Help Save the Larchmont Playhouse

Summary

Larchmont is in danger of losing our movie theater. Preserving it means preserving a piece of local history – the theater was built in 1930 – but more importantly, it means keeping a cultural and community resource in Larchmont and Mamaroneck.

If the three-screen, 250 seat Larchmont Playhouse can be saved, first-run releases as well as independent, foreign films and documentaries will be shown; family programming will also be a key part of the theater. The theater can, based on industry averages, be profitable with the planned improvement in programming, better concessions and membership revenues.

A group of residents, the Friends of the Larchmont Playhouse, is forming a not-for-profit organization to buy the building. Once organized, that entity will apply for tax-exempt status and operate the three-screen theater.

Since June 20, community members have pledged $450,000, but an additional $1 million is needed to make an offer.

Ownership

If enough money is raised, the Larchmont Playhouse will be purchased outright by the Friends of the Larchmont Playhouse (“The Friends”), a not-for-profit in formation.

The Friends are in conversations with existing operators to run the theater, but it is most likely that The Friends will run the theater directly.

The Friends will be incorporating as a not-for-profit under New York State law and seeking tax-exempt status as a 501(c)(3) organization under the federal tax laws. Most independent theaters are organized and operated as non-profits.

While the community group involved in saving the theater has to date largely focused on raising funds to buy the Playhouse, once fundraising is completed, the group will turn to finding experienced leaders for the theater. Several residents with experience in the industry already have stepped forward to lend their services pro bono in the interim and we hope to keep the staffing lean.

Start-Up Costs: In addition to the $1.4-$1.5 million needed to buy the theater, The Friends must purchase three digital projectors, which costs approximately $75,000 each, for a total of $225,000. There will also be some compensation costs at the outset to pay for part-time employees at the concessions stand, a ticket taker and a maintenance worker.

Theater Condition

The building, according to a 2014 engineer’s report, is structurally sound, although an architect who toured the theater saw some asbestos in pipe insulation. Additionally, we may eventually need to install an elevator to comply with the Americans with Disabilities Act (depending on whether we want to convert the basement area into something like a tap room, one of the ideas under consideration).

But the building hasn’t been renovated since the early 1990s, so the board of The Friends will engage an architect to determine what needs to be renovated in the near future (like the seats and carpeting) and which upgrades can be done at a later date.

While costs are unknown at this time, renovations could amount to $1-$2 million, according to experts in the independent cinema industry.

Financial Summary

Bowtie Cinemas, which currently operates the movie theater, declined to disclose any financial information. So the following numbers are based on some intelligence gathered through other operators as well as estimates.

2017 Projected Revenues Total $770,000

Details: In 2015, the theater had ticket sales of approximately $450,000.

Assuming an average ticket price of $9 (prices range from $6 - $11.75, with discounts for children and seniors and matinees), then 50,000 tickets were sold. 

Concession sales average $2.50 per moviegoer at independent cinemas. With 50,000 tickets sold, the estimated revenue from concessions was $125,000 in 2015. (With margins on concessions approximately 85%, concession profits were approximately $106,250). On average, cinemas that serve alcohol and meals see their concessions revenues rise to $5.59 per ticket holder. Conservatively, with an upgrade in quality, concession revenues could increase to at least $150,000.

Advertising revenues from the on-screen advertising that precedes the previews are unknown and this is an area that should be evaluated for additional revenues. But these revenues can reach as high as $50,000; we’ve estimated $25,000.

Bowtie is a commercial movie exhibitor and does not have meaningful memberships or subscriptions. In contrast, most independent theaters do have memberships and often those revenues can help to offset any shortfall. If 500 people – a conservative number based on interviews with residents – bought $200 memberships, it would generate $10,000 in revenue (depending on what type of benefits come with membership – such as free or discounted tickets—there might be some reduction in ticket revenues.

In addition, at not-for-profit cinemas, there is typically a board of directors with an annual financial commitment. The Pelham Picture House, for example, has 25 directors most of whom contribute $10,000 annually. A smaller board of 10 people would result in $100,000. We have used that conservative figure.

Projected Costs for 2017 Total $722,500

 

Costs: While Bowtie paid $67,200 in rent and $53,000 in property taxes in 2015, The Friends will not have either of these costs. As owners, there is no rent and property taxes will be abated. There could, however, be some financing costs depending on how much money is raised. (Obtaining a commercial mortgage is difficult because we have no tax records, so financing can only work if it’s from an individual, non-bank lender, or by partnering with an existing theater.)

Movie rentals: movie studios typically take an average of 55% of box office revenue. Based on $450,000 in sales, the studio and the distributor earn $247,500, leaving $202,500 for the theater.

