Why a Good Theatre Died

Two days ago, the Boston Globe published an interesting article about the demise of the North Shore Music Theatre. Founded in 1954, NSMT was a not-for-profit theatre in Beverly, Massachusetts, 17 miles northeast of Boston, that had yearly attendance before closing of over 350,000. According to the most recent IRS filing available (2006-2007), NSMT had a yearly budget of about $13.25 million. It owned an usual physical venue for producing musicals, a 1,700 seat theatre-in-the-round. NSMT closed this month after raising only $500,000 of a needed $2 million to continue into its next season.

The Globe article notes recriminations in the wake of the closing, many aimed at the new director of the theatre, Barry Ivan, who took over in 2008. But before that, the organization was in trouble. A fire in 2005 was covered by insurance but the board decided to make improvements as well which cost an additional $1.5 million. While the theatre was under reconstruction, productions moved to Boston's downtown Shubert Theatre. Lost income from this period totalled another $1.5 million.

Most tellingly, NSMT had no endowment. Endowments and retained surpluses are essential if not-for-profit theatres are to survive unanticipated losses. The last three years saw budgeting shortfalls: $492,184 in 2005, $107,856 in 2006, and $621,240 in 2007. Without an endowment, the board borrowed money to bridge the organization's needs, resulting in total liabilities of $4.6 million. With a physical theatre estimated to be worth about $4.9 million, banks were unwilling to loan NSMT more money.

NSMT was supported by its community. A 2007 production of Disney's High School Musical was its highest grossing show ever. Its last production, Show Boat, won the local critics award as best musical of the season. But without managing risk, preparing for an uncertain future, the organization could not weather this recession. Blame the recession, sure, but the lack of provision for exigencies doomed the organization.

At this writing, the Boston Globe article can be found here.