Ed. note: There was too much information from Sunday’s talk to cover in one piece. Look for ongoing coverage of the plans, the numbers behind the decisions and the implementation of changes in the operations of the Art. For now, here are some of the highlights.
On Sunday, Sanford Hess, operator of the Art Theater invited patrons in for an informative talk he called “The State of The Art Theater.” A good number of people turned out to hear Hess expound on the current status of the Art, the three-year outlook of his tenure and what direction the next three years might take. There was a slide show with numbers and figures that are all very important, but you’ll hear more about those details in another article. Basically there’s a lot of revenue fluctuation now and it’s nothing to do with the operations; essentially — “it’s the movie, stupid,” as Hess put it.
The top five grossing films at the Art over the past year accounted for 30% of total sales: The Tree of Life, The Girl With the Dragon Tattoo, The Girl Who Played With Fire, Babies and The Girl Who Kicked the Hornets’ Nest. The lowest grossing, well, Hess admits that he chose some of those under-performers based on what interested him instead of considering his audience. But that’s one of the admirable qualities about Hess, he isn’t afraid to admit his mistakes.
When Hess took over the Art a little over 18 months ago he decided to go with two three-year lease terms. With that first term’s end in sight, he is thinking about what direction he wants to go. This second set of three years will mean a 16 percent increase in the rent and, as much as Hess loves the Art and all it stands for, he’s seeking a way out. But he isn’t ready to run. He really wants to remain involved and see to it that the Art lives on and thrives and that all of the locals that love it can continue to do so. “There are people that want to help the Art out. My goal is to give people an outlet for it,” Hess said.
Hess outlined three possible scenarios that the Art could take in the coming years.
1. Stay. Staying would mean that Hess has to shell out the 16 percent increase in rent to Daniel Kraft, owner of the building. In addition, Hess knows that he would need to spend around $70,000 on a digital projector. This, sadly, would be in response to industry talk about the end of 35 mm film. Hess said that projections are for 2012 or 2013. It would also be wise to buy 3D capabilities, which also means a new screen. It’s a big endeavor and those are just a few of the concerns to address.
The last major component of another three-year tenure for Hess would mean an increase in prices, both at the door and the concession stand. The Art’s prices on food and drink are significantly lower than the Beverly and Savoy 16 of course, but changes would need to be made. If you’re familiar with the movie industry at all you already know that concession sales are one of the major factors in profits.
2. Find someone else to take over. Some passionate cinefile and/or businessperson (though I hope that whatever happens with the Art, there’s someone in charge who loves both the business and movies themselves) could step into an already operating business and get Hess’s help step-by-step. “Honestly, I would love this,” Hess said.
3. Create a theater co-op. Hess says that he believes this to be the most likely scenario. The development of a community owned co-op would give members a stake, give them benefits (discounts and access to special events). In addition, members would be “voluntarily supporting a cause,” as Hess put it. His examples were both the thriving Common Ground Co-op in Urbana and a cooperative theater in Minnesota called the Morris Theater.
In this plan, the theater’s equipment would be purchased from Hess, the lease could be sublet and a board and manager could be established. The benefits of this model, according to Hess would be the reduction of debt (money received from investors could pay off loans for which Hess and lenders have received no returns). A debt-free organization would allow things to run more smoothly and, obviously, the lack of compounding interest would be quite a burden lifted.
On the downside, a lot of funds would still be going to Kraft to cover the rent, and the selection of films would now be in the hands of a cooperative. “Never, never try to make film decisions by committee,” Hess said. He says the keys to consider are to look at box office numbers, critical reviews, and the film’s availability. The Art has to compete with big theaters for what comes in and there aren’t always a whole lot of options when films, such as Black Swan and The King’s Speech, two that Hess wanted, were just simply not available to him. And there’s audience perception. Of course, “you cannot sustain a business if you’re always choosing the movies people are asking for,” as Hess put it.
Hess outlined five steps to make a cooperative a reality:
- Identify a board.
- Prepare a business plan.
- Sign up owners and develop a capital campaign.
- Hire a general manager.
- Transition operations (the goal being by the end of 2012).
Another factor at play is the space itself. Is it cost effective to stay in the current building? It’s sad to think about the Art no longer occupying that space, but how do the other options compare? Hess mentioned a handful of other possible locations: the Rialto Theatre space across the street, an empty space out near This is It Furniture on Country Fair, The Orpheum (which has a four-screen capacity), or, brace yourself, a whole new building.
The Art Theater has been changing ever since Hess took over and it looks like things are only going to keep going in that direction. Movies are big business, but running a “true independent theater for movie lovers” isn’t necessarily. Hess is proud of some of their accomplishments, including the upgrade of a projector, which cost around $8,600. Unfortunately, the bulbs are $1,000 a pop and need to be replaced every six months. This past year also saw the Art Theater as a part of Ebertfest. Hess was given the list of films early and was able to offer alternate showings, all with Ebert’s support.
The options are out now. What will the future hold? What does the community want to see happen? It’s exciting and tense times for fans of the Art.