SCHUSTER CENTER TIMELINE
July 1999 - Second and Main Ltd. announces the arts center project and fundraising campaign.
November 1999 - The former Rike's/Lazarus building is imploded to make room for the project.
April 2000 - Groundbreaking ceremony is held for the Schuster Center site.
February/March 2003 – Schuster Center opens with Gala Celebration.
May 2003 – Mezzo-soprano Denyce Graves performs at a Dayton Opera event
June/July 2003 – Phantom of the Opera highlights the opening season
April 2004 – Bill Cosby performs benefit event for Central State University
July 2004 – Comedian Jerry Seinfeld makes first of two Schuster appearances
March 2005 – Famed cellist Yo-Yo Ma performs at a Dayton Philharmonic event
March 2005 – Dione Kennedy takes over as president of the Arts Center Foundation and Victoria Theatre Association, replacing Mark Light
Sept. 2005 – Oprah Winfrey and Maya Angelou participate in Bessie Coleman tribute
July 2006 – Schuster Center (and Arts Center Foundation) comes under heading of Victoria Theatre Association as boards of ACF and VTA merge
Jan. 2008 – Chicago The Musical visits Schuster
June 2009 – Ken Neufeld takes over as president of VTA, replacing Dione Kennedy
2010-2012 – Schuster attracts a three-year run of national touring Broadway shows – Wicked and Phantom of the Opera in 2010, The Lion King in 2011, and Jersey Boys and Wicked in 2012.
March 2013 – Schuster Center begins yearlong 10th anniversary celebration
BY THE NUMBERS
Schuster project funding
The Schuster Center cost $88.15 million to construct, and the Performance Place tower cost $33.75 million for a total of $121.9 million. Some costs were paid up front, and $46.7 million in bonds financed the rest. The bonds are now paid off. Here are the sources of the $121.9 million.
$55,997,678 — Community donations
$30,750,000 — Ohio Cultural Facilities Commission
$15,000,000 — Montgomery County
$10,342,334 — Federal money through RTA
$7,500,000 — City of Dayton
$2,305,406 — Sale of condominium units
$121,895,418 — Total
Broadway show ticket revenue
2007 — $6,160,876
2008 — $5,971,905
2009 — $4,674,915
2010 — $9,671,034
2011 — $6,947,228
2012 — $12,990,622
Dayton’s Schuster Performing Arts Center has drawn widespread attention for its 10th anniversary events this month, but perhaps more impressive is the financial milestone reached in February – in just 10 years and despite the worst recession in decades, the arts center and attached condominium tower are completely paid off.
David Schrodi, chief financial officer of the Victoria Theatre Association, which operates the Schuster Center, said the bonds tied to the arts center and Performance Place tower totaled $121 million, all backed by pledges from individuals, corporations, governments and others.
“We just received our last pledge (payment), and Schuster Center is debt-free. That happened Feb. 4,” Schrodi said. “It’s a testament to the community effort.”
Schuster’s financial success, at at time when major companies have left or closed in Dayton, is a sign that the facility has been embraced and become part of the community, perhaps taking away some of the elitism that some people tie to the arts, according to Randy Cohen, vice president of the national group Americans for the Arts.
“It’s about being more durable than the nation’s economic cycle,” Cohen said.
He called the 10-year payoff unusual and “extremely impressive.”
“There have been contribution defaults in other places, as some people lost an awful lot of their value in the Great Recession and weren’t able to follow through,” Cohen said. “This is going to get a lot of attention at the next big conference of arts centers, because we’re going to wonder how the heck you did it.”
Victoria Theatre Association President Ken Neufeld is proud of the bond payoff, but he’s already turning his focus to a strong financial future. The goals are making sure the nonprofit VTA continues to operate narrowly in the black, while still giving favorable rental rates to local arts organizations and planning for the long-term viability of the Schuster Center, the Victoria Theatre and the Metropolitan Arts Center.
“We are stewards of these buildings,” Neufeld said. “We own and operate them, but they are essentially for the benefit of the community. Our responsibility is to make sure these buildings are here in 50 years.”
Layers of organization
The Schuster Center project was launched in 1999 by Second and Main Ltd., which demolished the former Rike's department store, raised funds and managed construction. Schrodi said once Schuster was opened in 2003, it was given to the nonprofit Arts Center Foundation for operation.
In 2006, the Arts Center Foundation was merged into the Victoria Theatre Association, with ACF living on as a holding company that owns the three arts buildings, plus the parking garage at Second and Ludlow streets. Since 2006, it has been the nonprofit Victoria Theatre Association that actually runs the operations of the Schuster, Victoria, Metropolitan and garage.
The Performance Place condo tower also is paid off, according to Schrodi, as all residential units have been sold, and only the fourth floor of the commercial section of the tower remains unsold.
Since the bond for the tower is paid, Neufeld said revenue from the eventual fourth-floor sale will go straight to VTA’s endowment, which currently stands at $10 million. VTA officials said once that final floor is sold, Second and Main Ltd. likely will be dissolved.
