Kimmel Center scrambling for a new financial model after ‘dire’ economic hit from COVID-19

If you want to understand what has made the Kimmel Center the financial winner it’s been until now, look northeast about 90 miles, where Broadway and other New York theaters form a pipeline of shows that have become the single largest financial contributor to Philadelphia’s arts center. In the 2018-19 season, visits by hits like Hamilton and The Book of Mormon generated more than 40% of the Kimmel’s total revenue.

But Broadway theaters are now dark. Ticket sales have been suspended at least through the end of May, the Broadway League recently announced. And while touring Broadway may operate on a timeline separate from New York Broadway, the disruption created by the pandemic has gone on longer than anyone initially expected, raising serious questions about the viability of the Kimmel’s current business plan.

In the COVID-19 era, the future of Philadelphia’s $275 million answer to Lincoln Center, described by one Inquirer critic as a “magical snowglobe world” for its glass-domed structure, has gone suddenly cloudy. Take, for instance, the next two shows in the Kimmel’s Broadway series — Beautiful: The Carole King Musical in February and, in March, Ain’t Too Proud: The Life and Times of The Temptations.

Are they still coming?

“It’s so hard to say,” says Kimmel president and CEO Anne Ewers. “Who would have thought [COVID-19] would have gone on this long? It’s frustrating to see new cases popping up. The most important thing is that audiences and performers and staff need to be safe.”

They also need to feel safe — safe enough to sit arm-to-arm with strangers in a group of a couple of thousand at the Academy of Music, which the Kimmel manages, or the Merriam Theater, which it owns.

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Even when government safety guidelines allow crowds again, it’s not clear that patrons will return in numbers large enough to justify the cost of putting on performances. Ewers cites an ongoing national survey commissioned by arts centers, including the Kimmel, showing that more than half of patrons say they won’t return to the theater until there is a proven vaccine.

“You have to respect that,” she says.

The Kimmel today sits in a largely mothballed state. No public performances are scheduled through at least Dec. 31 at the main Kimmel complex, the Academy of Music, or the Merriam. The staff has been slashed to only 17 from about 110. Some of the Kimmel’s resident companies, like the Philadelphia Chamber Music Society and Philly Pops, are now performing elsewhere. The center’s restaurant, Volvér, remains closed.

Filing for bankruptcy isn’t on the table. “We don’t feel that is the direction we should take,” says Ewers.

In a way, the Kimmel is a victim of its own success. About a decade ago, the center undertook a series of broad changes in its income mix and board leadership. A nonprofit, it was perceived by a number of powerful civic leaders as being in philanthropic competition with its own resident companies, which include the Philadelphia Orchestra. And so the Kimmel reduced its reliance on donations and boosted the percentage of earned income.

The change was applauded by many in the arts community. Until its COVID-forced closure in March, the Kimmel was earning 93% of its income, leaving just the small remainder to be made up in donations — an unusually lopsided ratio among nonprofits. Now, though, with ticket sales gone, the Kimmel cannot lean on a list of loyal donors to the extent that some other groups can.

“We restructured ourselves [starting] in 2008 and 2009 so we would complement rather than compete with the resident companies in terms of programming and fund-raising,” said Ewers.

» READ MORE: Kimmel Center, seeing no earned revenue, cuts most of its staff

The resulting weak fund-raising muscle is now being felt. Kimmel leaders are trying to raise $10 million to cover COVID-related shortfalls over three years. They have so far raised only $3.5 million.

“The problem is now we don’t have the depth and breadth of fund-raising relationships that our resident companies do, so that is what is making this real challenging," says Ewers.

The halt of Broadway disrupts not just this season, but potentially also future seasons. The Kimmel scouts for potential imports several years in advance. The Kimmel’s Broadway booker, Frances Egler, was already mulling bookings for the 2021-22 season when COVID-19 hit.

At that point, “basically about half the season hadn’t opened,” said Egler, senior director of programming and presentations. Hamilton has been scheduled for a return to Philadelphia that season, but the rest of the season, she says, is an uncertainty. “We are planning it, absolutely, but titles will likely change.”

» READ MORE: As Philly museums reopen, they brace for COVID-19′s financial wallop

What lies ahead is a potential revamping of the Kimmel’s business plan to increase fund-raising while reducing the percentage of earned income, which includes both Broadway ticket revenue and facilities rentals. Ewers points out that philanthropy supports the Kimmel’s education programs, and notes that the center will be two decades old in 2021, a reminder that the city’s “new” arts center is now old enough to have substantial cash-hungry capital needs.

In the meantime, though, immediate survival is the focus. A fund-raising pitch that was running on the Kimmel’s website did not mince words.

“The negative financial impact of COVID-19 has been dire,” it stated.

Before March, ticket sale and rentals were on track, and a surplus in the budget had been projected, said Ewers.

Now, of the fund-raising required just to reach the $10 million goal, she says: “We have a long way to go.”