The town has already received strong interest from prospective new operators of the movie theater on Elm Street, officials said Tuesday night.
Bids are due Jan. 7 to a town-issued RFP for a new operator of The Playhouse and “we’ve been getting active interest in the RFP,” according to First Selectman Dionna Carlson.
“We have a lot of interest [from] additional operators to come in and hopefully continue to run it for the enjoyment of the community,” Carlson told members of the Board of Finance during their regular meeting, held at Town Hall and via videoconference.
The comments came as the finance board took up two agreements with the current operator, CinemaLab, that Carlson has already signed: a lease termination agreement and management services agreement. The Board of Finance unanimously approved both. They now go to the Town Council.
The lease termination follows CinemaLab’s failure to pay the town $10,000 in monthly rent for October, November and December (which itself followed six months of rent “abatement” approved by the town), Carlson said.
The town has not received that $90,000 in rent and “there was a side letter of another $250,000 that we haven’t received,” Carlson said.
At the same time, according to an attorney for the town, Doug LoMonte of Berchem Moses PC, the town is getting “tenant-owned trade fixtures” (seats, theater lighting, screen and projection equipment) that CinemaLab had a right to “except upon termination or default under the lease.”
“That was their [CinemaLab’s] property,” said LoMonte, a guest at the meeting. “It was excluded from the town’s property, except upon termination or default under the lease, at which point … the town had to pay the current depreciated value of the seating. In other words, upon termination or default, the town would get the items that I just listed [theater lighting, screen and projection equipment], except for the seating, which the town would have to pay for the depreciated value.”
Finance board members said that the termination agreement essentially means the town has avoided having to pay for the depreciated value of the seats—which cost about $400,000—or having them removed at CinemaLab’s direction.
The management services agreement details that CinemaLab will continue operating the movie theater until a new operator comes in. The company will keep all gross revenue while it continues to operate “and they also bear all the expenses,” Carlson said.
“I was like, ‘You can take the revenue, but you also get all the expenses,’ ” she said. “I don’t want any operating expenses while we are going to get a new tenant.”
When a finance board member noted that the town is out $340,000 between unpaid rent and the separate note, Carlson said, “You could quibble over depreciated values of everything—honestly, that wasn’t where I was trying to go. I wanted a clean theater that we could have a new operator come in and operate for the benefit of the community. If we chose to go down a really difficult path, the theater would’ve closed. It would’ve been a really difficult process.”
Referring to the lease termination agreement, Carlson said it was “cleaner than going through a bankruptcy and trying to collect” to “figure out what they owed us and what the value of those assets were that we wanted to get—a fully intact theater—and thought that this was the cleanest, easiest and best for the community.”
Board of Finance members voting in favor of the agreements were Chair Todd Lavieri, Secretary Chris Le Bris and members Michael Chen, Victor Alvarez, Maria Weingarte, Robert Hamill, James Yao and Nick Mitrakis.
Lavieri said, “ I think we have a beautiful asset and we need a different management team. That’s really what it boils down to.”
Asked how quickly a new operator could come in, Carlson reiterated that bids are due Jan. 7, and it will take a couple of weeks to get through the RFP responses, then she has to give 30 days notice to CinemaLab, so the spring is realistic.
The Playhouse reopened in June 2024 after closing at the start of the pandemic.
[Note: This article has been updated to show that Board of Finance member James Yao was in attendance.]
Really. They owe us $340,000 in back rent and u are letting them keep the forward gross revenue? Why not apply the gross revenue against the unpaid rent. Excuse me but pay the expenses and keep the net revenue against unpaid rent. Something is missing here especially when town hall officials have invested in this venture inclusive of town council members, ex selectman and the town administrator. I challenge the town council to not simply sheeple vote without clear and complete transparency and insure taxpayer’s are being completely treated properly. Does the charter allow the first selectman to individually and arbitrarily make this decision on her own? I saw the BOF meeting, no one asked the hard questions!!! We need a BOf elected to answer to the electorate not protect and answer to the Selectman. Where is the audit committee on this. Can you imagine a tenant breaking a 10 year lease and operating agreement after a few months, owing $340,000, getting $3,000,000 investment from the state and town , another $5,000,000 from investors, not having to pay to remove equipment, not paying bankruptcy legal fees and not paying to remove equipment and getting future gross revenue without penalties. Geez!!! Methinks the taxpayers have a right to see the investor list and which insiders consulted the first Selectman on the deal.
