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Future Talk : Uncertainties of booking mix and funding pose questions for center managers

September 21, 1986|ALLAN JALON | Allan Jalon is a Times staff writer.

Managers of the Orange County Performing Arts Center predict that next week's opening will usher in a time of considerable struggle, financial and artistic.

"Everybody thinks we just throw our doors open and we're home free," says Thomas R. Kendrick, the center's executive director, "but it won't happen that way."

The main hurdle, Kendrick says, will be raising money to run the facility during the 5 to 10 years before the center can tap its projected endowment of $64 million. The endowment--to pay for performances and day-to-day operations--is being assembled mostly from pledges from donors' estates.

By contrast, there are a number of successful new arts centers that have not depended to such an extent on deferred pledges for their endowments. For example, the Tennessee Performing Arts Center in Nashville opened in 1980 with $5 million already earning interest.

Says Kendrick: "The center does not have certain sources of funding that other centers do. Nobody wishes more than I do that we had that $64-million endowment in place. I'm cautioning everybody that we're still going to need a high level of subsidy for years to come."

Because the center is privately funded, it is not required to publicize its financial ups and downs. Yet the challenges facing its manager could be gleaned from recent interviews with Kendrick and managers of similar centers around the country.

Financial success for regional and civic arts centers, almost always nonprofit institutions, usually means minimizing their deficit. Operating at too much of a loss can start a downward spiral, eroding programming flexibility and community confidence. "If you want no deficit at all, well, that's easy--just close our doors," says one center official who asked not to be named.

Performing arts centers depend on a variety of income sources, which include mixtures of programming and operating subsidies from corporations; public funding; a percentage of the box-office take from events that the center funds; rent paid by outside sponsoring organizations, such as the Orange County Philharmonic Society, and earnings from parking lots, restaurants and liquor concessions.

It is ironic that Kendrick should now run an arts center that has no independent sources of income, such as parking lots or restaurants. When he was operations manager for the John F. Kennedy Center for the Performing Arts in Washington, he says, he counseled planners of new centers about the benefits of such moneymakers. Kendrick says that the Kennedy Center made about $1.5 million a year from parking spaces it owned.

Two parking lots serving the Orange County center are owned by C. J. Segerstrom & Sons, the center's largest donor to date. So, parking yields no financial benefit to the center.

There is no restaurant. A gift shop is planned but will not begin operating in the immediate future, Kendrick says. (Len Bedsow, who preceded Kendrick as executive director, says it was decided that the cost of parking lots would push the center's fund-raising goal too high. Bedsow says that there is no restaurant because he had little confidence that one in the center could succeed.)

No plan exists for the center to receive public funding in the near future. After all, seeking such help could well undermine the center's much-touted status as a symbol of private cultural enterprise. Yet Kendrick says that center officials are exploring whether the center could eventually receive a share of the tax that Costa Mesa imposes on users of hotel rooms. "The subject has been raised" with local officials, says Kendrick, who declines to discuss the matter further.

The City of Costa Mesa imposes a 6% bed tax. Orange County imposes an 8% transient-occupancy tax in unincorporated areas, but Kendrick says that no approaches have been made to the county.

Kendrick was hesitant to give a detailed breakdown of the center's budget projections, saying that they would be "rough and preliminary estimates." Yet he did offer some figures that he says reflect planning for 1987, the center's first full calendar year.

Operations (utilities, personnel, etc.) and programming that year will cost roughly $9.5 million, Kendrick says. He estimates that close to half of that--$4.5 million--will have to come from contributions. (That is about the share that Kendrick hopes will be sustained annually at least until the endowment begins to earn substantial interest). Roughly $4 million will come from events funded by the center itself. About $800,000 will come from rent paid by outside sponsoring organizations; another $200,000 will derive from the center's five bars, which will serve drinks during intermissions.

As for the $4.5 million subsidy, Kendrick said in an interview in early July that the Orange County center did not have a development staff in place to raise the monies. And he admits that even when one is in place, the road will be uphill for reasons that include the following:

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