Creative Financing Keeps Pennsylvania Ballet Afloat - Brief Article

Dance Magazine, April, 2000 by Karen Dacko

IN A MOVE to bolster its financial stability, Pennsylvania Ballet has finalized the $1.5 million sale of its headquarters to the Rock School, the 37-year-old company's official dance academy. The deal provides ready cash to pay off the mortgage and bills, and will provide PB a rent-free venue for seven years.

"Pennsylvania Ballet is not in the business of real estate," said Louise Reed, the board of trustees chair. "We've been distracted from the artistic mission by the building. Now, free from the burden of mortgage payments, we feel the relief."

The five-story building, purchased in 1987, houses six studios, administrative offices, and facilities for wardrobe, production, and physical therapy. The Rock School, which has operated with a separate board and budget since 1992, is also located there.

The building will be renovated this summer; the roof repairs, spatial reconfigurations, and installation of lounges and lavatories will be funded by a $1.5 million capital improvement grant from the Commonwealth of Pennsylvania. Of that figure, $500,000 goes to PB for operating costs, and the rest to building repairs. Reed acknowledged that the grant, awarded to the school more than a year ago, got the sale rolling. "It was probably [former PB chairman] Dr. Milton Rock who came up with the sale as a way to retire the mortgage and tide us over. Milton was carrying the mortgage for the building. The idea had been in the mix for a couple of years. However, we'd been trying to get everyone in agreement."

In June 1999, the proposal failed to muster a quorum. Former PB Board Vice Chairman Leonard A. Sylk, who resigned over the issue, contended that "the idea was mishandled and misrepresented. The original deal was for ten years of free rent, but the second proposal was for only seven." The staff, however, did not support the original proposal, Sylk said.

PB Executive Director Michael Scolamiero noted that while the building "could only be sold with Board approval, if another buyer had come forward, it could have been sold."

Approved September 23, 1999, by a two-thirds majority of the Board's thirty-eight members, the sale requires the school to pay its fair share of the costs--thirty-nine percent of annual operating expenses, a little more than $100,000, up from $80,000. PB, with an annual operating budget of $7.3 million, contributes $155,000, Scolamiero said.

The sale, financed by the Shirley and Milton Rock Foundation, "has no impact on dancers," Scolamiero said. When the seven-year lease expires, "we will decide what's next. We may find another space." The company's needs remain the same, while the school, with an enrollment of 400 at the 1101 Broad Street facility, continues to grow.

Since a 1991 financial crisis, PB's budget and working capital deficit have grown to $1.4 million. The goal is to eradicate the remaining liability by 2001.