Carolina Theatre getting new city contract

Mar. 30, 2014 @ 08:12 PM

A new long-term contract with the nonprofit operator of the Carolina Theatre is ready for a City Council vote next month, City Manager Tom Bonfield and other officials say.

The deal with the Carolina Theatre of Durham Inc. will run until at least 2024 and cost the city between $5.7 million and $7.4 million over the decade.

It resembles the deal the city made late last year with the Durham Arts Council, in giving officials the right to raise or lower their annual subsidy of the group based on their opinion of its performance.

The city can change its subsidy of the Carolina Theatre by up to 3 percent a year, in either direction.

Administrators in the city’s General Services Department “ended up negotiating both [deals] and they felt like we needed to work through the Arts Council agreement first, and make sure the methodology of how it would work made sense,” Bonfield said. “That became the model.”

The sequence also gave city officials more time to size up the financial health of the nonprofit theater, which Bonfield had questioned nearly two years ago when it sought an additional city subsidy to offset operating losses.

The group booked a profit in fiscal 2012-13, collecting $68,780 more in revenue than it spent covering costs. That ended a four-year run of annual losses.

“The financial performance they ended the year with last year was definitely positive compared to where they’d been,” Bonfield said. “And the track record so far this year – we get monthly reports – has also generally been pretty positive.”

Carolina Theatre President Bob Nocek said his group is “extremely pleased” with the new deal.

“We’re happy to have the next 10 years secured, and hopefully beyond that,” he said, alluding to the contract’s inclusion of two five-year extension options.

He added that the upturn in financial returns comes as the theater emerges from a “multi-year rebuilding process,” one that saw the building undergo renovations while the nonprofit made “major investments in personnel, marketing, systems and equipment.”

“We did under $2.5 million in total revenue in [fiscal 2009-10] and we expect to hit $3.6 million or $3.7 million this year,” Nocek said.

The contract assumes a $635,000 annual city subsidy of the theater to start, which is an increase over the $614,520 Bonfield’s government has been paying.

It requires the nonprofit to follow a preventive-maintenance plan for the building developed by General Services. The city remains on the hook for any repairs to the roof or major mechanical and electrical services, but Nocek’s group is otherwise responsible for day-to-day upkeep.

The deal also includes a series of “performance measures” city officials can use in judging the theater’s performance. They include requests that the group increase the number of profitable shows it puts on, running the Carolina’s film series and live performances in the black.

Bonfield said the performance measures “took a bit longer” to work through than other parts of the deal, the two sides cooperating to figure out what mattered.

The theater deal is the fifth major lease or operating contract officials have negotiated in recent years for city owned entertainment and business venues.

The previous deals covered the Durham Performing Arts Center, the Durham Bulls Athletic Park, the Durham Convention Center and the Durham Arts Council.

The only comparable facility officials have yet to address with a long-term contract is the Durham Athletic Park, the historic minor-league baseball stadium off West Corporation Street.

The Durham Bulls have operated the DAP for the city since the start of 2012, when Minor League Baseball Inc. backed out of a management deal for the facility.

Bonfield said the DAP “doesn’t really lend itself to the kind of arrangement we’ve been able to do in other places.”