Capitol Hill can stand to profit

Venture relies on ticket sales, concessions, building rentals

TACOMA, WASH — A modest, 200-seat theater in Seattle has staked its bank account against the accepted logic that serious theater outside Broadway must be nonprofit to survive.

Capitol Hill Arts Center is a for-profit venture that, instead of balancing box office with public and private donations, relies on ticket sales, building rentals and concessions. This model marks a synthesis of profit-making methods mixed with social responsibility, a la Ben & Jerry’s or the Body Shop.

The theater has produced one premiere, but its growing reputation in Seattle is based on solid productions of classics such as “Death of a Salesman,” “Rhinoceros” and “The Resistible Rise of Arturo Ui.”

“Show business is a business like any other,” says 28-year-old founder Matthew Kwatinetz, whose family background seems a fortuitous recipe for his current project — dad’s a venture capitalist and mom’s a nonprofit guru. He opened CHAC (pronounced: SHACK) after a previous string of other startups, both nonprofit and for-profit, that have had varying degrees of success.

It is a populist theater, not a commercial theater that is spiritually a nonprofit, meaning that CHAC shares the nonprofit community’s intention to further the art form, says managing director Aimee Bruneau. Tickets cost $10 to $18.

Nonprofits have become too beholden to funders and boards of directors when they should respond more directly to audiences, Kwatinetz says.

Plus, the nonprofit model provides scant protection from business failure, Bruneau says.

Almost 60% of nonprofit theaters lost money in 2003, according to the national nonprofit service organization Theater Communications Group. .

“(CHAC) can call itself a for-profit theater if it wants to, but it won’t turn a profit,” says Chris Shelton, former general manager at Tacoma Actors Guild.

That said, Shelton praises CHAC’s innovative approach to solving the problems of nonprofits, which she knows all too well . Her theater closed suddenly and laid off its employees last December, with $350,000 of debt, and is now running in an interim capacity as trustees hash out future plans.

CHAC doesn’t make money yet.

Its business model is divided into theater production, merchandising and concessions, and rentals of the building, an 18,000 square-foot 1917 auto showroom and former school now complete with restaurant, pilates studio, bar and cabaret.

The production budget is $120,000, almost half the total business budget. When CHAC opened, it sold 300 tickets per run. Now it sells an average of 1,750, and the shows pay for themselves, not counting administrative overhead and lease costs, Kwatinetz says. He expects the whole business, which includes a staff of five full-time employees, to be “cash-flow positive” in a year.

“Our overall goal is to build a network of four to six places like CHAC around the country,” he says.

At CHAC, some artists work at Actors Equity union wages, and everyone involved in a production shares any profits. Those checks have been small and infrequent, but the goal is to pay everyone a living wage, Kwatinetz says.

CHAC is an anomaly, though how many others exist is unclear.

A small for-profit called Off-Market Theater opened two years ago in San Francisco, providing mainly rental space to other companies, but inquiries at umbrella groups in major U.S. cities failed to turn up any others.

For many large theaters, the for-profit model may remain unthinkable. Ben Cameron, nonprofit head honcho at TCG, says he has begun telling his Columbia U. theater students to think twice before starting nonprofits: “Being a nonprofit is not a given, the way it used to be.”

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