EDITOR'S NOTE: This is the first installment in a three-story series examining the challenges and successes of Texarkana Regional Arts and Humanities Council's programs. This story explores the financial woes TRAHC has encountered in recent years with its Perot Theatre Series. The subsequent attached stories will explore the organization's way forward in reshaping operations and will highlight the successes of TRAHC's educational programs.
TEXARKANA - Arguably the best flautist in the world, top contemporary Christian acts, a superlative ensemble of tenors, a young and dynamic dance troupe.
Sounds like an appealing arts lineup, yes?
Losers, each and every one.
Losers in terms of actual profit and loss figures as part of the Perot Theatre Series organized by the Texarkana Regional Arts and Humanities Council.
They sound like the sort of interesting, accessible artistic events that may fly - elsewhere. They're winners as performers. They change people's lives. In many places, such shows bring arts-rich experiences to town while also finding an audience.
But not in Texarkana. While all those shows brought cultural enrichment to Texarkana, they also spelled troubled times for TRAHC's Perot Theatre Series. In recent seasons the trend is down with a drop in ticket sales.
It's August, and next year's season has yet to be unveiled for several reasons, including big shows that fell through. It's usually been introduced by now with a membership party and fanfare.
As part of the Perot Theatre Series for 2018-2019, each of those aforementioned shows lost TRAHC money, ranging from the $23,523 actual loss for the band NewSong's tour stop here to a $11,752 loss for dance crew Ailey II's powerful performance in February.
Added together, the 2018-2019 Perot Theatre Series lost $65,842, according to series reports provided by TRAHC. That's a lot, but hardly the only season TRAHC lost thousands.
The '15-'16 season, for example, saw TRAHC lose $23,370. That year brought a '70s-style, disco dancing stage show and a beautiful, family-friendly holiday tale with neon puppets: both double-digits-in-the-thousands money losers. The '14-'15 season? Losses totaled $55,873. The '16-17 season? Losses totaled $12,754.
One sure money-maker? Comedian Jeanne Robertson, who made TRAHC money both times she's performed here recently: $15,280 this past season, $6,313 in 2015.
The Perot Theatre series, which is entirely separate from outside rentals of the Perot like a Willie Nelson or Cody Jinks concert, may have never been an overall money-maker for TRAHC since first conceived, but these losses coupled with other factors put TRAHC in a financial bind.
TRAHC's financial woes were so acute that operational funds were in short supply earlier this year. TRAHC borrowed from reserve funds and considered opening a line of credit, say TRAHC's executive director, Brian Goesl, and members of the board and executive committee.
"It's the fact that membership has continued to fall, and across the country what all of us as presenters are seeing is that memberships are falling - as far as these types of organizations are concerned that have been in existence for 30 or 40 years or longer - because people are not willing to extend themselves just in support," Goesl said.
Across the country, Goesl said, the trend to support performing arts organizations at the ticket booth has also changed dramatically.
"Unless it's somebody they recognize, they've seen on TV or they've followed for a long time, they're just not willing to buy a ticket. They used to be because it was for the greater good of the community. We still have some people that feel that way," he said. But some of those longtime supporters have aged and passed away. Also, donations to nonprofits are down, he said, another financial hurdle.
Talking about season losses, Goesl said, "This isn't something that just happened this year. But the difference is we no longer have that core group of people that are buying tickets in support of TRAHC shows."
Discussing specific shows, Goesl says a Whitney Houston tribute act about a year ago at the Perot, a TRAHC special added to the summer lineup, caused TRAHC to dip into membership money for '18-'19, the next year. It was essentially digging into the fund as an advance, he said.
"Until this year I never had to do that," Goesl said. He's never had to pre-spend money this way, he said. He said the executive board and TRAHC board approved the expense of this show.
Goesl said a cross-cultural show with a performer who hit those Whitney Houston notes looked good. "She'd been turning great numbers," he said.
Here in Texarkana? It sold 100 seats in a house that fits more than 1,500.
Expectations vs. Reality
For show after show, season after season, a wide gulf consistently exists between projected ticket income and actual ticket income. The same is true for projected profit or loss and actual figures.