Arts groups’ finances
Audited financial statements of the VTA and ACF from mid-2010 through mid-2012 reviewed by the Dayton Daily News showed the organization narrowly in the black, with a $96,419 operating profit on $33.4 million in revenues.
“We’re fortunate enough to have some surplus on operations, generally on a yearly basis,” Neufeld said, adding that VTA’s goal is for that profit to stay very modest.
Cohen said his group’s 2012 National Arts Index showed that over a four-year span, roughly 40 percent of nonprofit arts organizations had annual operating deficits.
Dan Dahl, executive director of Akron’s E.J. Thomas Hall, said both the economy and competition for arts dollars have changed in the past five years.
“In general, we’re OK,” Dahl said of his 39-year-old arts facility. “Are we jumping up and down going, wow, we’re making money hand over fist? No. But if you are stable, stable is great.”
Others haven’t been so lucky. Seattle’s Intiman Theatre canceled its shows midseason in 2011, and the Philadelphia, Louisville, Syracuse and Honolulu orchestras filed for bankruptcy protection that same year. Locally, Dayton’s opera, ballet and philharmonic orchestra companies merged last year to solve financial problems.
“The monuments on a hill, so to speak, are the ones struggling whereas the ones that are connecting with their community very broadly are doing better,” Cohen said, pointing to arts outreach with schools, businesses and new arts consumers.
Schrodi said that fits what the VTA has done, bringing scores of local school groups downtown for field trips and hosting weddings, parties and staff meetings for local businesses in its buildings.
VTA officials also say they must do a balancing act between meeting their board’s annual financial goal of a $300,000 operating margin, and being sensitive to the finances of local arts organizations like the ballet and Muse Machine that use their facilities. Neufeld said those local groups pay a lower rental rate than national touring acts.
“We could boost our rental rates, could charge more for office space they’re using from us, charge more for the ticketing we do for them,” Schrodi said. “That’s all subsidized. … But if we put them out of business, then the facility’s not being used, and then we’re out of business. We’re all partners. Their success is our success.”
Revenue streams
Neufeld pointed to varied revenue streams as another reason why VTA and Schuster have weathered tough economic times. He said most arts centers rely solely on ticket sales and fundraising.
“We have those, plus we have a garage, and a ticket center that makes money, and a restaurant and catering operation, and a bunch of real estate that we charge below market rates on but still make a bit of money,” Neufeld said. “Those other business lines help to cushion swings in the economy and (the shows we draw) from year to year.”
The VTA’s audited financial statements show that the garage and food service operations finished $1.5 million in the black for the two-year period ending June 30, 2012. Sue Stevens, VTA’s vice president of marketing, said the group’s ticket center, with fee revenue of $1.27 million in that same span, keeps ticket fee money in the community, rather than having it go to a national ticketing firm.
The parking garage will be the last piece of the development to be paid off, in 2021, as VTA is using garage profit to pay off that bond.
Looking forward
With the main buildings paid off and operations running a narrow profit, Neufeld said VTA has turned its focus to the future, with a four-prong long-range plan.
The goals are to expand and diversify programming, to be a bigger partner in downtown growth, to strengthen the VTA brand and to ensure long-term financial stability to protect its venues.
“It’s an aggressive plan, but we think we’re in pretty good shape,” Neufeld said. “Our hair’s not on fire.”
Neufeld said VTA just did a detailed analysis of all of its buildings, down to cataloguing every sink and light switch and whether in the next 20 years they likely would need to be replaced. As a result, VTA is planning a campaign to raise $20 million for future investment.
Dahl said Akron’s Thomas Hall has similar issues, adding that ticket revenue does not cover long-term care of buildings, and that’s where donations and endowments are needed.
“We have to plan for the fact that we’ve had 3.5 million people sit in the seats and walk on the carpet (at Schuster),” Neufeld said. “It’s in great shape, but we have to be ahead of the curve, so that the community wants to continue using (our facilities), so that artists who are pushing the technical envelope can find that they still can do anything they want to do at Schuster, or (at Victoria).”
High-quality facilities help Dayton draw top national touring Broadway shows, and Stevens said that investment benefits the whole community. She said the four-week run of The Lion King in 2011 had an $18 million economic impact, counting restaurants, hotels and other business. Neufeld estimated the 10-year economic impact of the Schuster Center at more than $300 million for the region.
“We see that as a mission for the community as well,” Stevens said.
Neufeld said VTA has been both lucky and prepared in that regard.
“People ask, hasn’t the recession been terrible for you guys? And I have to maintain a level of modesty, but my response to the recession is Wicked, and Lion King, and Jersey Boys, Wicked again, Phantom of the Opera,” Neufeld said. “We really had no, or very little, impact of the recession on our organization. The timing was good. People came to the shows … and it was a great experience for them.”
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