit, limiting the company’s overall operating loss to below $1 million. This spring, it’s leasing the Stephen Sondheim Theatre to Mrs. Doubtfire, which lead producer Kevin McCollum said is resuming performances on April 14, after closing in January amid a spike in the Omicron Covid variant. Tracy Letts’ The Minutes, produced by Jeffrey Richards and originally scheduled to open March 15, 2020 at the Shubert Organization’s Cort Theatre, now is slated to open at Studio 54 on April 17.