Kathleen Gaffney didn't see it coming.
In the disappointing winter of her first season as artistic director and CEO of Studio Arena Theatre, six straight years of mounting debt and dwindling audiences finally reached the breaking point.
"I thought I had two years to help turn it around -- to avoid the tsunami," Gaffney said. When the "tsunami" hit in late 2006, the theater slashed 14 people from its staff, overhauled its management and embarked on a detailed plan to rescue itself from imminent death.
Now, five months after January's earth-shattering announcement, the theater's plan is well under way. About $1 million was cut from the annual budget, a new team of resident designers was hired and Gaffney has scaled back the 2007-08 season.
An ambitious, three-phase strategic plan is in progress. It includes cost-cutting, restructuring, shortening the season and paying off debt. Gaffney and Studio Arena's board are cautiously confident that they have placed the theater back on solid ground.
"We feel a little more confident about it this year," said Studio Arena board Chairman Mike Piemonte. "But frankly, if we find ourselves in six months not having done that well, boy we're going to find ourselves in a pile of trouble."
In that case, Piemonte said, "We begin to ask questions about the theater, about its place in the community and whether or not the community can support the arts the way it has."
The theater's 2007-08 season contains six plays instead of the usual seven, and its success -- more than any single season in Studio Arena's history -- will determine the future viability of the theater as a community institution.
"There's a lot riding on this season," Gaffney said.
There's also a lot riding on Gaffney, whose roles as CEO, artistic director and the face of the theater's fund raising have conspired to make her name synonymous with Studio Arena itself.
"We're very concerned that she burns out, that she takes on too much," said Piemonte. But, he added, "She's a leader, she's someone we believe we can trust the management of this asset to."
If the season tanks, Gaffney said, "I don't have anybody to blame but myself."
>Big names, big casts ... big audiences?
In one of dozens of cost-saving measures, Gaffney recently hired two resident designers, Troy Hourie and Iain Campbell, who will work throughout the season on each production. This is is a grand departure from the more costly previous model in which new teams of designers were brought in for each show.
"That's brand-new thinking. That's shocking thinking," Gaffney said.
She has extended that thinking to her bold choices for Studio Arena's 2007-08 season. A survey conducted this spring indicated that a large number of Studio Arena patrons were no longer interested in one-person shows -- like January's unprofitable play "The Syringa Tree." The survey showed that patrons want more musicals and more actors in each show.
"I heard that loud and clear," Gaffney said, noting that the second and third shows each have more than 10 actors, and two musicals are planned for the season.
The season starts with Tom Dudzick's new play, "Don't Talk to the Actors," which is about a Buffalo playwright. It stars Denny Dillon and Richard Kline, two respected television and Broadway actors whose salaries, as Gaffney put it, "go with the names."
Studio Arena has produced three highly successful plays by Buffalo-born playwright Dudzick, commonly known as his "Over the Tavern" trilogy. The nostalgic plays all focus on the Buffalo community and have earned Dudzick a large and faithful crowd in Buffalo -- one that Gaffney is banking on for the season's first show.
"If the show doesn't sell the way we anticipated or if I'm wrong about Buffalo's appetite for comedy or Tom Dudzick, we could have a big, bad thing," Gaffney said. "We could have a disaster, right out of the box."
The success of the season will also depend on the draw of October's MusicalFare collaboration "Bat Boy," A.R. Gurney's Christmas play "Indian Blood" and the edgy political drama "The Vertical Hour." Better bets for big audiences are "To Kill a Mockingbird" and the Stephen Sondheim revue "Side by Side," which ends the season in 2008.
In an unprecedented and controversial move, Gaffney planned to present the work of two local production companies as part of its season without any artistic oversight from the theater.
But a firestorm started when the two shows -- MusicalFare Theatre's "Bat Boy" in October and Road Less Traveled Productions' "To Kill a Mockingbird" in January 2008 -- were challenged by the Actors' Equity union, which opposed the shows because they were originally cast with non-union actors. Studio's move to join with the other theaters was based on pressure from the local performing arts community to collaborate with other institutions, said Celeste Lawson, executive director of the Arts Council in Buffalo and Erie County.
"I certainly think that they were trying to follow the advice that the sponsors and funders are asking organizations to do, and that is collaborate and program outside of your traditional framework," Lawson said. "I don't think it does the unions or anybody any good if Studio is not able to do the work they need to do to survive."
The issue was settled Wednesday when the two sides reached an agreement to produce the shows under union contract. The compromise will add at least $35,000 to the theater's already stretched budget, though Gaffney said all three theaters will share the cost.
Scott Behrend, artistic director of Road Less Traveled Productions, said the disputes with Actors' Equity stem from Gaffney's revolutionary thinking in a cash-strapped atmosphere that has often been hostile to major paradigm shifts.
"You're walking into a situation where somebody hands you a bag full of land mines and says good luck," Behrend said. "And quite honestly, I think she's been doing a pretty good job of negotiating that."
In "courting the wrath of Equity," as Gaffney put it, she is taking a new approach to running a regional theater -- one that engages in highly creative and often counterintuitive activities in the hope of finding a workable formula. For Gaffney, that has meant an increased interest in collaborating with the rest of Buffalo's theater community, something that regional theater directors generally avoid.
"Most of my clients don't do that, but she does and she's very interested in the local theater community, which is unusual," said Harry Weintraub, a lawyer representing Studio Arena in its negotiations with Actors' Equity.
>Making the old model work
For Susan Booth, artistic director of Atlanta's Alliance Theatre, such an approach -- albeit with different ingredients -- worked wonders. Like Gaffney, Booth inherited more than a million dollars of debt when she took over from her predecessor in 2001. Thanks to the launch of a successful new play workshop and a sizable gift to support it, the Alliance's debt was completely repaid by 2005. In June, the theater won a Tony Award for excellence in regional theater.
Booth said that an unconventional approach, such Gaffney's, is far better than simply battening down the hatches and making conservative decisions across the board. That tactic, she said, would have sent her theater into a "death-spiral."
"Honorable decisions that end up with massive deficits and finally shuttered doors? Yes, you can point to them and say that they're honorable and noble, but to what end?" Booth said. "I think more and more, you're finding artistic directors who have deeply entrepreneurial spirits trying to find a new way to make an old model work."
But in today's icy arts climate, nothing is a sure bet.
Still, Gaffney, given to grand pronouncements, is optimistic.
"We're not out of the woods yet," Gaffney said. "However, we are on a great pathway. The pathway is so brave that I believe that in about a year, there will be stories, nationally, that say, 'Studio Arena: greatest turnaround in regional theater history.'"