For the 2018-2019 season through the Ailey II ballet, the difference between projected income and actual income was a $103,373 shortfall. For the prior season, that figure was roughly the same, a negative $107,023. Back in '14-'15, this figure was $87,862 to the negative.
About that 2017-2018 season, Goesl points to shows like the New York Philharmonic, which at one time would have been a phenomenal success, he said. They only took in $28,711, which was 302 seats sold (compared to a projected 675) for this Oct. 7, 2017 show, according to figures he provided. That was nearly $7,000 less than projected.
"Pinkalicious" a month later? "That show, across the entire Southwest, has never lost a penny for anybody," Goesl said. "Not a penny. It's always made money."
But Texarkana lost much more than mere pennies. It lost TRAHC $13,619 in actual figures. The variation between the expected profit/loss and actual profit/loss, according to reports provided, amounted to $11,164. What's the difference with us?
"That's a really good question," Goesl said, pointing to possible reasons like soccer or the weekend. "I don't know," he said, noting Saturday children's shows like that one haven't done well. The trend has been to lose money on Saturday daytime shows for kids.
"We thought that Saturday shows would be great for kids and for families," Goesl said. But that wasn't the case.
"As you can imagine, many variables actually affect how many actual tickets are sold for that specific performance. You always have competing events, weather, venue, show preferences/titles etc., which will dramatically affect a show's sales," Goesl said.
Or there's "Rudolph the Red-Nosed Reindeer," which arrived that same month as "Pinkalicious." It sold 981 seats, 78 % of the house. It lost $894 overall, but the variance between projected figures and actual profit/loss was a negative $4,449. "The show looked good. It looked like we had a big audience," Goesl said.
"Sleeping Beauty" sold well at 717 tickets, but it fell $3,632 short of projected income - still considered a loss.
A success from '17-18? "Cirque Holidaze," which brought a $12,600 profit, a figure $9,480 more than TRAHC's projection. It was the only net moneymaker for that season in terms of projected profit/loss and actual profit/loss.
Goesl is quick to point out logistical challenges that prevent certain shows from happening - tour plans may change, for example. And sometimes shows land at the wrong time of the calendar. "We couldn't sell Clint Black during the Four States Fair," he said.
Touring theater shows don't sell well, but the director says they have people ask TRAHC to bring them all the time. Costs also aren't as high for stage plays and, after all, TRAHC aims to bring culture to Texarkana. The logistics of getting contracts finalized has also changed with more uncertainty in the mix. The season has been decided later and later, the director said.
"There is no certainty anymore," Goesl said.
Getting back to this past '18-'19 season, Goesl said the majority of shows were in the fall. It was front loaded. That was the difference that put TRAHC in a cash flow crunch, he said.
"Normally we would have been able to go forward and carry some of this debt forward with us, but in this case we couldn't do that because we ran low on cash in January," Goesl said. He said they weren't in dire straits but TRAHC was short of cash.
He also blames paying $26,000 for the Whitney Houston tribute show, which as a TRAHC special was an added expense they normally wouldn't have had to pay. TRAHC was also late receiving show support payments from schools, he said.
Another way to put TRAHC's financial condition in perspective is through revenue less expenses for tax years 2017 to 2013, according to the organization's 990 tax forms. They're all to the negative this amount: $37,680 (2017), $85,261 (2016), $34,878 (2015), $11,433 (2014), $134,905 (2013).
Digging into reserves
Goesl said TRAHC absolutely considered borrowing outside money this year. They decided to borrow $64,500 from themselves instead, he said.
They had it in reserve funds so they borrowed it from there. How much do they have in reserves? "Well, we don't have a lot left now," he said.
Goesl said that after talking to a bank he told the board they could borrow $50,000 to $70,000 from the bank, but someone on the executive board suggested TRAHC borrow it from themselves. They could do so with funds they'd set aside to set up an endowment fund.
"Because that endowment was set up specifically to be able to offset any kinds of expenses that we may have, any kind of shortfall that we had," Goesl said. "So that's what we used the money for. We had a shortfall."
