When Aaron Bare came to work for the Carolina Theatre in 2006, it wasn’t the buoyant venue the city knows today.
“The shows weren’t particularly exciting. It’d be Gregory Popovich’s Comedy Pet Theater or [saxophonist] Boney James or Todd Oliver’s talking dogs,” says Bare, who came on as the theater’s director of marketing and was later promoted to chief operating officer. “Our marketing was an afterthought. We’d send out direct mail and postcards. We didn’t have a Facebook page. Our website was atrocious. The whole place was just kind of antiquated.”
Financially, the theaterowned by the city of Durham, which in turn pays an annual subsidy of about $600,000 to the nonprofit Carolina Theatre of Durham to operate itwas in a negative feedback loop of cutting costs to fight sagging revenues. The arrival of the Durham Performing Arts Center in 2008 exacerbated the problem. Was there still a role for the historic 1920s theater in modern Durham?
In 2009, president and CEO Connie Campanaro announced she would be stepping down. Bob Nocek was brought in to replace her. Nocek’s background was in working with national concert promoters. He’d booked an eighteen-hundred-seat venue in Wilkes-Barre, Pennsylvania, and later served as assistant general manager at a ten-thousand-seat arena there. The thousand-seat Carolina Theatre wasn’t as big or slick, but Nocek saw an opportunity for reinvention.
“From the outside,” Nocek says, “it looked like a small-minded community organization that wasn’t doing much with its potential. Which is not uncommon. A lot of organizations that start grassroots get stuck in that gear. What I saw, though, was a market that was starting to grow and a city starting to turn, and I felt that there was a path forward for the theater as a more commercial venue.”
“Bob came in and said, ‘We’re going to have growth, we’re going to have big shows,’” Bare says. “We got on Ticketmaster. We built up a massive email database. We stopped announcing shows in the traditional wayall at once as a seasonand instead spread them out throughout the year, more like a commercial venue.”
It was slow going at first. But by 2013, things picked up.
“We had figured out the brand and the programming niche,” Bare says. “It’s not easy to find your niche in this business. You have to try lots of things and see what works, and it’s expensive.”
The niche was, roughly, mid-level artists not big enough for DPAC but too commercial for Duke Performances. There were big gets: Brian Wilson, Lauryn Hill, Morrissey. In 2014, comic Aziz Ansari did four sold-out sets over two nights. (“Our highest-grossing shows ever,” Nocek says.) The theater’s Film: Acoustic series brought names like Jeff Tweedy, Wayne Coyne, and Neko Case to host screenings and discussions of their favorite films.
And the theater stayed true to its mission. In 2015, it launched Series 26, a string of eclectic shows like the Dance Theater of Harlem, Chick Corea & Béla Fleck, Paco Peña’s Flamencura, and the Japanese drumming act TAO: Seventeen Samurai.
The theater was doing more programming than ever beforeover a hundred shows in 2015, up from just twenty-five in 2009. Revenues doubled to $5 million. In 2015, the theater cracked the Top 100 list of concert-industry trade publication Pollstar; Durham’s once-sleepy community theater was now selling more tickets than all but ninety-nine theaters in the world. In February 2015, the theater announced that it had turned a profit for the second year in a row.
“There was a sense that we had made it, that we had figured it out,” Bare says. “We were the little theater that could.”
Everything was clickingand then, suddenly, it wasn’t.
A year later, the Carolina Theatre is a million dollars in debt and begging the city for a cash infusion to keep its doors open. Nocek is gone. Bare is gone. In April, Jared McEntirethe last person in the building with booking experiencedeparted. Not including the art-house films that run year-round, the upcoming calendar shows only six events between now and Labor Day.
Whether the theater will reassert itself as a venerated Durham institution or wither into nothingness is very much an open question. And the answer largely depends on Dan Berman.
The symphonic sounds of the Southeastern Regional Ballet Association swirl up from downstairs as Berman pulls up a couple of chairs in the Carolina Theatre’s second-floor lobby. Berman, a Duke undergrad and law grad, has lived in Durham for the last eighteen years. He made his bones in the radio business, buying and selling stations in northeastern North Carolina and Virginia, and sold the last five years ago. Before becoming the Carolina Theatre’s interim CEO in Januarya pro bono gig for himBerman had been easing into semi-retirement. He still looks the part: shaggy white hair, an untucked powder-blue oxford, jeans, brown loafers, no socks.
