TORONTO — You can color Canada’s Shaw Festival red.

For the second season in a row under artistic director Jackie Maxwell, the classical repertory operation in Niagara-on-the-Lake has posted a seven-figure deficit.

At its annual general meeting on Friday, the org revealed a C$2.37 million ($1.9 million) shortfall on its 2004 season, which operated on a C$24 million budget. In 2003, the fest not only ran a C$3 million operating deficit but also had to include C$1.2 million of expenses incurred by capital and endowment campaigns.

As a result, the 2005 season has been cut down in size — both in number of shows and actors being employed — and the 900-seat Festival Theater will present only three shows: “Gypsy,” the fest’s first musical staging, and the Shavian comedies “You Never Can Tell” and “Major Barbara.”

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Fest’s current debt comes to a hefty C$6.57 million, which the board decided to reduce to C$4.4 million by contributing just over C$2 million from a “rainy day” fund set aside in previous years. The 2003 deficit was blamed on the SARS epidemic, but no such problems existed for the poor showing in 2004.

Although much of the 2004 season was critically praised, the rave notices didn’t translate into box office. Plays such as “Three Men on a Horse” and “Nothing Sacred” at the org’s flagship Festival Theater were especially poor sellers.

By comparison, Canada’s larger Stratford Festival posted a small C$37,000 surplus on a C$52 million budget despite a 4% drop in attendance.

For the 2005 season, Shaw begins previews April 1. Stratford follows April 19. Both companies continue producing into November.