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Second Stage to invade Broadway

Second Stage to invade Broadway

Acquisition of Helen Hayes appears closer

Crain’s New York  10/03/10

by Miriam Kreinin Souccar

Riding high from its string of commercial and critical hits over the past few years, Second Stage Theatre is setting its sights on the bright lights of Broadway.

The nonprofit off-Broadway theater company, which produced Pulitzer Prize-winning musical Next to Normal and breakout hit The 25th Annual Putnam County Spelling Bee, has hired an architect and is launching a $45 million capital campaign to purchase and renovate the 600-seat Helen Hayes Theatre on West 44th Street.

Commitments for about 50% of the campaign goal are in hand. Now trustees of the theater are looking for a person or corporation to pony up around $15 million in exchange for the naming rights to the theater—a relatively modest sum for such a prestigious location.

The move to Broadway will give Second Stage—which was founded in 1979 to produce contemporary American drama—a third and much larger venue to present material in, as well as its first permanent home. The theater currently leases its main space on West 43rd Street and Eighth Avenue, which has 296 seats, and presents smaller shows during the summer in a 100-seat space on Broadway and West 76th Street. It will also greatly raise the small theater’s visibility, helping it attract bigger artistic talent due to Broadway status and making more of its productions eligible for Tony Awards.

“This move will elevate our stature,” says Stephen Sherrill, chairman of Second Stage and a partner at private equity firm Bruckmann Rosser Sherrill & Co. “Now we’ll be in the same league as the large nonprofit theaters with Broadway houses,” he adds, such as the Lincoln Center Theater, Roundabout Theatre Company and the Manhattan Theatre Club.

Second Stage signed an initial purchase agreement with the owners of the Helen Hayes two years ago, but its plans to raise the necessary money were stalled by the financial crisis. Now executives there say they are confident enough in the economy to move forward and are actually in a better position fiscally than they were previously. They expect to close on the theater in 2012 and open their first season there in 2013.

Second Stage’s annual operating budget is about $8 million, an amount that should double with the addition of the Helen Hayes. In the past few years, Second Stage has had so many commercial hits that it’s been able to earn close to 60% of its budget from box-office revenue, compared with the typical 50% that most nonprofit theaters earn. In fact, single-ticket sales jumped 50% during the fiscal year that ended Aug. 30. The increase in box-office revenue made up for the drop in donations during the financial crisis, executives at the theater say.

Carole Rothman, the company’s founder and artistic director, says owning another theater—and one with more seats—will offer Second Stage the chance to extend the life of successful shows. Now, because the theater is a subscription house, it has to close down productions after a mandated number of weeks to make room for the next show, even if the current production is selling out. Summer blockbuster Trust, with Zach Braff, had waiting lines for tickets every night, yet it had to end its run after eight weeks.

“It’s hard for us to do a play that people are excited about and then cut it off,” Ms. Rothman says. “With the Helen Hayes, we can take a show that’s selling out and move it in there and let it run for as long as it can.”

Money mavens

The monetary commitments for the campaign have so far come mostly from board members and the city. Executives at Second Stage declined to disclose the purchase price of the Hayes. But Mr. Sherrill says around $8 million of the campaign is expected to come from the trustees and will go toward operating the new theater for the first five years. The renovation is expected to cost between $7 million and $12 million.

Plans for the renovation, by architectural firm Pfeiffer Partners, are complete. They include a number of interior upgrades to the Helen Hayes and the addition of a sleek glassed-in patrons’ lounge in the adjoining brownstone.

Nonprofit theater executives say the move will catapult Second Stage to another level of visibility.

“You get an automatic amount of press and attention being on Broadway, not to mention being eligible for Tony Awards, which a lot of artists find important,” says Todd Haimes, artistic director of Roundabout, which runs three Broadway houses and two off-Broadway theaters.

Yet the move is not risk-free. It’s more expensive to produce on Broadway because union and other costs are higher, and the public expects more sophisticated scenery and other bells and whistles, Mr. Haimes says.

But Second Stage officials are sanguine. To help make the expansion a success, the theater just hired a new executive director, Casey Reitz. In his previous job, Mr. Reitz ran The Public Theater’s campaign to raise $35 million for its renovation, so he isn’t too worried about the expansion.

“Yes, the budget will go up, but we will have a higher profile,” he says. “We’re hoping to lock in more corporate sponsors, more individual giving, and we’ll have 300 more seats for each performance.”