When Berman came onboard, he only knew what he’d read in the papers in December: massive accounting errors had caused the theater’s leadership to believe it was running a surplus when, in fact, it had run up a deficit in excess of $1 million. Upon reading about the theater’s woes, Berman had called his friend, Sugar Hill Records founder Barry Poss, who sits on the theater’s board.
“I said, ‘What’s going on over there? It sounds like Full Frame all over again,’” Berman says.
A decade ago, the Full Frame Documentary Film Festival broke away from Duke’s Center for Documentary Studies and became an independent operation. It soon ran into financial trouble. “Poor accounting, some overspending,” Berman says. “I was asked to join the Full Frame board and was made finance chair to try to help untangle the mess and figure out a plan moving forward. We moved it back to the Center for Documentary Studies so that it would have resources behind it. It worked out well.”
The Carolina Theatre board hopes Berman can work the same magic. But here he faces a considerably more complex undertaking.
The generally agreed upon chronology of how the Carolina Theatre ended up in its current predicament is that, one day in May 2015, Nocek got an email from the bank informing him that the state had placed a levy on the Carolina Theatre’s account. It owed more than $155,000 in unpaid taxes. The person directly responsible for this oversight was finance director Sam Spatafore. (The INDY‘s efforts to contact Spatafore were unsuccessful.)
Nocek notified the city, and Spatafore was fired within days. The theater worked out a payment plan with the state and had things squared up by July.
Spooked, Nocek brought in an outside accounting firm to take a closer look at the theater’s books. They were a bigger mess than anyone had imagined. Dozens of invoices had not been entered into the financial reports. Large chunks of revenue had not been accounted for. Larger chunks of expenses had not been accounted for. The accounting firm had to reconcile dozens of vendor accounts from scratch.
In the end, the Carolina Theatre had lost more than $830,000 in the previous two years. Add in the $225,000 long-term deficit it had been carrying for years, and the theater was more than $1 million in debt.
“It was crushing, to say the least,” Bare says.
Nocek reported the information to the theater’s board of directors and city manager Tom Bonfield in November. In December, the theater announced the news to the press. Nocek proposed that the city advance the theater $600,000$75,000 for each year left on the contract between the city and the theater, which runs through 2024while it revised its budget and programming in order to dig itself out of the hole.
In mid-January, though, Nocek resigned. His severance agreement, he says, limits what he can say about his exit.
Bare isn’t bound by such formalities.
“Bob’s resignation was forced; it’s the worst-kept secret in Durham,” Bare says. “I didn’t agree with it, but I understood where the board was coming from. I had every intention of staying on. And I would have hoped that, as COO, I would have been trusted to advise the board during that stretch. But I wasn’t. I found out that staff members were having conversations with the board that I wasn’t privy to. It made me feel like the board didn’t trust me.”
Bare resigned the following week.
Scott Harmon, chairman of the theater’s board, says that “all parties felt [Nocek’s departure] was in the best interest of the theater. Beyond that, it’s a personnel matter, and I won’t comment on it.”
But Harmon says the board isn’t shying away from its role in this disaster.
“The best metaphor I’ve got is a commercial plane crash,” he says. “A commercial plane doesn’t crash because one system fails; the redundancies and safety features are too robust. The crash happens when three or four seemingly unrelated systems fail at one time and overwhelm the system.”
He goes on: “We had an internal accountant doing sloppy work but also knowing enough to try to hide his incompetence. Then you had a CEO and president who was making important decisions while believing that this faulty accounting was accurate, and neither he nor anybody else in management at the theater was checking to make sure the accounting was legitimate. Then there’s a finance committee on the board of directors that also bears responsibility here. And we had an outside audit of the books done in 2014. And the audit came back fine! So if any of those things had functioned the way they should have, we probably wouldn’t have ended up where we did.”
“I made the mistake of relying on information I was given and not looking deeper into it,” Nocek admits, “and I grew the organization very rapidly, believing we were in one position, when it turned out we were really in another. I should have seen it, and I certainly think the board should also have seen it.”
Bonfield has a harsher take.
“It’s beyond me how the theater could have gotten to the level of being that upside down in debt and crisis without somebody knowing about it,” he says. “Certainly there was horrible accounting, but there was also poor oversight across the board.”
Into these fiery ashes came Berman. After diving into the theater’s books, he determined that its finances were in even worse shape than Nocek acknowledged in November. On February 29, Berman submitted a memo to Bonfield stating that “without an immediate injection of cash, the theater will have no choice but to shutter its doors next week.”
