Lagging ticket sales had forced theater and state officials to find new ways to pay the $800,000 that the Hippodrome owes in debt service each year.
The MSA’s board of directors on Tuesday unanimously approved giving the theater $250,000 each year. The MSA will also refinance and extend bonds by five years to reduce annual debt service to $1.47 million from $1.8 million. By restructuring the debt and assuming some of the theater’s utility bills, the Hippodrome will be able to become more competitive in luring big acts without passing along costs, stadium authority officials said.
In return, theater officials agreed to guarantee paying a $2 surcharge to the MSA on 220,000 tickets. The surcharge had been in place, but the Hippodrome had not sold 220,000 tickets since fiscal 2008. The Hippodrome also agreed to pay an additional 25 cents per ticket for every ticket sold in excess of 350,000, a figure that was reached once, in fiscal 2006.
Jeff Daniel, executive director of the Hippodrome Theatre, could not be reached for comment.
The Hippodrome was taken over by the state in 1998 after sitting dormant for 14 years. The theater reopened after $27 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.
But ticket sales have fallen below 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.
“This is something that has been worked on for quite a long time,” Maryland Stadium Authority Chairman John Morton III said. “If you look at the state of condition as it exists today, [the theater] has not performed from 2006 until now. At its current state, the stadium authority will have to put another $70 million until the expiration of the contract in 2022.”
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, has reported to the General Assembly on the theater’s underperformance in ticket sales and how that affects the state’s general fund.
A plan for increasing ticket sales and minimizing debt has to be reported to legislators by Dec. 1.
Equipment provided by outside vendors is part of the Hippodrome’s high operating costs. In the theater’s original capital budget, about $4 million was removed that would otherwise have gone to renovate the theater’s HVAC system. The theater has leased equipment from Veolia Energy to cool the building as an alternative, and must buy its electricity from Veolia.
The Hippodrome Foundation has agreed it will pay $500,000 for the HVAC equipment’s costs.
In addition, Baltimore City officials are looking to increase safety around the theater as well as working on a plan for West Side development, Morton said.
Olive Waxter, director of The Hippodrome Foundation, could not be reached for comment.
The restructuring of debt will have to be approved by the Maryland Board of Public Works before taking effect.