|5:00PM||The Company You Keep|
We are in the process of forming the Art Theater Cooperative (Co-op) to assume running the theater after 2012. We have a two-page PDF that addresses most of the basics: Co-op basics PDF. We recommend you start there. You can also come to the theater to see a 30-page version of the business plan.
Here are some Frequently Asked Questions (FAQs) and at the bottom of the page is a link to sign up as an owner.
OK, glad you are excited! Skip down to the sign-up link. We still recommend perusing the FAQs later
A cooperative (co-op) is a business that is owned by its customers. Its goal is to be financially self-sufficient entity that is run to meet the consumer and social goals of its owner-community. Co-ops are not dependent on donations or grants.
Being a single screen movie theater is tough. Most of the ones that still exist have been taken over by cities, such as the Virginia and the Normal. So far, Sanford has shown that the Art can operate and make a small profit.
However, because movie distributors are transitioning from 35mm film to digital formats, the theater needs to purchase a new digital projection setup that will cost about $80,000 in order to continue operations. Without this new equipment, the theater cannot show new movies, and Sanford will close operations at the end of 2012, when his lease runs out.
Although the Art generates a profit now, it is not enough to take on $80,000 in new debt.
The key difference between a co-op and a non-profit is ownership. Nobody owns a non-profit, so community engagement is not focused. Similarly, the non-profit has no direct incentive for meeting the needs of the community, and can lose sight of what its patrons want.
The Art Theater Co-op will be owned by the people who benefit the most from the business: Cinema lovers!
Another aspect of ownership is democracy. Owners will elect the board and can serve as directors. This direct linkage keeps the Co-op thinking about what the owners want.
Another benefit of co-ops is that they have an entrepreneurial energy because they are run as a business. This discipline means that the Art Theater Co-op can only exist if it continues to be managed well and meets its patrons’ needs.
Finally, non-profits must subsist on donations and grants. In these uncertain economic times, with government at all levels cutting back on spending, the Art Theater Co-op would be competing with other downtown arts organizations for a dwindling amount of money.
Shares cost $65. This is a one-time equity purhcase - you are not paying a fee or a due, but are actually buying an interest in The Art Theater’s business. Your shares in the Co-op can be sold back for a full refund if you are leaving town or no longer wish to be an owner.
Buying a single share for $65 makes you an owner and gives you all the associated privileges and allows you a single vote in board elections and other ballots. The by-laws allow you to buy up to eight additional shares, and while extra shares won’t give you additional benefits or votes -- a key distinction between a co-op and an investor-owned business -- by buying multiple shares you will help us reach our equity goal and know that you are playing a lead role in insuring the future of The Art Theater. If you have the means, you are encouraged to buy multiple shares.
Owners who are not directors have no liability risk. The Illinois compiled statutes (805 ILCS 107.85) states: ’The members of a corporation shall not be personally liable for any debt or obligation of the corporation.’
Directors, unlike members, have oversight responsibilities, make policies, and decide operational issues. (The statutory limitations on liability of directors apply only to a tax-exempt organization, which the Co-op is not.) Potential liabilities of directors relate directly to their own negligent and wrongful conduct. The behaviors to avoid potential liabilities is described in the standards of conduct set out in the bylaws, which are taken from the governing statute. As long as directors comply with these standards of conduct, their risk of being liable are minimized.
The Art Theater Co-op needs to raise $100,000 in order to take over. Of that money, $80,000 will be spent on the new projector. The other $20,000 will be the initial operating cash for the business. Once the $100,000 is raised, a transition process will begin for the Art Theater Co-op to assume operations from Sanford.
The Art Theater Co-op must raise the $100,000 by July 2012. If it cannot raise the money, then the amounts paid will be returned (though without interest, and minus credit card fees).
This is the short answer. There’s a 30-page version of the business plan at the Theater.
The Co-op will operate the Art Theater, running it as a movie theater as it is now. The Co-op will lease the theater; this is not about purchasing the building.
The theater will begin operations with $20,000 in cash and $115,000 in debt. The debt reflects the equipment that is in place now, which the Co-op will purchase from Sanford’s corporation. The equipment includes pretty much everything in the theater (35mm projectors, the screen, sound system, concessions equipment, computers, printers, etc...) but not the seats or marquee letters, which are part of the building.
The Co-op will pay off it’s debt over a six-year term with the money raised from new owners joining and with cash from operating profits. At the end of six years, the Co-op is projected to be debt-free and operating at a profit. At that point, the Co-op can consider different long-term options.
The owners will elect a Board of Directors from its ranks. This Board will have ultimate responsibility for setting direction for the business and reviewing its operations. Its primary employee will be the General Manager who will hire staff and run the day-to-day operation of the theater.
The General Manager will operate the business so that it is sustainable. Any profits that are generated will either be used for community work that relates to our mission, held for future expansion or unexpected expenses, or given back to the owners in the form of patronage dividends.
Elections for the first Board will occur once 200 owners are signed up.
Yes! The Art will operate as a normal movie theater.
The General Manager will determine owner benefits, but they will likely include exclusive events and screenings, and the opportunity to work at the theater as a hands-on owner.
In addition, owners will have the satisfaction of investing in a business model that supports community building and independent cinema. Owner equity in the business will help keep the Co-op financially healthy and ensure a space for the community to see fine cinema for many years to come.
Most importantly, the Art Theater Co-op will be a democracy. Owners will be able to run for seats at the board of directors and get involved in the governance of the theater.
Come to the theater any time that movies are showing and you can join. You will fill out a simple form and you can pay for your shares with cash, check, or charge. You can pay your shares in full or finance them with $10 per share down and payments of $5 a month (per share) for the next 11 months.
You can also join right now, with PayPal. Just choose the number of shares you want and click on the Paypal link to sign up. We'll mail you your Co-op ownership card as a confirmation.
In the mean time tell your friends and encourage them to find out more about the new Art Theater Co-op.