Kimmel purchasing Merriam Theater from University of the Arts, will likely spur more real estate deals

Merriam Theater
The Merriam Theater this season is hosting Rosanne Cash, Mamma Mia!, Alvin Ailey American Dance Theater, children's shows, and the Pennsylvania Ballet.

The Kimmel Center for the Performing Arts is buying the Merriam Theater from the University of the Arts for $11 million, leaders from the two arts groups say. The deal, on track to close next week, could eventually mean a name change for the theater.

With this purchase, the Kimmel bolsters its control of major arts venues between Pine and Locust Streets totaling well over 8,000 seats — adding to its own Verizon Hall and Perelman Theater, as well as the Academy of Music, which is owned by the Philadelphia Orchestra but operated by the Kimmel.

Kimmel Center to Purchase the Merriam Theater

The $11 million deal with the University of the Arts will bolster Kimmel’s control of arts venues between Pine and Locust Streets: Verizon Hall and Perelman Theater at the Kimmel Center for the Performing Arts, and the Academy of Music. The University of the Arts hopes the sale will be the first of several real estate deals and partnerships that could bring a new building with a smaller performance venue and student dorms.

SOURCE: Image from Google Earth

For the University of the Arts, selling the building is key to a series of anticipated real estate deals and partnerships that the school hopes will eventually result in a new mixed-use building with a smaller performance venue and student dorms.

The Kimmel is covering the purchase price with $5 million in donations from 24 board members and a $5 million grant from the William Penn Foundation. The remainder of the purchase price plus closing, financing, and initial capital costs, totaling about $5 million, will be financed through a loan, said Kimmel president Anne Ewers.

Simultaneous to talks over the purchase of the nearly century-old Merriam, the Kimmel and University of the Arts have developed new programs that aim to "expose every student in Philadelphia to an arts experience" at the Kimmel.

"The whole thing is really thrilling," said Ewers.

"Anne and I hit it off, and we are all trying to figure out how to bring young audiences into the fold," said David Yager, who started meeting with Ewers soon after becoming president of the university in January. The partnership includes the creation of a performance series during school hours; connecting University of the Arts students with musicians, dancers, and actors visiting the Kimmel through master classes and residencies; and art exhibitions and performance opportunities at the Kimmel for University of the Arts faculty and students.

Though their facilities comingle on Broad Street, interaction between the two has been limited, says Yager. "One of the things that's important to me is the culture, and the culture in all honesty has said we are next-door neighbors to the Kimmel, but nothing's going on."

Speaking at the Kimmel last week as a new University of the Arts faculty show was going up in the lobby, Yager said: "Getting the faculty and students to come over here has felt so invigorating."

The Kimmel has been operating the Merriam Theater for seven years, but now, as owner, the arts center is mulling much-needed renovations to the Merriam's backstage and audience spaces. It seats about 1,700, depending on the configuration for specific performances. Ewers said she intends to engage the Philadelphia architecture firm KieranTimberlake to size up the scope and cost of the project.

The university will lease back, as needed, the theater, as well as office and classroom space above.

William Penn's $5 million toward the purchase is on the higher end of the giving scale for the foundation, though it comes not from the arts and culture budget, but through a fund for special projects. "Our primary concern with a sale was that it could potentially be purchased by a third party and redeveloped for another purpose," said Shawn McCaney, director of William Penn's creative communities and national initiatives. "It's prime real estate, so that was a real potential risk, and we wanted to be sure it would continue to function as a performance venue."

The purchase allows the Kimmel to add the Merriam to the list of naming opportunities it is shopping around. Naming rights to the Merriam could go for $20 million to $35 million for a deal lasting anywhere between a decade and two, Ewers said.

This would mean the disappearance of a name prominent in the city for decades. John W. Merriam, who died in 1994, was a developer and University of the Arts board member. In 1972, on behalf of one of the schools that would later merge to form the current university, Merriam helped negotiate the purchase of the theater that had opened in 1918 as the Sam S. Shubert Theatre. It was renamed for him in 1991, as he established a $3 million trust to help maintain the theater.

But the trust did not come with a naming agreement, a University of the Arts spokeswoman said. The $3 million was paid out from the Merriam estate between 1991 and 2004 and is now exhausted.

The university owns several buildings on and just off Broad Street, and landing a new site might involve a series of transactions, Yager said. The university is not leaving its John Haviland-designed classical-façade building at Broad and Pine Streets, and any new facility would be in the same general area.

What the deal brings the Kimmel is more shows and more revenue, either by increasing what's in the Merriam or by moving some shows from the Academy of Music into the Merriam, thereby freeing up the Academy for more Broadway, Ewers said. The Kimmel expects to see a net profit increase of between $150,000 and $250,000 per year in the first two years, rising to between $300,000 and $500,000 per year after that, since increasing bookings takes time.

The addition of naming-rights income could bring the Kimmel between $1.5 million to $2.5 million more per year, depending on the size of the deal and number of years it covers.

The Merriam this season is hosting Rosanne Cash, Mamma Mia!, Alvin Ailey American Dance Theater, children's shows, and the Pennsylvania Ballet. Ballet executive director David Gray said he didn't think the sale would affect the number of performances the company does there, which comes to 10 this season. The ballet has 50 dates this season in the Academy of Music (25 of them The Nutcracker).

Still, he said: "From my point of view, anything done to improve the theater is a blessing. We've had subscribers say they don't want to go to Merriam shows, that the theater isn't comfortable."

Yager said most of the proceeds from the sale will go toward a comprehensive campaign to construct a new building for the University of the Arts. The size, program, and location of that new facility are not set, he said, but he would like to see it include "a proper performance space of about 450 seats for dance, theater, and music for teaching and performing," plus dorms.

The goal is to improve the student experience, to help increase the current enrollment of 1,900 (and with it, revenue) by 10 percent.

"What I'd like to build is space in the lower floors for performance and exhibitions, with the rest a student residence hall with food service and workout spaces," he said. "That would be my ideal dream."