Arts Center falls into its first deficit

For the first time in its 22-year history, the Orange County Performing Arts Center reported a deficit Thursday.

Despite having revenues that were slightly higher than its operating expenses during the previous fiscal year, the center lost millions of dollars, mostly due to the sub-prime lending crisis.

“The impact [of the difficult economy] was significant, turning our small surplus from normal operations into a $13-million deficit,” Treasurer John Evans said.

Economic downturn aside, the center has set record numbers for attendance in a season where it added unusual amounts of new shows in an attempt to reach out to different demographics.

More than 1 million people attended shows at the center during the year, pulling in $32 million in ticket revenue, which Vice President Todd Bentjen called “substantially the organization’s biggest budget ever.”

New offerings like a low-cost series of indie rock bands, aimed at younger audiences, and a free preview of the William J. Gillespie Concert Organ as well as free movie nights and $10 dance concerts were significant investments the center made in its future, but they didn’t come without a big financial commitment.

“It was a very ambitious year for us. We launched lots of new programming that’s either very low cost or free,” Bentjen said.

Still, the organization would have remained above water for the year if it weren’t for significant financial losses not related to the performing arts offerings.

In recent years the center has issued hundreds of millions of dollars in bonds to finance all of its new construction, and when the market crashed the company that the center enlisted to insure those bonds, Financial Guarantee Insurance Company, was left on its last legs.

This meant that the nonprofit had to write off almost $9 million dollars of bond insurance, which became worthless. It also watched the interest on its debts soar to 10% — a number that has since been reduced to 2.5% after the center refinanced, said Chief Financial Officer Brian Finck.

Center executives feel that they’re primed for a turnaround.

“Next year is looking very solid because the interest rates went down, we have a lower debt cost and we budgeted more tightly,” said Finck said.

In fiscally tightening its belt the center has had to cut down on new hires, new positions and expenses like utilities.

Management highlighted the silver lining amid all the bad financial news, though, which is that the center is expanding, its audience is growing and it continues to attract more and more top-notch talent.

“All in all, a good year,” said President Terry Dwyer.

ALAN BLANK may be reached at (714) 966-4623 or at alan.blank@latimes.com.