CHALLENGE
Merging two separate 501(c)(3) theatres into one larger organization.

PLAN
Over a period of two years, merging both companies’ assets into one organization, then slowly working on rebranding and marketing.

WHAT WORKED
Combining educational programs, personnel, and finances so that there was no duplicative programming; a stronger balance sheet; and, most important, no layoffs.

WHAT DIDN’T
Combining staff into one location—present office space can’t accommodate two sets of staffers.

WHAT’S NEXT
Working with an ad agency to rename and rebrand the theatre, and communicating to stakeholders and audience the mission and program of new organization.

It’s not every day that an artistic director is happy to give up their theatre. But Paul Lenzi, the former artistic director of Blue Apple Players in Louisville, Ky., is positively ecstatic.

“It really feels great,” Lenzi answers, when asked for his reaction to ceding control of Blue Apple. He hasn’t left the organization, though: When Blue Apple, which he founded in 1976, merged with another local organization, Walden Theatre, to become Walden Theatre/Blue Apple Players, Lenzi took on the role of development officer for the combined entity. “We’d known [Walden Theatre] for so long—I knew the people in it and I knew this was a good match,” Lenzi explains.

The new name is a mouthful, but it’s indicative of the No. 1 rule for mergers: Roll out changes slowly. “If you rip off a Band-Aid and change it all at once, then you have no idea which piece of it might not be working,” says WT/BAP managing director Alison Huff, who was originally on the Walden side.

Walden Theatre and Blue Apple Players have always had a close-knit relationship. The theatres were both founded in 1976. Walden does a full season of traditional and modern classics, while Blue Apple specializes in original TYA musicals that tour to local schools. Both theatres had extensive educational programs for children and teenagers, with Blue Apple’s programs focused on preschool and elementary school kids, and Walden’s on middle and high schoolers. The two organizations would often collaborate—they had cocreated a summer camp and classroom series for children and preteens.

The merger conversation began two years ago. When Lenzi was mulling his imminent retirement, he realized that instead of finding a successor for his theatre, it would be better to capitalize on the existing relationship and make a plan to combine the two organizations.

“There’d been a lot of crossovers going on for years and it occurred to us to look a little deeper and see if a merger provides a future that would increase capacity for both organizations, which we both needed—and also maintain the legacy of both organizations,” explains Lenzi. Indeed, when you combine the reach of the theatres’ educational programming, they serve 47,569 young people annually in the Louisville Metropolitan Area, pre-K to 12.

For Huff, the merger of Walden and Blue Apple is unusual, because it wasn’t predicated on financial troubles, which is often the reason for one organization

absorbing another. Instead, it was built on a desire to better serve the community. “It’s what we called a mission-based merger,” she says. “We didn’t have to cut staff, which harms morale. We didn’t have any duplicated donors, and we didn’t have any duplicated programs. It’s a good thing, because it means we can put these two already strong organizations together and start at a really solid place and build capacity.”

Pre-merger, both organizations were financially stable; Walden Theatre’s budget was $750,000 and Blue Apple’s was at $350,000. The two theatres’ combined budget is $989,500, making the new mid-sized organization eligible for more national grants. In addition, it also strengthened income streams. Before the partnership, Walden’s budget was comprised of 75 percent earned income to 25 percent contributed, while Blue Apple’s was nearly the opposite, at 85 percent contributed and 15 percent earned. The merger allows for more balanced revenue sources—the new ratio is 55 percent earned income and 45 percent contributed. There has been no duplication in staff: Walden had a marketing staff and Blue Apple didn’t, and vice versa for development staff.

According to Huff, “By combining efforts, we can really raise our profile.”
On paper, it looked like two puzzle pieces fitting perfectly together. But that doesn’t mean the merger hit no snags. For one: that name. In order to not confuse audiences, the new company has temporarily registered itself as a new 501(c)(3) called Walden Theatre/Blue Apple Players. They have been in business as such since Jan. 1, but they’re planning on having a new name in place by September.

WT/BAP is currently working with an ad agency to facilitate the rebranding process, one that will assure respective audiences that this is the same Walden or Blue Apple constituents know and love, only bigger. Though representation of the new company are trying to speak publicly as one organization, they still find themselves having to assume their previous individual identities when addressing certain donors and audiences. At press time, Blue Apple’s old website was still in use—though their name is also on the Walden website, where two logos sit at the top of the page.

“I think this is a good transition—where people are getting used to the idea that these two groups have come together,” says WT/BAP artistic director Charlie Sexton. “Our main constituents are our students, our parents, and the audiences that see our shows. We want them to know that there’s no change in quality—it’s the same instructor, the same building, only with the ability to reach more kids and to do more programming.”

All the same, Sexton is aware that rebranding and getting people used to the new name and entity will take time: “It’s two to three years before you’re finally established as something.” Another issue is literal capacity: There is currently not enough office space to house both staffs. Walden owns its building, and is still leasing Blue Apple’s office space to accommodate overflow. “We’re beginning to outgrow this building. We don’t have enough room for everybody,” Sexton allows.
These are just small hiccups, though, in what has otherwise been a smooth and efficient process. Lenzi can attest to that: While the merger idea sprang from his retirement planning, the longtime theatremaker isn’t going anywhere. It’s all too exciting right now.

“There’s so much happening here and I’m immersing myself in all the programs,” he enthuses. “I’ve been doing this for 40 years. This really rejuvenates me.”