EXCLUSIVE: Second Stage Theatre has less than two years to repay a $16.5 million mortgage on its new Broadway home.
In April 2015, the nonprofit completed its long-awaited purchase of the Helen Hayes Theatre. The “amazing moment,” as Artistic Director Carole Rothman put it, should help raise the profile of the 37-year-old company and the contemporary American plays and musicals it produces, which have won three Pulitzer Prizes since 2010. But in buying Broadway’s smallest venue, Second Stage accepted a big burden.
The $16.5 million loan from Signature Bank matures in April 2017. It can be extended for just 12 months, according to Second Stage’s most recent financial statement. A person briefed on the fundraising said it still seeks a multi-million-dollar donor who’d have the option to rename the Helen Hayes. Second Stage is also offering naming rights for the theater’s six bathrooms, five dressing rooms, two lounges, two offices and the lobby, bar and elevator. A spokesman declined to comment.
The short maturity of the loan — for two-thirds of the $25 million purchase — suggests that Rothman and Executive Director Casey Reitz believe they can raise funds fast, notwithstanding their past struggles. The pressure won’t disappear: Second Stage has said it plans to double its annual budget — now $8 million. For a nonprofit on Broadway — i.e. the Roundabout, Lincoln Center Theater, Manhattan Theatre Club and now Second Stage — “the fundraising is even more crucial on an ongoing basis,” said Steven Chaikelson, head of Columbia University’s theater management and producing concentration. When ticket sales fall short of internal projections, an organization must compensate with increased contributions or future sales, he said. (As at other nonprofits, Second Stage gets help with expenses on some shows from commercial producers, such as with the musicals Dear Evan Hansen and Next to Normal.)
The company originally sought to buy its 296-seat off-Broadway rental on West 43rd St.; the landlord wanted a “phenomenal” sum, recalled Ellen Richard, Second Stage’s executive director from 2006 to 2009. A deal for the 597-seat Hayes was signed in April 2008, but fundraising was promptly suspended amid the financial crisis. Twice Second Stage postponed the closing, originally set for June 2010. Then it was tabled during the commercial run of the musical Rock of Ages in the Hayes. After Rock of Ages shuttered, Second Stage sued the seller — Martin Markinson and Jeffrey Tick — to gain more time. Rothman said in court papers that it couldn’t secure financing without a closing date. Second Stage was granted a two-month, court-ordered extension, which added about $250,000 to the $24.75 million price. It completed the purchase through a limited liability corporation it created.
It received help from a rich neighbor. Jujamcyn Theatres, which owns five Broadway houses, agreed to provide Signature Bank with extra collateral for the Helen Hayes mortgage, according to property records. And Second Stage agreed to sell Jujamcyn an alleyway underneath an annex west of the Hayes, so Jujamcyn can expand the stage in the adjacent St. James Theatre. Jujamcyn paid Second Stage $5 million. The agreement will allow Jujamcyn to book more elaborate musicals in the St. James, such as Frozen, which is headed there in 2018, a person familiar with the landlord said. Jujamcyn President Jordan Roth declined to comment.
Being on Broadway should help Second Stage attract more stars, who can compete for Tony Awards. And ownership confers stability. “I don’t know of any successful not-for-profit that doesn’t have a permanent home,” Ellen Richard said. She noted that an earlier employer of hers, the Roundabout, left its Times Square venue in 1999 under threat of eviction. “We had two theaters at the Criterion Center and it became a Toys ‘R Us,” said Richard, now interim executive director of the Laguna Playhouse.
New York City is beset with competing capital projects, including MCC Theater’s new home on West 52nd Street. And foundations, which bless projects with their largesse and imprimatur, are cautious about investing in bricks and mortar for culture. “The sector nationally is overbuilt,” said Sandi Clement McKinley, a vice president of the Nonprofit Finance Fund, which provides financing and consulting to nonprofits. “They want to do no harm. They’re asking, ‘is the organization able to take on the facilities and still pay day-to-day costs?'” (Even without the Hayes, Second Stage has struggled with its model, like the rest of the industry. Subscriptions, a top revenue source, declined in each of the past seven seasons, from $1.6 million in 2007-8 to $953,000 in 2014-15.)
Rothman, Second Stage’s co-founder, expressed her own ambivalence about Broadway a decade ago. “I think you have to change your programming when you move to a Broadway house,” she said in a November 2006 video interview with Newsday critic Linda Winer, just over a year before the Hayes deal. “You can’t really be as adventurous, or I haven’t seen the people that do Broadway shows be as adventurous. And you can’t take as many risks, probably.”
Yet with Broadway dominated by tourists who favor musicals, it could use more of Second Stage’s contemporary American plays. The house that opened in 1912 as the Little Theatre is scheduled to reopen in 2017-18 following renovations overseen by the Rockwell Group, the firm led by architect and Tony-winning scenic designer David Rockwell. The project includes a new LED marquee, a restored interior and digitized images on the walls based on tapestries that hung a century ago in the auditorium. Second Stage has pledges, verbal and written, for the entire $22 million it estimates the work will cost, including $10.5 million from the City of New York, it said in the financial statement.
For the mortgage, all it needs is a rich person or entity looking to make a mark on Broadway.