Berman outlined a path forward. It includes an increased emphasis on private funding, fewer in-house produced events, greater emphasis on renting out the theater, and more board oversight. Berman asked the city for a half-million dollars, contingent upon private matching donations.
“Our request is enormous but simple,” Berman wrote. “If the city will provide $500,000, the theatre can immediately collect pledges of $270,000. The board is committed to raising an additional $230,000 by the end of June.”
Bonfield and his staff reviewed the request and recommended that the council support it, which it did. (The council will formalize the decision later this month.)
“As distasteful and frustrating as the situation was, there was no good reason to not resolve it and be partners moving forward,” Bonfield says.
The Carolina Theatre, built in 1926, is a resilient joint. At one time, a dozen or so theaters like it existed in Durham. Only it survived. In the 1970s, a band of community activists fought off a plan to level the theater to make way for a parking deck. They formed a group that took over the lease, with promises to keep the doors open.
“Part of the mission was to bring back downtown, to create a reason for people to come here,” says Stephen Barefoot, who served as the theater’s managing director in the eighties. “It was all closed-up storefronts down here back then. At one point during that time I think the census had it that the official population in downtown Durham was one person. We wanted the theater to be the living room for downtown Durham.”
Board member and Durham mayor pro tem Cora Cole-McFadden’s memory stretches back further than Barefoot’s, to darker days when segregation split the seating in the theater. “I’ve moved from the balcony to the board,” she says.
Cole-McFadden calls Berman “an incredible citizen” for the unpaid work he’s doing as interim CEO. And the city council and deep-pocketed donors have decided with their money that Berman’s plan is sound.
But stabilizing the theater financially is different from stabilizing its role as a cultural institution.
“I think [Berman] is a guy who wants to do the right thing and has a great history with philanthropic ventures,” Bare says. “But I don’t know if the board understands the entertainment experience required to pull this through. I felt like they were thinking about replacing the CEO of one of Durham’s favorite nonprofits, as opposed to replacing the CEO of one of the country’s busiest performing arts centers.”
The counter to Bare’s argument, of course, is that maybe the theater had no business being one of the country’s busiest performing arts centers.
Berman and Bonfield agree that the previous leadership took excessive risks on national acts with high guarantees. Sometimes this approach brought sold-out Aziz Ansari shows. Other times, however, artists like the late Frank Sinatra Jr. sold only a couple hundred tickets, and the theater lost twenty grand. Such losses are easier to absorb for a national corporation than a city-subsidized nonprofit.
The way Bonfield sees it, Durham was blessed with so many Carolina Theater shows under Nocek because the nonprofit got trapped in a cycle of losing money on shows and then booking additional shows to pay the bills.
Nocek denies this. “As I told the city in December, it’s not unusual in the industry for an organization to use advance ticket sales for cash flow,” he says.
Regardless, Berman says, his plan is to scale back big-ticket events. The theater will produce closer to sixty per year, he says, down from more than a hundred. The goal is to market the freed-up dates to promoters who want to put on their own eventsa more profitable scenario in which the theater remains active, the nonprofit takes little risk, and the ordinary audience member doesn’t know the difference.
The one problem: more rentals mean less control of the theater’s brand.
“You need a strong programming identity to stay relevant in your community, or else you turn into the Armory,” Bare says, referencing the underutilized downtown space. “I understand that continuing to operate with risky programming is difficult. I get that. I can imagine that they’re looking at the spreadsheets right now and seeing programming as the enemy. But if the intention is to keep the theater open and operating, you have to open yourself up to risk and know not all of it will work out.”
But without McEntire, who booked national shows until his departure last month, and his network of industry connections, won’t it be more difficult to lure big acts?
Berman says no. The theater plans to quickly hire an in-house booker or outsource booking to a promotions company.
“I don’t think anybody agrees that one hundred and eight shows in a year was a reasonable number for the Carolina Theatre to be putting on,” Berman says. “Reducing shows to a reasonable numbersixty or seventyautomatically opens you up to more rental days, which are more profitable, which will help dig us out of this hole we’re in. And by the way, some of those rentals are local groups that bring in national actsArt of Cool, for instanceor national promoters presenting a show, like AEG.
“I’m very conscious of not allowing the pendulum to swing too far back the other way,” Berman continues. “Yes, the theater went too far in one direction. It got too big, it overextended itself, it spent too much. But the last thing I want to do here is lose the goodwill and status the theater has achieved in recent years. I think that would be a true loss to the community.”
This article appeared in print with the headline “After the Crash”