Red House Entertainment will operate the historic Paramount Theater following the Common Council’s unanimous agreement of the deal.
The city will pay the first sixth months of utility bills, expected to cost about $30,000, but is expected to receive about $45,000 in shared ticket revenue the first year and $110,000 the second year.
The theater closed in October with a previous operator racking up debt. Under that agreement, the city received just $1 per year, but paid for the utilities plus $50,000 in support, the city said.
Here’s an announcement from the city:
IT’S OFFICIAL: CITY OF PEEKSKILL COMMON COUNCIL UNANIMOUSLY APPROVES LEASE AGREEMENT WITH RED HOUSE ENTERTAINMENT TO LEASE, MANAGE, AND OPERATE THE CITY’S HISTORIC PARAMOUNT THEATER
Foster: Lease Provides ‘Steady Revenue Stream to the City’
PRESS CONFERENCE AND PUBLIC CELBERATION ANNOUNCED FOR MAY 15, 2013 AT 11:00 A.M. TO SIGN CEREMONIAL AGREEMENT AND ANNOUNCE LINEUP OF 2013 PERFORMANCES
(Peekskill, New York)….. Mary F. Foster, mayor of the City of Peekskill has announced that at 6:45 p.m. this evening, the City’s Common Council unanimously voted to approve a lease agreement with Red House Entertainment to lease, manage, and operate the Paramount Theater. The historic theater was shuttered in October after its previous nonprofit operator dissolved half a million dollars in debt.
“We’re very happy to be reopening the Paramount Theater. The new lease is strong, clear, and allows for a healthy cash flow for both the operator and the city. It will provide a steady revenue flow to the city and will once again be an economic boon for our downtown,” says Mary F. Foster, mayor of The City of Peekskill.
Deputy Mayor Drew Claxton says: “I’m so excited to get the Paramount up and going again. My expectation is that Red House will do more than any operator in the past.”
Councilwoman Kathie Talbot, who had served on the City’s Paramount Selection Committee with the Mayor said: “Red House’s business model, combining a for-profit and a not-for-profit entity will provide a strong base. There was tremendous due diligence in our selection process and now, I’m thrilled beyond words, vey hopeful, and very excited to have the Paramount reopen again.”
Kurt Heitmann, the CEO of Red House Entertainment was not present for the vote tonight but previously-released a statement saying: “We’re very happy to have reached an agreement with the City of Peekskill. We’re looking forward to working with the City. It’s a great day for this vintage theater to be reopening in Peekskill and the Hudson Valley.”
Mayor Foster made the following points prior to tonight’s vote:
- The Red House deal includes a 17-year contract with a 10-year option.
- The City will receive 5% of the adjusted gross income on ticket sales for every show.
- To guarantee a revenue stream to the city, the lease agreement requires Red House to hold 50 shows in year one, half of which must be ticketed; in its second year, the entity will be required to hold 100 shows, 75 of which will be ticketed.
- The City will cover utilities for the first six months.
- Red House Entertainment projects gross ticket sales of $900,000 in the first year (October, 2013 to October, 2014) and projects $2.2 million annually in year two. Performances will begin well before October, 2013.
- In comparison, the Paramount’s previous operator’s lease provided no revenue to the city. It required the city to pay its management $50,000 annually in operating support plus utilities. The previous agreement was for 20 years at $1 per year. The maximum number of performances previously required was 60. The previous operator dissolved $500,000 in debt.
- This arrangement was not advantageous for the city, so Peekskill took the process seriously in finding a new operator.
- The City wanted to ensure a there would be a healthy cash flow for both Red House and the City, as a steady revenue stream is important for the city.
- The City wanted to be sure the amount of performances would be doubled.
- The City was interested in having the new Paramount operator retain the rich history of arts and education in the city.
- The City was seeking to have a closer role with the Paramount’s new operator to ensure stability of operations.
- The Mayor is grateful for everyone’s hard work.
Mayor Foster also noted that there is still an outstanding issue with Key Bank, which became the owners of the theater’s equipment when the previous operator dissolved. She says that although Red House can open the theater, they’re still looking to strike a deal with the bank for some of the equipment.
On Wednesday, May 15, 2013 at 11:00 a.m., the City of Peekskill and Red House Entertainment will hold a press conference and public celebration at the Paramount Theater to ceremonially sign the agreement and to announce the lineup of 2013 performances.