Cherished Berkshires theater troupe imperiled

Leaders of the Lenox-based company acknowledged the crisis after the release of a 37-page report from the Technical Development Corporation, which examined the theater’s finances and laid out a stark picture: a deficit of $4.75 million over the last five years, and liabilities exceeding assets by a ratio of almost seven-to-one.

Shakespeare & Company is the latest among area theaters to face money trouble. They range from the big-budgeted North Shore Music Theatre in Beverly, which closed this year, to the increasingly ambitious Boston fringe ensemble Up You Mighty Race Company, which recently canceled its season opener. But national stature and a loyal, Bard-loving audience put Shakespeare & Company in a different league entirely.

The organization’s leaders, who had requested the report to help develop a recovery plan, said they have begun cost-cutting measures to keep the theater alive.

“If we do nothing, then these are the bad things that will happen,’’ Tony Simotes, the company’s artistic director, said of the report. “I couldn’t agree more. The good news is that we are not only not doing nothing, but we’ve already put some changes in place, many of which this report suggests and others which will come down the road.’’

These changes include staff reductions, a hiring freeze, and performance schedule shifts that will cut down on days the theater needs to be closed during its prime summer season. The company also is in talks to restructure its $8 million in loans with Century Bank of Medford.

British-born Tina Packer founded Shakespeare & Company in 1978, with performances staged at The Mount, novelist Edith Wharton’s turn-of-the-century estate. In 1999, Packer, who served as artistic director until last summer, spearheaded the $4.1 million purchase of its current site in Lenox center. Just last year, the organization renovated a massive building on its property for scenery, costume shops, rehearsal rooms, and a flexible, 65-to-186-seat theater.

Although the budget mess has been building for years, according to the report, it caught many by surprise.

Audiences at the Elayne P. Bernstein Theatre were sizable at a recent performance of “The Hound of the Baskervilles,’’ applauding heartily for the farcical adaptation of Sir Arthur Conan Doyle’s classic Sherlock Holmes tale.

This season alone the company has sold 51,000 tickets, up from last year’s total of 49,000, and there are still two full productions left.

“There’s been no outward indication of financial struggles,’’ said Jeffrey Poulos, executive director of Stage Source, a service organization in Boston. “There’s been no public statements by them and no appeals to the public.’’

“The productions I went to were full,’’ said Judy Isserlis, a retired professor who has been going to Shakespeare & Company shows for eight years. “I think it’s terrible because they stay open longer than anybody else and put on more plays than any other theater. It’s troubling if that’s rewarded with a shortfall.’’

In fact, the company’s problems are due to a variety of factors, board chairman Richard Mescon said yesterday.

Over the last decade, Shakespeare & Company has spent about $18 million on buying property, renovations, and transition costs. Fund-raising for those projects made it harder to secure money for the company’s $5 million annual operating budget, a challenge that the organization’s leaders didn’t anticipate.

That, in turn, led the organization to use capital funds for daily operations. When construction money was then needed, it wasn’t there, Mescon said, which forced Shakespeare & Company to borrow.

The stock market collapse added pressure, particularly when a pledge of more than $500,000 in securities ended up delivering half that sum when it arrived in the company’s coffers.

“You add these things up and it becomes a number of factors,’’ Mescon said.

Recognizing the crisis, Shakespeare & Company asked the Massachusetts Cultural Council for help earlier this year.

The MCC, in turn, suggested the company have its finances examined by the Technical Development Corporation and agreed to pay the roughly $15,000 fee. The Technical Development Corporation also was brought in to study the finances of North Shore Music Theatre not long before the organization folded.

Responding to the report, Simotes said the company is already moving to make sure the most dire prediction - that the company could run out of money to meet its payroll as soon as this month - doesn’t come true. He said the company did not need to raise $2.3 million right away.

“If we pay everything off, that’s how much money we need,’’ he said. “But as you know in your own life, when the bill comes in you don’t go to the bottom and pay everything off. We’ll move the funds around a bit to take care of the more pressing issues.’’

Mescon said a plan in development will reduce expenses by more than $1 million. It calls for further staff cuts, shifting performances to maximize ticket sales, and moving the company’s summer training institute earlier in the year. And he hopes to renew a fund-raising campaign as soon as the company is able to renegotiate its terms with Century Bank.

“My sympathies are with them,’’ said Ella Baff, executive director of Jacob’s Pillow in Becket. “And my hope is that their supporters will come forward and rush forward and help them through this crisis.’’

Geoff Edgers can be reached at gedgers@globe.com

Correction: Because of a reporting error, a Page One story yesterday about the financial struggles of Shakespeare & Company incorrectly identified the organization that studied the financial state of the North Shore Music Theatre. It was Technical Development Corporation.