The theater is a town asset for sure, now figuratively and literally, given how much money the town’s invested. The CinemaLab group seems to have fooled us once, hopefully the new operator won’t fool us twice. We hope it can maintain its asset status, not become a liability. It is a great venue in its current form.
I love the playhouse. It’s such a unique addition to the town. That being said, it’s so hard to make a cinema work, and cinema lab went all out w a restaurant and a beautiful lounge. I don’t know ANY of the legal specifics, but it might be a lessor challenge if the restaurant and bar were leased out to someone, and the cinema stand alone. Perhaps only open a few days a week? Again, I don’t know the business at all but it seems like a creative approach might be worth exploring. Please save the cinema (but not at all costs!)
Faced with a lot of bad choices, perhaps self inflicted due to lack of due diligence, it appears the town is making the right choice here to avoid a years-long legal harangue with a bankrupt company. (Another spend $1mil on lawyers to get 250k) That outcome would have also resulted in a shuttered theatre and loss of downtown attraction during the holiday season and beyond. The Playhouse has three potential revenue streams with a pub and seasonal outdoor dining downstairs, a restaurant / catering venue upstairs, and a movie theatre in an exclusive location. Hopefully, a skilled operator(s) can now be found to provide a solid business with meaningful revenue against the debt service.
I would suggest that residents watch the meeting to get the facts. It was mentioned as a reasonable priority to have the facility continue to operate over the holidays and to have a new operator in place in the next few months. As a result of the agreements approved at the meeting, the fixtures that were originally excluded, such as the seats, screen, and equipment will remain and allow for an easier transition to the next operator.
The biggest mistake was running the playhouse as a for-profit theater. The best solution moving forward is to parter with an operator (Prospector, Avon, Bedford Playhouse, etc) who will run it as a non-profit.
The reason being that in a market as small as ours (or any small town), it just isn’t possible to run a new release long enough for the theater to start seeing ticket revenue. That’s because there is a formula for new releases between studios, distributors and the theater itself. Namely, studios and distributors take all the ticket $$ for the first week, a little less for the second week, a little bit more less the third week, and so on. So, in a town like ours it would take a few weeks before the theater could start enjoying the lion’s share of ticket revenue, but by then there simply aren’t enough people still going to see a movie that’s been out for four weeks for that to add up to much of anything.
As a non-profit, the theater is able to receive federal and state grants to help with overhead costs, plus private donations and avoid federal taxes. Among many other reasons.
But at the simplest level, non-profit is the way to go for the math to work. Plus, again as evidenced by Prospector, Avon, Bedford, etc that’s how small movie theaters are even able to survive in today’s world. And not just survive, but thrive.
Let’s hope the town does the right thing and award a new contract to an independent, non-profit operator and stay far away from the AMC’s of the world.
Completely agree Andrew. A non-profit is a smart way forward! Also open it up to Live Events like Bedford Playhouse does. They do a really good job with running the bar too.
