Opera House pounds 3m in debt

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The beleaguered Royal Opera House has plunged more than pounds 3m into debt after what Sir Angus Stirling, its chairman, describes in its annual report as "an exceptionally difficult" year.

The debt comes after three years in the black and is due, Sir Angus says, to a "steep decline in sponsorship, disappointing box office returns during the hot summer of 1995, and a standstill Arts Council grant".

The result is that the ROH has an operating deficit of pounds 3.1m, partly from "non-recurring" expenditure of pounds 1.7m, which includes redundancies.

"The deficit, which we must plan to eliminate, serves as a cruel reminder that at a time when so much new capital money is flooding into the arts from the Lottery, our revenue needs are as desperate as ever if standards are to be maintained," Sir Angus writes. The report reveals that the severity of the ROH's debt triggered cuts to departmental budgets and the cancellation of new productions. Staff numbers were reduced by nearly 100.

The ROH and Royal Ballet's preoccupation this year is preparing for the closure from autumn 1997 of their home in Covent Garden for a pounds 213m redevelopment funded by an initial lottery grant of pounds 55m.

The Liverpool Institute for Performing Arts, Paul McCartney's brainchild "Fame School", has been driven pounds 5.3m into debt just six months after its opening because of spiralling building costs, writes Steve Boggan. Chief executive Mark Featherstone-Witty said the school was unlikely to close, but added: "We can't go on with such huge debts round our neck. We would be like a Third World country, always owing more and more money."