Eighteen months after a financial crisis almost forced it to close, the Carolina Theatre has paid off an estimated $1.7 million deficit.
The Carolina Theatre of Durham Inc. reported an accumulated surplus of nearly $200,000 at a meeting of its Board of Trustees on July 25, according to a news release. The financial report, which is preliminary and unaudited, includes operations through June 30, 2017, the end of the organization’s fiscal year. The nonprofit projects that the surplus will continue to grow through the current year.
The theater retired the deficit through a combination of fundraising, and a matching grant of $600,000 in 2016 from the Durham City Council. The deficit came to light in December 2015 and was attributed to some unpaid state admissions taxes that brought other accounting problems to light.
The deficit led to the resignation of the theater’s previous CEO, Bob Nocek. Since January 2016, Dan Berman has been acting as CEO without pay. (A search for a new CEO is underway.)
The theater also reported improved performance in its rental, film, live event and concessions businesses. Under Berman, the nonprofit has focused on operational efficiencies, reducing risk and rededicating itself to mission based activities.
“The outpouring of support from all segments of our community is testament to the central role the theatre continues to play in shaping the cultural life of our city and region. I’m happy to report that the arts-loving people of Durham remain fervently committed to a thriving, welcoming and relevant Carolina Theatre,” Berman said in a statement.
In February 2017, an independent accounting firm completed a comprehensive audit of the nonprofit’s 2016 fiscal year financials that helped clarify the scope of the financial distress under which the organization was operating when the board named Berman interim CEO. The audited financial statements were presented to the city of Durham and indicate that the theatre had a more than $1.4 million accumulated net deficit as of June 30, 2015. This number grew to an estimated $1.7 million by December 31, 2015, putting the Carolina at imminent risk of closure and bankruptcy.
The theatre and the city of Durham recently filed suit against the nonprofit’s former auditing firm to recover losses stemming from the firm’s failure to identify significant errors in financial statements.
The city owns the Carolina Theatre. It pays the nonprofit organization Carolina Theatre Inc. an annual fee of $635,000 to run the theater.
The theater ranked 135th worldwide on Pollstar’s ranking of theater attendance for the first half of 2017.