Perseverance Theatre in Douglas was founded in 1979 by Molly Smith and is currently led by Executive Artistic Director Art Rotch. (Michael Penn | Juneau Empire)

Perseverance Theatre in Douglas was founded in 1979 by Molly Smith and is currently led by Executive Artistic Director Art Rotch. (Michael Penn | Juneau Empire)

Perseverance Theatre furloughs employees after debt piles up

Perseverance Theatre, Alaska’s largest professional theater, furloughed its employees after several years of financial problems that are now just coming to light.

Management suddenly asked workers to reduce hours at the Douglas Island theater, effective immediately, at the beginning of the month. The theater also recently canceled its most recent production, “Snow Child,” which had been planned for May showings in Anchorage.

Executive Artistic Director Art Rotch, reached while he was out of town, confirmed the furloughs with the Empire in a Friday interview. He said he couldn’t say how many employees have been furloughed or the size of the theater’s debt. The Empire contacted several employees in recent days on social media and via email; each referred questions to Rotch.

“Where we are is just understanding what the number really is and talking to the people who can help,” Rotch said. That includes donors and the 13-member Perseverance Board of Directors. Board President Joe Bedard, who works in Anchorage, couldn’t be reached immediately Friday for comment.

When asked if the nonprofit theater will be forced to shut down, Rotch said he couldn’t say without more information about the extent of the debt, which the theater is trying to compile right now. Rotch doesn’t anticipate canceling “significant amounts” of upcoming programming, but it’s too soon to tell, he said. The theater is in its offseason right now and is doing a “deep dive” to into its financial situation.

“To some extent, there’s always a chance that an arts organization that’s nonprofit can end, so we can’t ever take these things for granted. But to really give you a sense of what is the chance, the percentage chance, (of a shutdown) I’m not sure right now,” Rotch said.

The theater incurred six-figure debt in each of fiscal years 2015 and 2016, a shortfall it’s still paying off, Rotch said. The second budget shortfall hit the theater particularly hard, Rotch said.

“The first one we had reserves for, the second one is a little harder. We’ve been working on ways to capitalize and finance that loss, and we’re still doing that. So that’s ultimately the root cause of our challenges, tight cash flow due to losses going back a couple years, which we’re still working on capitalizing,” Rotch said.

An additional $170,000 of anticipated revenue and sunk costs were lost when Perseverance had to cancel the Alaska showings of “Snow Child,” Rotch said. The theater anticipated earning revenue from ticket sales from that show, and the cancellation put them over the edge of being able to pay employees. Perseverance’s budget has been between $1.5 and $2 million the last several years.

Perseverance expanded its operation to Anchorage in 2014. Washington, D.C.-based Arena Stage had partnered with Perseverance to bring “Snow Child,” a musical based on an Alaska author Eowyn Ivey’s 2011 novel, to Anchorage for stagings in late May. The “short answer” explaining the cancellation of those shows is that Perseverance didn’t have enough money to put the show on, Rotch said, forcing them to cancel plans a week prior to its Alaska opening.

When reached for comment recently about the cancellation of Snow Child’s Alaska showings, Arena Stage referred the Empire to Perseverance. Molly Smith, the artistic director there, founded Perseverance Theatre in 1979.

About half of Perseverance’s revenue comes from ticket sales and donations from individuals. The other half comes from a variety of funding sources, including state and municipal arts grants, the National Endowment for the Arts, and local and national corporate sponsors and foundations.

The mix of funding sources has changed in the last five or six years, Rotch said. The theater used to earn about 20 percent of its money from ticket sales and private donations, and 80 percent of its funding from other sources. A 50-50 split between those two categories is industry standard, Rotch said, and Perseverance moved to that mix about five or six years ago.

Rotch said he’s hopeful that the theater is on its way to solving the problem. It helps that the theater has set annual records the last four years in individual contributions, he said.

“This is a pretty big speed bump, potentially, but I think we have the right people in the room to figure it out,” Rotch said.

• Contact reporter Kevin Gullufsen at 523-2228 and Follow

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