Statement Regarding Virginia Rep’s Financial Crisis

What was the financial situation when Phil left?

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Virginia Rep’s FY2022-23 audit conducted by Keiter for the period ending June 30, 2023, indicated $10.1 million in total assets, $6.6 million in net assets, and a cash surplus of $750,000, in addition to $1.26 million in restricted gifts to the campaign and specific programs.

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However, Virginia Rep faced a significant operating budgeting challenge for the 2023-24 fiscal year. The cash reserve was still intact but significantly diminished, audiences still had not returned to pre-Covid levels, and the Board mandated that Virginia Rep pass a balanced budget for FY2023-24. Tough decisions were on the table, including potential pay cuts and layoffs.

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Yet, all three Artistic Directors (at that time), the Managing Director, department heads, the Board*, and finance committee worked together to create and approve a balanced budget plan for FY2023-24 that kept all positions intact with no pay cuts. It was an aggressive budget that hinged on exponentially increasing educational and children’s offerings at the newly acquired Virginia Rep Center for Arts and Education, as well as generating additional contributed revenue, and simultaneously reducing expenses.

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The organization was coming off a hugely successful capital campaign ($5.2 million) for the new building and was buoyed by the promise it held to expand youth- and family-centered offerings and the associated revenue they would generate, particularly since the building was scheduled to be paid off by Dec. 2023.​

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*The Board experienced a great deal of attrition after the budget was passed.  Some members rotated off after their terms concluded in June 2023.  The vote to terminate Phil Whiteway from his position in August 2023 resulted in the resignation of several additional members, including newly elected officers.  The Board went from a group of 31 in June to a group of 15 by September.

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Why would Virginia Rep purchase the Scottish Rite Temple if it was in in dire financial straits?

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At the time of purchase, October 11, 2022, Virginia Rep was not in dire financial straits. Like many theatres, federal Covid relief funds allowed Virginia Rep to stay afloat during the pandemic and fundraise to create a robust cash reserve, which enabled the organization to build back its full operations. The 2021-22 season was the first full season of programming since before the pandemic.

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While the pandemic was in full swing and all theatres and venues were shut across Richmond, Virginia Rep was notified that the rent at their leased theatre space at Willow Lawn, where all children’s productions and educational camps had been taking place for nearly a decade, was going to increase by approximately 300%. Virginia Rep was able to negotiate out of that lease, but it meant that it no longer had a home for its children’s programming. In the meantime, the Scottish Rite Temple had entered the real estate market, with the price steadily dropping over a period of time from $6 million down to $3.5 million. It was the perfect opportunity to establish a nationally prominent permanent new home for Virginia Rep’s youth-centered programming .

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Virginia Rep’s purchase of the Scottish Rite Temple came about as the result of a year and a half of due diligence (all of 2021 through spring 2022) conducted by the Board, facilities committee, finance committee, and staff, engaging multiple consultants, architects, contractors, and subject matter experts, including the previous owners. The finance committee and accounting department ran a series of financial scenarios and models. An external fundraising consulting firm conducted a feasibility study to determine an appropriate level of community support. All results pointed to viability and profitability with the opportunity to exponentially increase educational and children’s programming, and the board voted to move forward with the purchase. (For reference, the Willow Lawn theatre held 200 seats; the Scottish Rite Temple holds 650 seats.)

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The needs of the building were known, documented, and triaged, and accordingly, a capital campaign was to take place in three phases. Phase I was completed in 15 months to raise $5.2 million from the philanthropic community (including $1 million from the Board and $1 million from the Bogese family) to pay off the loan on the building by Dec. 2023, begin initial improvements, including remediating environmental concerns, and create a $1 million reserve fund for the aging HVAC. No government funds were issued to support Phase I. Phases II and III were to raise funds for additional improvements (lights, sound, fly system, other structural enhancements) and an endowment to establish the long-term sustainability of the facility. These phases were to take place over a period of approximately 10-15 years.

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The building is the original home of the Children’s Theatre of Richmond. It was the stage where Bruce Miller and Phil Whiteway mounted their first children’s theatre production together before they launched Theatre IV. Countless dance recitals, concerts, and other performances have been held on its stage over the decades. The building has a long history of being a significant contributor to the performing arts and Greater Richmond’s cultural landscape.

 

What about Virginia Rep's $1.7 million deficit?

 

Virginia Rep’s original emailed statement indicated that “the new leadership team has been greeted with a legacy deficit.”  Many inferred from this statement that Phil Whiteway left the organization in a precarious financial position. While they did not issue a clarifying email to their readership, Virginia Rep immediately corrected their statement on their savetherep.org website, clarifying that the $1.7 million annual operating deficit was in fact accrued in fiscal 2023-24, after Phil Whiteway's ouster. (Fiscal 2022-23 audited financial statement information is outlined above.)

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Virginia Rep cites soft post-pandemic ticket sales, reduced contributions and unfulfilled pledges, and increased costs of doing business as reasons behind their deficit.  We also know that decisions were made to pause, reduce, or eliminate core revenue-generating programs, including:

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• the statewide educational tour to Virginia schools

• the national tour to major performing arts venues

• the Disney Musicals in Schools program

• Hugs and Kisses (Virginia’s principal child sexual abuse prevention program since 1983)

• FIELD (Family Involvement in Early Language Development)

• TALL (Theatre Arts Learning League, like the Police Athletic League, only theatre)

• Gospel Nativity holiday celebration

 

These programs flow from Virginia Rep’s 49-year commitment to the unique and powerful ways in which theatre can impact youth, families, and the community. However, we also recognize that all of these programs are time-consuming, challenging, and have associated costs.

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It looks like Virginia Rep sold the Scottish Rite Temple. Do you know who bought it? Was it you?

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For the past three months, one of the foremost goals of ATLAS Partnership was to save the Scottish Rite Temple property on Hermitage Rd., preserving the intended purpose and vision in which the community invested $5.2 million.  We did not want to see it torn down and believed (and still believe) it has a vital place in our community's performing arts ecosystem.  Shortly before Virginia Rep announced its emergency fundraising campaign in mid-September, ATLAS Partnership made an offer to Virginia Rep to acquire the building.  It was declined, as our offer fell short of solving Virginia Rep’s financial challenges.  We did not submit a counter offer.  We saw the recent news that the building is currently under contract.  It is our understanding that the buyer intends to leave the building intact.  We do not have any additional information at this time.

 

I made a substantial gift to the Virginia Rep Great Stages Campaign to support the purchase of that building. Should I ask for my money back?

 

We are encouraging donors to contact Klaus Schuller directly to discuss their individual situations (kschuller@virginiarep.org). 

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If you have additional questions regarding Virginia Rep's position, please visit Virginia Rep's FAQ on their Facebook page or www.savetherep.org.
 

If you have specific questions for ATLAS Partnership, please contact Managing Director Emily Cole-Jones.