Hartford Business Journal

6 Hartford Business Journal • October 14, 2019 • www.HartfordBusiness.com By Frank Rizzo Special to the Hartford Business Journal D avid Fay arrived as the new president and CEO of Hartford's The Bushnell Performing Arts Center in June 2001, just five months before the theater completed a $45-million renovation and expansion. But Fay also inherited something else from that project: $20 mil- lion in debt. That financial overhang, when mixed with other economic factors over the last two decades such as the tech-bubble burst, shock of Sept. 11, Great Reces- sion and some sizable annual deficits, has bedeviled the institution's fiscal health ever since. However, Fay, 67, finally sees a spotlight at the end of the tunnel. If fiscal projections hold up, The Bushnell could retire its debt by March 2022, which would mark a major financial turning point for the 89-year-old theater. And it's taken a special fundrais- ing campaign, some surpluses, a stable economy, endowment funds and a musical called "Hamilton" to make it happen. "Thank god for 'Hamilton,' " Fay says of the musical's financial im- pact on the theater. The Bushnell took on debt early this century because its capital cam- paign for the renovation — which included construction of the 900- seat Belding Theater and numerous other amenity upgrades — came up $20-million short, Fay said. Of that amount, $5 million was covered by a short-term loan from Webster Bank, which was paid off in eight years. But the other $15 million in debt, financed by the Connecticut Health and Educa- tional Facilities Authority (CHEFA), has been more of a challenge to manage, says Fay, as the economy starting in late 2008 turned into "meltdown" mode. At its peak, The Bushnell was making $1.2 million in annual debt payments (by comparison, the theater's total expenses in recent years averaged around $20 million). When the short-term debt was paid off, annual borrowing costs dropped to $700,000, which was still a millstone for the arts center. Debt payments contributed to The Bushnell running myriad deficits throughout the last two decades. It also restricted the the- ater's financial flexibility. As of this year, The Bushnell still carries $9.2 million in debt, which comes due in 2022, at which point the theater would either have to refinance or pay it off. Fay said he is confident The Bush- nell will be free and clear of its legacy of debt before the deadline, with plans to pay it off with a mix of further fun- draising and budget surpluses. The "Hamilton" boost The Bushnell's debt burden had its most significant impact earlier this decade. In 2012, Bushnell executives de- cided to refinance the debt (at a fixed rate of 3.3 percent) and launch "a quiet" fundraising campaign called the "Leadership Gift Initiative." It came just in time, says Fay. "There were a couple of years between 2012 and 2015 that we were losing over a million bucks a year or so," says Fay. "It was a very difficult time and we were dangling at the precipice but people stepped up in pretty profound ways." A total of $13.5 million was raised "to get us stable," says Fay. About $1 million was targeted for the 2022 debt deadline while other money went "to pay the bills, do capital improvements, grow the company and do program development." It also set out to build the endowment, which at its height — before the financial crisis — was more than $19 million and during the Great Recession collapsed to $12.9 million. It now sits at $25 million. Another good sign: For the past few fiscal years, The Bushnell's led- ger has been in the black, says Fay, "and we finished this fiscal year with a $3.2 million surplus." Fay said he expects the surpluses to continue, spurred by the news of a Dec. 2020 return engagement of the blockbuster musical "Ham- ilton," which should help maintain much of the subscription gains when the show played at The Bush- nell last year. A return engagement next sea- son of the popular "Wicked" musi- cal adds to the hopes for another $3 million surplus, he said. Fay says some fundraising is still necessary before the 2022 deadline. "Our goal is by the end of 2020 to have $5 million to $6 million set ARTS BIZ Debt Relief After two decades of financial challenges, The Bushnell eyes a debt-free existence The Bushnell's FY 2018 financial performance Revenue Theater & other earned revenue $14,177,780 Contributed support $8,636,985 Investment earnings $952,615 Total $23,767,380 Expenses Performance-related expenses $12,961,871 Building & other operating expenses $4,024,813 General & administrative expenses $2,417,690 Fundraising costs $1,369,203 Total $20,773,577 Margin $2,993,803 Source: The Bushnell Annual Report Frank Rizzo The Bushnell's President and CEO David Fay has had to deal with a major debt overhang since he took the job in 2001. Now Fay hopes to pay off more than $9 million in remaining debt over the next few years, creating financial flexibility. PHOTO | HBJ FILE

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