Arizona Theatre Company says it needs $2 million to avoid closing

Or suspend operations.

The company has announced that unless it raises $2 million by Friday, the beginning of the fiscal year, it will likely suspend operations in order to reorganize.

“If we don’t raise the $2 million, we would, at least temporarily, go on hiatus and not start the season until we recapitalize,” says David Ira Goldstein, ATC’s artistic director.

ATC’s six-play season is slated to open the 2016-17 season on Sept. 10 with the London and Broadway hit, “King Charles III.”

The company’s 2014-15 fiscal year ended in the black, and the same is expected in the current fiscal year, ending June 30, said Goldstein. And, he added, subscription ticket sales for the 2016-17 season have been brisk.

But ATC’s deficit, which had dwindled to a little more than $120,000 in 2010, had ballooned to $1 million under the leadership of then-Managing Director Mark Cole by 2013. After two years at the company, Cole resigned in August of 2013, leaving behind a greatly reduced staff, a fractured board and that looming debt, which ATC has not been able to pay down.

A few donors have been very generous, allowing the company to continue offering full seasons, says Tom Hall, with Albert Hall & Associates, the arts consulting company that has helped ATC with its day-to-day operations. But the donor base is much smaller than what is necessary for the company to sustain operations, he said.

“ATC has been depending on the box office to the tune of 69 percent over the last 10 years,” said Hall. “Equivalent theaters rely on 59 percent of box office; ATC needs a stronger contributor base.”

ATC engaged the arts consulting business about eight months ago to find a replacement for Goldstein, who resigned in 2013 but agreed to stay on until his replacement was found.

“We start every engagement with a thorough assessment” of the client’s business, said Hall, who is authorized by the ATC board to speak for the company.

During that assessment, he said, they found that some deep reorganization was necessary before they launched a search.

“They asked us to help with their ongoing business practices,” said Hall. “I brought in an associate from our team who has been there on-site to get best practices in place.”

One of those practices is to ensure that the theater has the money it needs before the season begins. That includes day-to-day expenses, as well as money to pay down the deficit.

“It’s just not fair to continue a process that may put them in further debt,” said Hall.

That would call for a budget of $7.5 million, said board member Michael Kasser, who has given about $2.5 million to help keep ATC afloat over the last two seasons.

“We can count on about $4 million in ticket sales; we can count on $1.5 from fundraisers and donated income. That’s $5.5 million,” said Kasser, founder of Holualoa, an international investment firm with offices in Tucson and four other cities. “So in order to start the season, we need $2 million.

“It’s not prudent to proceed with the season unless we know the $2 million is available.”

Kasser said he is committed to raising $1 million in Tucson, but feels strongly that Phoenix needs to step up, as well. While corporate and foundation support is more significant in Phoenix, where ATC also performs, Tucson has always had more individual donors, said Goldstein.

“If Phoenix can’t support first-class theater, then we might as well know that now,” said Kasser.

Suspending operations doesn’t mean the death of a theater, said Hall.

“It’s possible to come back,” he said. “But I’ve not seen it possible that they come back as they left.”