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The
economic downturn is taking its toll on these performance theaters, as
evidenced most recently by the plight of the Orlando Opera Co., which announced on April 16 that, after 51 years, it would be closing its doors for the final time on April 30. "The recession of the past 18 months has resulted in lower ticket sales, reduced contributions, and defaults on pledged donations," said Jim Ireland, the president and CEO of the Orlando Opera in a statement. "In spite of significant cost reductions, Orlando Opera has not been able to break even on operations nor has it been able to eliminate its long-standing accumulated operating deficit." The board of trustees followed up on that announcement by voting to file for Chapter 7 bankruptcy, reported the Orlando Sentinel
on Tuesday. "The board acted on legal advice and because of the lack
of options and a rapidly dwindling cash reserve," the paper wrote. The Baltimore Opera Co. on Dec. 9 filed for Chapter 11 in the U.S. Bankruptcy Court for the District of Maryland in Baltimore, because of a "substantial drop in single-ticket sales as well as contributions from individuals, corporations and government agencies," Cleaveland D. Miller of Semmes, Bowen & Semmes, outside legal counsel for the company, told The Deal (Pipeline subscription required) on Dec. 10. Although the 58-year-old company listed assets of $3.8 million and liabilities of $1.4 million in court papers, it was forced to convert the case to a Chapter 7 liquidation on March 17 when an attempt to secure the financing necessary to continue operations was determined to be a "futile gesture," it said in court papers. Like Orlando Opera, it blamed the economic downturn for its problems. Baltimore Opera's Chapter 7 trustee has tapped Alex Cooper Auctioneers Inc. to hold auctions for the debtor's assets on May 14 and May 28. Then there's the debt-laden American Musical Theatre of San Jose Inc., which filed for Chapter 7 liquidation in the U.S. Bankruptcy Court for the Northern District of California in San Jose on Dec. 23, two weeks after Baltimore Opera's filing. Its petition listed assets of about $200,000 and debts in excess of $5.1 million. Founded in 1934 as the San Jose Light Opera Association, the company blamed the filing on a $1.7 million loss that it incurred because of a business deal with the Theater of the Stars in Atlanta. Michael Miller, American Musical Theatre's CEO and executive producer, said in a statement that it suffered the loss because the Atlanta theater diverted funds that were to be used for a Tarzan musical based on the Disney production "for other things," the San Jose Business Journal reported. "In essence, they canceled the show without giving us any warning, and we discovered that the funds we had paid for Tarzan were spent on another production of theirs, which lost a significant amount of money," Miller said. HBendix Auctioneers was tapped to auction off the company's assets as part of the liquidation. Auctions were held on Feb. 24 and Feb. 25, which netted the trustee $128,046 to distribute to creditors. The California court has not yet held a hearing to approve the auction sale. Despite placing the blame on the Atlanta theater, the $1.7 million loss stemming from that botched deal was only a portion of the company's $5.1 million in debt, which was considerably higher than its assets. In other words, it's likely American Musical Theatre would've been in serious financial trouble even without the Tarzan debacle. - Kevin Fung
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People cry when they go to the opera. Now it's the opera houses that are weeping.
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