FEARS were growing today for two of Edinburgh’s best-known theatres as the trust that runs them faces a deepening cash crisis.
Auditors have warned that there is a doubt about the ability of the Festival City Theatres Trust, which runs the King’s and Festival theatres, to “continue as a going concern”.
The warning is contained within financial accounts for the trust that have not yet been published publicly and indicate the extent of the financial crisis that the organisation is facing.
It has faced severe cuts to the funding it receives from the city council and has already been forced to scale back its programme and make staff redundant in order to cut costs.
City council chiefs today insisted that the situation at the trust had been “stabilised” but opposition politicians called for guarantees that the venues will not be forced out of business.
Councillor Iain Whyte, culture and leisure spokesman for the Conservative group on the city council, said: “Any item like this that the auditors highlight should be a concern to the trustees and I hope they are taking every step to ensure that it does not become an issue and that the trust can continue.
“The issue comes back to the council ultimately and the whole point of the trust is to make sure that these venues are solvent and vibrant so I would hope that the trustees will look at it again and ensure that debt does not become an issue. They need to look at management, programme, costs – they have to look at everything to ensure it is being run properly; that is their role as trustees.”
The trust’s accounts for the year to the end of March 2010 were posted at Companies House in July 2010 but the 2010/11 figures have still not been posted.
The 2009/10 accounts showed that the trust had £868,520 of creditors due to be paid within one year but had only £682,412 of current assets, including cash, debtors and stock. The city council had to step in and provide a £400,000 bailout to the Trust – in the form of an advance on funding – in February 2011.
As well as reduced funding from the council, the trust has also been hit by declining audiences as a result of the turbulent economy.
The Broadway adaptation of The Secret Garden, the big Christmas show at the Festival Theatre last year, was hampered by bad weather and takings were reported to have slumped from about £10,000 a day to just a few hundred pounds.
It also continues to operate with only an interim chief executive, following the shock departure of John Stalker in June. Details of the auditor’s financial warning were contained within the city council’s own financial accounts. A statement said: “Festival City Theatres Trust accounts include an emphasis of matter statement in the independent auditor’s report. The emphasis of matter relates to the ability of the charitable company to continue as a going concern.”
Financial experts said that the warning from auditors was “serious”. However, Bryan Johnston, a divisional director at investment firm Brewin Dolphin, said it did not necessarily mean there was an immediate threat to the long-term future.
A council spokeswoman said that the trust has “stabilised” its position, while nobody was available to comment at the Festival City Theatres Trust.