A legal tug of war is under way for control of the substantial profits generated by the Auditorium Theater of Roosevelt University. The house has become the Chi venue of choice over the past six years for several long-running musical spectacles, including “Les Miserables,” “The Phantom of the Opera” and “Miss Saigon.”
In the past two fiscal years alone, the theater has netted $2 million in operating profits from its mostly musical residents. Those profits could swell considerably with the expected return next fall of “Miss Saigon,” followed in March 1996 by an open-ended run of the Harold Prince production of “Show Boat” mounted by Toronto-based Live Entertainment Corp. of Canada.
The fight for control of the theater’s operating surpluses was precipitated by Ted Gross, the president of the school, which has owned the 4,000-seat landmark theater since 1946. Gross maintains that profits generated from Auditorium Theater rentals and related revenue sources belong to the university and may rightfully be used, if needed, for other university-related purposes.
But members of the Auditorium Theater Council Inc., a not-for-profit group established in 1981 by the university to raise additional funds to maintain and renovate the theater, argue that monies generated by the theater should be used solely for theater-related purposes and that the council should determine how the money is used. The council currently has 31 members, including local business executives and civic leaders as well as Roosevelt employees.
Both sides agree on one thing: Any funds contributed to the Auditorium should be used only for the purpose for which they were given to the theater. In the past two fiscal years alone, the Auditorium has received approximately $1.35 million in additional contributed income.
Since 1988, the council has spent more than $3 million to upgrade the Auditorium, including new theater seats, a modern fly system and an attractive new glass theater entrance. Council members say another $10 million worth of renovations are needed to bring the 106-year-old theater, de signed by Dankmar Adler and Louis Sullivan, up to par with more modern venues. The additional work includes new building wiring, an elevator (to comply with the Americans With Disabilities Act) and dressing room improvements.
The issue of who controls the Auditorium’s reserves funds came to a head in December when Gross told the council executive committee he might soon require $1.5 million from the Auditorium’s surplus funds to help finance a planned new suburban campus for Roosevelt. The theater’s reserve fund currently totals just over $3 million.
When they heard of Gross’ intentions, two council members, Fred Eychaner and Betty Lou Weiss, immediately filed suit in Cook County Circuit Court barring Gross and the university from accessing the theater’s reserve funds until a judge could declare who controlled the funds and whether such a transfer of money is legal under laws pertaining to Illinois not-for-profit corporations. No legal ruling has been made yet.
The fight has been complicated by the fact that, since 1989, Gross has served as chairman of the Auditorium Theater Council in addition to presiding as university president.
Gross and the university subsequently filed a countersuit, claiming the university has clear and legal right to any revenues generated by a theater the university owns, though Gross has since found other means to finance the suburban campus.
“The only purpose of the council is fundraising,” maintains Stan Eisenhammer, attorney for Gross and the university. “Operating revenue from productions at the Auditorium should be declared Roosevelt’s funds.”
But Eychaner and his attorneys argue that the council has essentially been operating the theater as well as fundraising since 1981, and therefore should have the final say about how theater funds are used. “We’re not going away,” vows Eychaner.
Eychaner and other council members say the council must maintain control of all Auditorium profits, both to fund additional renovations and to help tide the theater over during periods when no long-running tuners or other attractions are generating income.
Late last month, at the first regularly scheduled council meeting since the battle began, a majority of council members present passed a resolution asking Gross to step down as council chairman. He refused.
Gross told the council members he was moving forward with a plan to establish a new university-controlled board that would have direct control over Auditorium operations and presumably future income generated by the theater. He invited council members to come to his office individually if they wished to talk to him about joining the new board.