Its next board meeting chaired by Sir John Mortimer will be faced with a stark choice: accept pounds 3m from a private trust, The Jerwood Foundation, but accede to their demand to change The Royal Court's famous name to The Jerwood Theatre - or risk going into liquidation.
The Court's famous writers, angry, young and middle-aged men and women, have gone ballistic. David Hare calls the proposal "an absurd and abomination. The idea that a theatre that has a radical tradition, stretching back beyond The English Stage Company to Shaw and Granville Barker at the start of the century, should be renamed is preposterous."
It's vintage Osborne: the inflated self regard and inflexibility of the money men, the artists baying for aesthetic integrity, and in the middle, trying to find a peaceful solution, the old English theatrical establishment in the guise of the creator of Rumpole himself.
There is even a deus ex machina in the unlikely shape of the Queen. It emerges that the theatre cannot be called The Jerwood Royal Court - the favoured compromise - as no corporate or foundation name can be inserted before the word Royal. So it's Jerwood Theatre or no money.
It is good that The Royal Court's dilemma has come to light. For it throws into relief other pressing problems in the arts. The first is the curse of the national lottery, which for no good reason demanded that arts venues find private funds to supplement their lottery handouts.
It is this "matching funding" that the Court is still seeking. This lottery catch has inevitably led to dozens of arts organisations chasing the same few philanthropists.
It has also exposed the euphoric optimism around when the handouts were given, which is proving a little embarrassing as recession threatens.
Did the Royal Court, for example, absolutely have to have a pounds 26m scheme involving a restaurant underneath Sloane Square - an area not exactly devoid of restaurants?
Daldry is keeping his own council about how the Jerwood problem should be resolved now; but there are those around him who certainly believe that it doesn't matter whose name is on the outside of the theatre provided no one interferes with what goes on the stage.
That seems a rational view. But I am convinced it is wrong, and for four reasons.
The first and perhaps least powerful argument is sentiment. The Royal Court is a name resonant in Britain's theatrical history and theatrical present. It conjures up a tradition of challenging society, whatever the decade. We are strangely attached to the names we grew up with.
But eschewing sentiment, there is a case that if you lose the name you risk losing the ethos of the theatre with it. New writers want their work to be put on at The Royal Court because that name inspires writers and directors to stretch the boundaries of theatre.
Thirdly, there are sound business reasons for a theatre not taking on a corporate or foundation name. The theatre's original name is itself a brand which can attract sponsors.
The Royal Court may get its pounds 3m from the Jerwood, but next time it wants to raise money it may have even more difficulty if it is called The Jerwood Theatre.
Other sponsors will simply say: "Go to the people whose name is on the building."
And lastly, it is simply inaccurate and arrogant for the giver of pounds 3m of a pounds 26m scheme to have its name in lights. We the public have given pounds 19m through the National Lottery. So if the name is to change, let's at least call it The National Lottery Jerwood Theatre.
Donors to the arts have become absurdly egotistical. The Central School of Ballet now tours as British Gas Ballet Central. Could there be an uglier name?
It is an added anomaly of the Royal Court affair that the Jerwood is not a private business but a charitable foundation.
One would have expected less self-regard. The Jerwood Foundation should have some public acknowledgement for its pounds 3m.
What is wrong with calling the small studio theatre inside, the second auditorium, The Jerwood Studio?
To demand that a theatre loses a century of tradition and put your name on the front of the building does not prove the benefactor to be a patron of the arts: more an example of posturing straight out of Gilbert and Sullivan.Reuse content