Arizona Theatre Company expects to end its 2013 fiscal year $1 million in the red - more than double the deficit when ATC's managing director took over two years ago.
Robert Glaser, chair of ATC's board, blames the losses on low ticket sales and disappointing fundraising.
"We had a really difficult time this year, surprisingly," Glaser said.
But compounding the financial crisis is a fractured board, the potential loss of significant donors and what one board member calls "a failure of leadership" by Mark Cole, who took over as managing director in August 2011.
"The No. 1 priority has to be survival of the theater," said board member and former University of Arizona President John Schaefer, who called the company "one of the cornerstones of the cultural activities in the state."
But, added Schaefer, who ends his term on the board at the end of this month, "Morale is low, there's a significant deficit and I see no evidence that a long-range plan has been developed that anybody can buy into, and I think that's a failure of leadership."
When Cole started with ATC, the deficit was $570,000. A $500,000 anonymous donation in June 2012 lowered last year's deficit to $221,800, but the deficit is on track to increase more than fourfold when the fiscal year ends June 30.
Cole's three-year contract expires in June 2014, but the board must tell him a year in advance whether it plans to renew it.
"There's been a significant fraction of people involved with the theater who have lost confidence in Mark's ability to lead," said Schaefer.
Last month, the board decided to set benchmarks Cole must meet by the end of September, said Michael Seiden, ATC's immediate past board president and a member of the executive committee. The benchmarks have not yet been set.
If the benchmarks are met, Seiden said, Cole's contract would be extended for one year, through 2015.
"All executives have benchmarks and metrics to achieve, and I have them as well," Cole said in an email.
Cole has supporters on the board.
"He's very skilled, he works incredibly hard, and I think he has a big heart for the theater," Glaser said. "The majority of the board is very happy, too."
However, the struggles at the theater have some significant contributors concerned.
Michael Kasser, who has helped to finance ATC's full seasons in both Tucson and Phoenix for close to a decade - to the tune of $100,000 this fiscal year - is not yet ready to commit to another season.
The ATC board member and president of Holualoa Cos. says he'll make a final decision once the board clarifies the direction the theater is headed, and once there is a move away from the $1 million deficit.
Employees, too, are feeling the effects of the upheaval. More than 20 people - roughly 21 percent of the staff when Cole was hired - have been laid off or have left in the last 15 months.
"I think there is concern because they have heard about the significant deficit, and they're concerned that the theater and their employment will survive," Glaser said.
The departures include David Ira Goldstein, who will step down in December after 21 years as artistic director.
"I would lie if I didn't say there was friction between Mark and David Ira, and all of that affects the employees, certainly," Seiden said.
Seiden said a new human resources committee will establish employee complaint procedures and survey past and current employees.
Despite their misgivings, Kasser and Schaefer are optimistic that the theater company can turn things around.
If ATC can establish a clear vision that will restore the confidence of theatergoers and donors, Kasser said, "I won't hesitate to help the theater; I love it."
Schaefer, who has a 40-year relationship with ATC, also is taking a wait-and-see attitude.
"I'm willing to continue supporting the theater," he said. "But I want to make sure the money will be well-spent, and that the theater goes in a direction that makes sound financial and cultural sense."
2011 - $4.6 million
2012 - $4.4 million
2013 - $4.2 million, versus a budgeted $5 million
* This includes such items as ticket sales in Tucson and Phoenix, rentals and handling fees.
2011 - $1.8 million
2012 - $2 million
2013 - $1.7 million versus a budgeted $1.8 million
2011 - $569,901
2012 - $221,810
2013 - $1 million projected versus a budgeted $45,200 in the black
Source: Arizona Theatre Company. The company's fiscal year runs July 1-June 30.
Contact reporter Kathleen Allen at email@example.com or 573-4128.