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**Hippodrome’s sagging ticket sales costing Stadium Authority

Sagging ticket sales are forcing Baltimore’s Hippodrome Theatre to find new ways to pay the $800,000 it owes in debt service each year.

The Hippodrome was taken over by the state in 1998 after sitting dormant for 14 years. The theater reopened in 2004 after $64 million in renovations that were overseen by the Maryland Stadium Authority.

The theater’s annual debt service of $1.8 million was to be paid back from $800,000 in ticket sales surcharges each year and $1 million from the state’s general fund. A $2 surcharge has been added to every Hippodrome ticket since the theater re-opened.

But ticket sales have lagged far behind state expectations, leaving the stadium authority to pay the entire debt service since 2007. So far, the stadium authority has paid $1.9 million to cover the down ticket sales.

Revenue from the ticket surcharge has fallen drastically the past few years, from $805,132 in 2006, to $353,078 last year, according to figures released by the stadium authority. The agency, which oversees many of the state’s sports and entertainment complexes, reported to the House Education and Economic Development Subcommittee Thursday on the status of the Hippodrome’s underperformance in ticket sales and how that affects the state’s general fund.

“We’re trying to minimize any loss to the state,” said stadium authority Executive Director Michael J. Frenz. “And in fact, we want to prepare the theater for when it can actually make money for the state.”

The stadium authority now has to create a plan for increasing the Hippodrome’s ticket sales and minimizing debt by working with city leaders, Hippodrome Executive Director Jeff Daniel and the Hippodrome Foundation. The foundation is a nonprofit that brings a Broadway series to the theater and has outreach and education programs to increase access to the Hippodrome.

The plan has to be reported to legislators by Dec. 1.

“If that doesn’t happen, I think the theater will continue to be business as usual,” Daniel said. “Which is not very good.”

Olive Waxter, director of the Hippodrome Foundation, could not be reached for comment.

Regardless of the theater’s performance, Maryland is responsible for covering the remaining 12 years of debt service, which totals $22.4 million, Frenz said.

Increasing the ticket surcharge is one of the options city and stadium authority officials are contemplating.

Other reasons ticket sales have declined, Frenz said, are the stalled Westside development projects and the recession.

“There was this assumption that when the city renovated the whole West Side, it would work,” he said. “But Superblock didn’t happen as everyone had hoped.”

The theater was intended to be a bastion of the revitalization of Baltimore’s West Side. But because there have been delays in redevelopment of the 400 block of Baltimore Street, that has been hurting the Hippodrome’s momentum, said Ronald M. Kreitner, executive director of WestSide Renaissance Inc. The nonprofit was formed in 2000 to lead a collaborative effort to revitalize that area.

“That was something that was very much felt by the theater because of the 400 block’s proximity to the theater,” Kreitner said. “The restoration of buildings should have proceeded much faster than it has, to both benefit from the momentum with the Hippodrome and to support the investments that had been made there.”

The stadium authority is also considering extending the theater’s operating agreement in conjunction with extending the maturity of the state’s debt. The theater’s operating agreement lasts for the next 12 years, the same length of time until the debt matures. The stadium authority would extend those years by the same amount.

Another part of the theater’s high operating costs is that it uses equipment provided and paid for by outside vendors. In the theater’s original capital budget, about $4 million was removed that would otherwise have gone to renovate the Hippodrome’s HVAC system. The theater has equipment from Veolia Energy to cool the building as an alternative.

The equipment is financed through a $250,000 monthly charge paid to Trigen and Comfort Link, both owned by Veolia, Frenz said. Utility charges for the equipment are also four times of what similar venues would pay, Daniel said. That makes it difficult for the theater to compete for many shows, he said.

In the meantime, Daniel said he will look to increase bookings at the Hippodrome through the rest of the year. Daniel said he also will bring more arts groups to the theater in anticipation of the debt’s pressure being lifted with a new business plan in December.

The Hippodrome opened in 1914 as a movie palace that also showcased vaudeville performances. After closing in 1990 when business fell, the Hippodrome renovation project started eight years later. The project encompassed three historic landmark buildings, the Western National Bank, the Eutaw Savings Bank and the original Hippodrome Theater.