Nobody argued at the time about TRAHC borrowing money from itself this way, he said, but someone did so later. He declined to say who that was.
TRAHC's director said membership has dropped significantly. They had a goal one year of $162,000 but came in at $146,000. "This year we had a goal of $146,000, and we came in at $106,000," Goesl said. TRAHC used to have more than 600 members, but this year they have 29 business and 319 non-business members, he explained.
"Part of that is because membership has been so tied to the series," he says. They're now moving away from that, however, but it's hard to change the idea in people's minds.
Ticket sales have never, said Goesl, paid for the Perot Theatre Series shows. "It just hasn't. It's membership that's always made it up," he said.
TRAHC's longtime board member Don Morriss said he had questions about the reserve funds transfer when he was asked to sign for it. He asked if the executive committee approved it and was told that they had. But he's not sure they were fully informed about how much money was being moved around.
Morriss said he was told funds were needed and they'd be repaid right after Party with Picassos. He said he didn't disagree with the move, just that he raised questions.
"Some of them were designated and some of them were just like a 'put it over here for a rainy day' so you don't use it for operations," Morriss said about funds shifted. He said it was explained as a short-term solution. He's been told some has been repaid but that it will take a while to get it completely repaid.
Morriss said projected income funds compared to actual income for shows indicate an "overly optimistic budget."
"I would just say the budgeting was out of touch with what the community wanted to see," Morriss said, adding, "We're either picking the wrong shows, or we're advertising it wrong or the community doesn't care. One of those three, probably a combination of all three."
Morriss is not the only board member to acknowledge the predicament TRAHC faced this year.
"The financial problems that TRAHC has had relate back to the series shows," said Ken Cowling, board president for TRAHC. That's not just for this past year, but also the previous financial year, which includes the Whitney Houston tribute show.
That put TRAHC "behind the gun" at the start of this year, he said, because of that series special where TRAHC fronted the money. Then, to follow, series shows lost money this past season. Series shows, he point out, help sell TRAHC memberships. In February, when the shows were done, TRAHC had money problems.
Cowling described the financial problem earlier this year as a cash flow problem with money on the way but it hadn't come in to TRAHC yet. That was part of the issue.
"We're on a much stronger footing today than we were three months ago," Cowling said. And while a line of credit was considered, other measures were taken by Goesl.
"He had some other funds, TRAHC funds, and some other accounts, and he shuffled some of those around until the immediate problem we had with cash flow was resolved. And we haven't had to do anything since then," Cowling said.
Executive board member Travis Ransom said the move to use designated funds made sense, rather than a loan that costs interest. "It's the smart thing to do. Does it make everybody uncomfortable? Yeah, nobody likes to do that," he said. It's not nefarious, he said, but it's like dipping into the savings account.
Goesl said the idea was to not owe anybody money. "We have never owed anybody any money since halfway through (previous executive director) Ruth Ellen Whitt's tenure," he said. "We had no debt. That's one reason we've been able to incur the losses that we have because we have other assets."
TRAHC's finances have improved from earlier this year because they've cut back on utilities, travel and other areas where they can cut, he said.
"On the bright side, we do not owe any monies to an outside entity and financially we are still very stable. With the very generous support of individual donors, proceeds from Women for the Arts' Party With Picassos and Bowie County we now have, after many years, a much needed ADA Certified Ramp leading into the Regional Arts Center," he said.
So why has TRAHC continued in this way for so long when Perot Theatre seasons lose so much money?
Said Goesl when asked this question, "Because part of our contract with the city, part of TRAHC's contract with the city, is to provide performances at the Perot Theatre. That's what the contract is." He also says it's their mission: growing people and the community through the arts.
"By the same token we are not a for-profit organization," Goesl said. People do expect TRAHC to provide cultural opportunities for the community. "We take that seriously, seriously to the point we lost so much money last year - $70,000." That's the series and more.
"When we book things we have to be careful what we really book," Goesl said, noting the board is now looking at making money. It used to be that membership revenue would cover that because TRAHC provided a service to the community, he said.
Like the TSO and others, TRAHC acts as cultural leaders in the community, Goesl said, and that's touted when people promote Texarkana and look for economic development.