The Oriental Express
The red carpet was rolled out last week for theater impresario Garth Drabinsky, chairman of Toronto-based Livent Inc. The occasion was the city's announcement that Drabinsky's company will acquire the 70-year-old Oriental Theater, a North Loop movie palace that has been shuttered for the past 15 years. Many local politicians and VIPs in the entertainment industry attended the slick affair, milling about the Oriental stage and gazing at the dramatically ornate but dilapidated interior as they feasted on fancy hors d'oeuvres and libations. Drabinsky showed an upbeat video on the Livent organization and a slide show detailing the planned $24 million makeover of the theater, which is scheduled to reopen in early 1998 as a 2,190-seat venue.
But despite the glowing stories in the newspapers and on television, there's still one big unanswered question: Is Drabinsky's Livent organization financially secure enough to handle the Oriental acquisition as well as the other projects it's expected to undertake over the next few years? In addition to the $15 million Livent is putting into the Oriental, the publicly traded company is investing another $22.5 million in a similar project in New York City, where it plans to convert two run-down theaters into one 1,850-seat venue for musical productions. A Livent spokesman says the company is also considering constructing a new theater in Toronto, which could mean another $20 million in building costs over the next several years. All told, Livent could be looking at a $57 million price tag attached to its future plans.
A Livent spokesman says the company will finance the Oriental project through a combination of cash flow and "institutional funding," which means it will borrow whatever it can't generate. The city has promised to contribute at least $13.5 million for the acquisition of surrounding properties and building restoration costs necessary to complete Livent's Oriental plan, which may finally total close to $30 million. Greg Longhini, deputy commissioner of Chicago's department of planning and economic development, says his office negotiated the deal and is confident that Livent has the financial wherewithal to handle the project. "We believe they can do it," says Longhini, who admits the city was anxious to move forward with the Oriental restoration when Drabinsky came to them with his plan. But according to Longhini, the city's confidence in Livent is based mostly on a review of its annual report. He says the deal could still be voided if Livent doesn't produce a $15 million line of credit when it comes time to sign the final agreement.
Eventually Livent must begin paying off the debt it's amassing from its various building projects. Since it was formed a mere six years ago, Livent's principal source of revenue has come from its theater productions, including Canadian mountings of four Andrew Lloyd Webber musicals: The Phantom of the Opera, Aspects of Love, Joseph and the Amazing Technicolor Dreamcoat, and Sunset Boulevard. Typical of the theater business, Livent's productions have proved to be a mixed bag in terms of their financial returns. Two Livent musicals that played Chicago--Joseph and the Amazing Technicolor Dreamcoat and Aspects of Love--fared very differently. Joseph, of course, was a huge hit, grossing almost $60 million during two visits here over nearly 20 months. But Aspects, a more sophisticated musical, lost money during its brief 1992 run at the Civic Theatre.
The Canadian production of The Phantom of the Opera has generated mounds of money for Livent, but the Toronto run is now in its seventh year and can't be counted on to remain a cash cow. In 1993 Drabinsky picked up the rights to Kiss of the Spider Woman, Fred Ebb and John Kander's dark musical, and tried to parlay it into another Livent hit. While the show won awards for its artistry, Livent had to write off a whopping $8.9 million in preproduction costs in the 1994 fiscal year. Still, in its 1994 annual report, Livent predicted the Broadway edition of Kiss would run "until September 1996." But the show was gone from Broadway by the summer of 1995.
Livent's staging of Show Boat, Oscar Hammerstein and Jerome Kern's classic American musical, garnered several Tony Awards, including one for best musical revival, and it continues to do brisk business on Broadway. But it remains to be seen how successful the show will be in Chicago, where the first national tour begins an open run at the Auditorium Theatre in March. Last week Livent said advance ticket sales for the Chicago engagement stood at $10 million, which sounds like a lot of money until one considers that Drabinsky has been heavily advertising the show's arrival for more than a year. Back in Toronto Livent may be facing a tough battle to turn a profit on its newest venture, a multimillion-dollar mounting of Sunset Boulevard. The Livent production only opened last October, but two-for-one ticket coupons are already appearing in local newspapers.
Whatever the fate of its current shows, Livent will need several more major hits to pay for its upcoming building projects. The company is currently developing a musical adaptation of E.L. Doctorow's novel Ragtime, as well as a musical based on the 1957 film noir movie Sweet Smell of Success (which was based on a script by Clifford Odets). In addition Drabinsky has secured the rights to revive Rogers and Hart's Pal Joey and is working with director Hal Prince on an original musical called I Love a Parade. Will any of these pay off in a big way for Livent in the years to come? Nothing is more of a crap shoot than producing live theater, and on that crap shoot may hang the future of Livent and its founder Garth Drabinsky, as well as the Oriental Theater.
By Lewis Lazare
Art accompanying story in printed newspaper (not available in this archive): photo / Bill Stamets.