Saturday, October 29, 2011

How To Take Over 177 MacDougal Street

[A furtherance of two conversations (see below for more) that took place today.]

They: How would a new organization take over the property at 177 MacDougal Street?
We: If (and that's a big "if") you should have an organization registered as a 501C(3) (or, you know, if you know someone who does) and you go to the landlord of 177 MacDougal Street (A J Clarke) you might be able to negotiate a lease beginning January 1, 2012.
They: But when we started Theatresource we didn't have a 501C(3) for... a year I think.
We: Yes. Yes you're right. But I strongly advise against operating without one, at least as an umbrella organization. That being said, the landlord would, if willing to rent to you, probably require that an individual put the space in his/her name. For a 7-year lease. Which will start at (likely) around $9,700 a month and go up from there.
They: What about all the stuff in the theater? The lights? The dimmers? The board? What's the deal with it?
We: That's a good question. Now, the landlord might decide if Theatresource is behind on rent, that he might be able to seize all of the assets.
They: If he should seize all the assets then he'd just rent them to a new tenant?
We: Yes. If that's what he's planning to do. It's difficult to know because we don't know what sort of deal the Board is striking with the landlord. But yes, just like the restaurant business, it's nominally better to be the second tenant in the building than the first.
They: What do you mean?
We: Well typically in a commercial lease you get the first two, sometimes three, months free on a lease. If, and as the Board is cancelling shows after the 1st that's a big "if", you can get rentals in the first month and you have the gear (lights, grid, dimmers, etc.) because the landlord seized the property inside the building, the theater becomes a "turnkey" operation. Then this is what happens financially:

  • You're paying a month-and-a-half rent up-front ($15,000?)
  • You can start renting out the space to theater companies immediately
  • You have zero debt load. 

Which is a relatively cheap way to get into the theater business.

They: Do you think the landlord would be amenable to renting to somebody else?
We: Landlords are a tad arbitrary. Maybe he just doesn't want to. And he's trying to sell the building (and the adjacent buildings). That being said, the market for rentals right now sucks. So yeah, they should be. It sounded to me like the landlord was tired of dealing with the Theatresource Board, but who knows?
They: What if Theatresource strips the theater before moving out?
We: There's a couple issues with that. One is logistical. Where are you going to put all the lights and the dimmers? Plus, who is going to help you?
The second issue may be legal. Depending on the deal the landlord has, that stuff might be his. I don't know the answer.
They: How much is the stuff -- the lights and sound gear -- worth? 
We: The dimmers are very beat up. That being said, they actually work (or, at least a majority of dimmers in each pack work). Replacing them is going to be a few thousand dollars at the very least. The light board itself would cost a few thousand dollars to replace (even used). We just had the light board overhauled.
We can spend any amount of money on lighting instruments. But fresnels (which our LD's complain we don't have enough of) are relatively cheap to rent.
Sound gear? You can spend any amount of money you like on sound. We have four JBL speakers, a couple cheap amplifiers, some tiny Behringer mixer, and a Mac Mini to run Qlab with. That's, uh, whatever that is.

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