Compensation costs, as well as expenditures for utilities and insurance, were not disclosed, but would likely run at least $200,000 based on interviews with other cinemas (there are hourly employees who work as ushers. If you have three ushers/ticket takers working 10 hours per day at $10 per hour 7 days per week, it’s $2100 per week or $109,200 annually, plus the manager’s compensation. An independent theater’s compensation could be more because there may also be an executive director and at least a part-time employee who focuses on programming). We could explore having volunteers to act as ushers (in exchange for theater tickets) as is done at the Capitol Theater in Port Chester).

Insurance is estimated at $25,000 per year; utilities at $25,000 per year as well.

Maintenance costs could run $100,000; this figure includes cleaning and minor repairs.

 

Plans for the theater

  • Interesting and diverse films including commercial movies as well as independent films and documentaries.
  • Frequent exhibition of family movies (like this year’s Finding Dory).
  • Concessions that include both traditional movie fare and higher-quality snacks and beverages. Eventually, the Playhouse will seek a liquor license to sell beer and wine, along with tapas or light supper items.
  • Special, themed events where moviegoers dress as a favorite Disney character, or holiday movies, such as The Rocky Horror Picture Show at Halloween or Love, Actually, at year-end.
  • Careful management of internal finances to control costs.
  • Robust membership to provide an additional source of revenue.

Market Analysis

The Larchmont Playhouse has an ideal location, within walking distance of several popular restaurants (as well as ice cream and frozen yogurt shops). It is close to the train station and while there isn’t a dedicated parking lot, there are several municipal parking lots within two blocks as well as ample street parking.

The local business community and the mayor of Larchmont have shown great support for the theater since it would keep residents in the community. The outpouring of support could encourage other retailers to lease the vacant storefronts currently available in the area.

While there are two other cinemas nearby – the Regal multiplex at New Roc and the Picture House in Pelham -- we do not regard these as direct competition. New Roc tends to show more blockbuster and action films, along with family films, while the Picture House doesn’t typically have first-run independent films.

Contrary to popular impression, overall attendance at movie theaters – both art houses and commercial theaters – is stable, according to the director of the Art House Convergence, an industry association.

Most importantly, the Larchmont-Mamaroneck community is enthusiastic about keeping the theater, as evidenced by the pledges to donate (ranging from $25 to $100,000) as well as the many signatories to the petition on change.org.

Sales Strategy

The Larchmont Playhouse will appeal to:

  • Families who seek local entertainment geared for children and their parents.
  • Adults (parents and seniors) who are interested in seeing first run and independent films and documentaries.
  • Teenagers and college students who will, in addition to standard-time screenings, will have a later-evening option at reduced-student rates. (12-17 year olds have the highest per capita attendance at movie theaters, according to industry statistics).
  • Seniors who live in the community and like both the access to the theater and the programming.

Retaining three screens enables the theater to show a variety of films. Sales will increase with better programming and an enhanced cinema experience. Concession sales, which typically average $2.50 per moviegoer, should increase with an uptick in attendance. (Margins on concessions typically run approximately 85%, according to industry data.)

While it’s difficult to forecast sales, since audience size depends on the movies available as well as such unpredictable factors like weather or a big sports game, in 2015 the Playhouse had approximately $450,000 in ticket revenue. While movie studios, on average, collect 55 percent of box-office revenues, that still left $202,500 in gross revenue for the theater in 2015.

September 2016

Bowtie ends its lease at the end of September. If we raise sufficient funds we can begin operations in October. Bowtie may agree to stay on for a few months if paid a management fee.

Internet presence

The website will be very simple. Its main purpose is to communicate to our customers what movies are showing at what times with links to each movie's website and reviews. The design will feature an image of the theatre along with a list of current movies and those coming soon. We anticipate also selling tickets online (e.g. with a seller like Fandango).

Management

While neither management nor a board of directors has yet been selected, several residents have already expressed interested in serving on the board. We are being advised by several experts in the area. Mark Balsam, a resident involved in film distribution is advising The Friends without charge and Jeffrey Jacobs, a movie booker in Rye who grew up in Larchmont, has agreed to provide initial consulting services pro bono as well.

Leigh Giroux, a lawyer whose expertise includes advising non-profits, is representing The Friends pro bono (Leigh formerly lived in Larchmont and now lives in Rye). The Friends has not yet retained a real estate attorney.

It is anticipated that an executive director will be hired sometime within the first year of operation.

Personnel Plan

In addition to an executive director, several part-time employees will be hired as ushers and ticket takers. A maintenance worker will be needed as well. The cost of these part-time employees could run approximately $100,000 annually.

 

Photo courtesy of the Larchmont Public Library