Absolutely! And the upstairs is gorgeous, but has no kitchen, so needs an innovative approach to fill a void I often hear (nothing is open past a certain hour, there’s no place with an activity besides drinking and maybe some live music). There was never any consistency, communications or promotions to know what was happening up there. There’s opportunity to do things like Mahjong Monday, Tuesday Trivia and various theme nights that bring the community together. And even things (with an order ahead pre-fixe menu) like Sunday Jazz brunch. And if anyone has been to the Alamo drafthouse there can by some classic movie tie ins with themes, costumes, etc.. Also sing alongs. I’ve seen this at Alamo and even Ridgefield Playhouse (I went to the Dirty dancing anniversary and they had Mai Tais on the menu and people sang along and even said the famous one liners out loud). Not that this should be an everyday event but a new business needs someone who treats it like their baby and for the upstairs that will be a lot of promotion and imagination, but I think people are looking for that void. The trivia nights they do have there are always packed. And 1000% to the non profit model.
Completely agree! I ran Development for the Bedford Playhouse and thought cinema lab should have looked at this model.
Lovely idea. I hope town officials will listen to that and have enough expertise to make that happen!
The Prospector Theater in Ridgefield is run so well. Val the owner built it herself and made it what it is today. She would be the ideal person to run the theater.
Before Cinema Lab, there was interest in Prospector Theater being the operator. What happened there, was Prospector not interested, or could we not make a deal with them?
Highly recommend contacting The Prospector in Ridgefield. It is very well run, a wonderful cause and would be a big asset to New Canaan. I would also create a lot of jobs for young adults and adults with disabilities.
Why 6 mos free rent when they got $8,000,000 in freebies. 4-6 mos free rent. Why no rental security on a 10 year lease with a letter of credit. I have reviewed leases for clients and that would be standard on a 5 year lease let alone 10 year lease – 3 -6 mos security plus a letter of credit. So my question: Cinema labs never paid a penny in rent?
Who approved this?
There was no $8,000,000 in freebies. The original budget established by the Town was a renovation and opening in 9 months for $3.9 million. Cinema Lab/Playhouse agreement called for a budget of $1.9 million, plus a contingency of $240,000. All of that money was raised and PAID by Playhouse with Town people putting up the $$. The Town failed to do an engineering study of the building and as soon as work started, discovered the building could not support the required HVAC system and ADA changes were hugely expensive. This doubled the budget and stretched the timeline to 24 months!!!! Playhouse/Cinema Lab did pay rent from the START OF CONSTRUCTION without any revenue. Moreover, the Town imposed upon Playhouse to contribute $350,000 to the unknown overrun. The combination of paying rent to the Town with no revenue, and $100,000 of the $350,000 upon opening in June 2024, combined to make Playhouse insolvent before it ever opened. The deficit was fully funded by transferring $1.6 million from the Cinema Lab investors starting in May, 2024. Indeed, Cinema Lab DID pay its rent after opening — contrary to this clueless claim by the commentator above. The Town, in an attempt to hell keep the entity open, abetted rent (did NOT forgive or cancel it) for 6 months. The major problem is well explained by the commentator above who explained the failing economy of small theaters in small markets. A 200 seat theater in New Canaan simply could never support the 8 ball losses and imposed costs of overrunning from &3.9 million to finally, all-in $8.3 million, to open the theater. New Canaan Towns peoples’ investments os $2.35 million in Playhouse, plus $1.6 million in Cinema Lab, plus c$400,000 in loans from the Founders and several Cinema Lab investors were WIPED OUT. There were zero gifts or freebies here. The State contributed $2 million toward the overrun. This commentators who recommend a 501(c)(3) type approach are absolutely correct. So is the commentator who recognized that there is no kitchen upstairs. That defect means that all food service must be via caterers or a nearby restaurant. In addition to failing to do any engineering review, the Moynihan administration failed to do any feasibility study on how a 200 seat theater would model out (ironically after Bow tie closed down in New Canaan and essentially went insolvent as a chain!), or how a restaurant/pub without a kitchen would model out. There are many losers in this story. Among those were those of us who invested in Playhouse and Cinema Lab. The good news is the Town has a lovely asset. The advance from CT State requires that the space remain a movie for 10 years. Frankly, Dionna and the current Town leadership inherited a mess. They have done an amazing job in keeping the Playhouse open.
Thank you, this thread is closed.