"The business of America is business" runs the famous quote of Calvin Coolidge in the 1920s. "The business of theater" in America sank many mid-size theaters in the 1990s and after. Seattle has been particularly hard hit, with Aha Theater, Alice B., Pioneer Square, The Bathhouse Theater, Center Stage (on Mercer Island), the Group Theater, the Empty Space, and, most recently, Tacoma Actors Guild (TAG) all going under. TAG closed operations once before in late 2004, when it had an annual budget of $1.35 million. It managed to reopen but was finally done in this February by a small deficit of around $100,000. Small arts groups suffer from boards with shallow pockets and limited ability to go to donors or a bank, so a small deficit can often be quickly fatal. But without small and mid-size groups, the whole artistic spectrum suffers as fewer artists can break in and the experimental side of the art form suffers. The birth of regional, non-profit theaters began to shift the business of theater from Broadway to the country as a whole about 40 years ago. All over, community leaders in major cities formed boards, built theaters, hired professional artistic directors and general managers, and started to produce seasons of classical theater and contemporary playwrights. Seattle acquired its flagship regional theater, the Seattle Repertory Theatre, in 1963, right after the Seattle World's Fair and as the regional theater movement was entering its heyday. There were few constraints on the artistic directors in the heady early years, with grants rolling in from the Ford Foundation and others determined to spread culture beyond the major New York companies. Seattle had such an appetite for theater that A Contemporary Theatre (ACT) was started, to challenge the Rep by offering more contemporary fare and letting Seattle discover plays by Harold Pinter, Tom Stoppard, Samuel Beckett, and Bertolt Brecht. The Rep and ACT each had a clear niche, and there was room for both theaters, and then some. Enter the Empty Space, offering even edgier fare by Peter Handke, Sam Shepard, and the like, formed by graduates of the University of Washington. The University of Washington's Drama School successfully fed all the theaters with their students and professors, and they lived together, although not happily ever after. Intiman Theatre was founded in the early 1970s, doing classical fare but soon blurring the clear niches occupied by the large theaters in town. The Alice B. spoke for the gay community, the Group Theatre tackled issues of ethnic diversity. During the 1970s and 1980s, Seattle enjoyed the benefits of a tremendously rich and healthy theatrical ecosystem. Below the canopy of the big theaters, there was a diverse network of mid-sized and small theaters driven by imagination, youthful optimism, and excitement about new forms. And the undergrowth was alive with fringe companies, startups, and experimental groups. A student could get well-rounded classical training at the UW, come out and start a company with classmates, move up and gain professional experience on the stages of the mid-sized theaters, and sometimes graduate to the stages of the big theaters and beyond. Seattle earned the reputation of being the best theater town west of Chicago. Then, with greater budgets and more competition, "the business of theater" started upstaging the creative side. The role of the artistic director started to morph from creative visionary to man in a suit: raising money, talking the talk, working with the board and the marketing and development directors. The first round of Ford Foundation money, which had created the regional boom, faded away, and corporations shifted money from arts to social services. Costs kept escalating as the scramble for funders and subscribers got more intense. A city such as Seattle, which had practiced little birth control about artistic groups during the boom years after the World's Fair, had a lot of mouths to feed. Next came a building boom, raising costs still higher and creating several "second spaces" that tapped audiences from smaller theaters. ACT grew from one space with a small black box to a four-theater, well-equipped complex. The Rep added the Leo K. Theater, which proved uneconomical to operate. As far back as 1974, when the Rep renovated an old night club, now demolished in favor of the Convention Center, and called it The 2nd Stage, it drew audiences away from The Empty Space. Around that same time The Pioneer Square Theater disappeared after it broke all records with Angry Housewives. In Seattle, where there were so many theaters, the lines between niches began to blur. ACT no longer had a corner on modern works, as every theater with a literary manager on the payroll sought out the next important playwright. Gay and ethnic themes could be found on the mainstages, robbing the Alice B. and the Group Theater of their exclusive mandates. Budgets ballooned, deficits were incurred, and seasons of plays had to be packaged like consumer goods. The two-person play or one-person show saved money and became the anchor of a smorgasbord season, designed to appeal to as wide an audience as possible. From 1980 to 1999, the Bathhouse Theatre where I worked sustained an ensemble of well-trained and talented actors. However, the number of actor contracts gradually shrank from 55 a year to 35, even as we continued to include one Shakespeare production every season. Into this scramble stepped the Kreielsheimer Foundation, offering generous amounts of money for arts organizations in the community. That money would expire in 2000, so visions of beautiful new buildings started to dance in boards' heads. Egged on by the dot-com boom, one board after another announced a capital campaign to move to a new building, add a second stage, or upgrade their facility. When the local technology boom went bust in 2001, many theaters were stuck with expensive new buildings to operate, more competition, and fewer grant dollars. Seattle, meanwhile, continued to be a place where public funding of the arts is very low. A classic squeeze set in, and small theaters began toppling. I was caught in the same down-draft at the Bathhouse Theatre. We went to the community for help and were told, "Your board isn't connected. And you don't have a good business plan." This was the truth - despite good productions, solid subscriber support, and decent box office. With a 165-seat house, we were making more than 80 percent of our expenses from the box office. Advised to raise our contributed income to 40 percent, we found the competition for the grants and donors was simply too intense. Urged by a board member to "wield a bloody axe" to cut costs, we felt that cutting an already small staff would kill the theater. So what did theater professionals like me learn from going through this painful wringer? I have a few suggestions. Local corporations should be encouraged to place employees on mid-sized boards as well as large ones, so that each midsized arts organization could receive two or three such placements from different companies at any given time. A small board needs more than one heavy hitter. Another good idea comes from Canada, where large and midsized theaters have a history of co-productions, where resources are shared, costs are streamlined, and artistic cross-fertilization replaces competition between companies. Finally, I'd recommend that at least some of the local grant organizations should allocate money specifically for midsized companies. A few local benefactors have created funds dedicated to helping smaller and midsized arts groups achieve stability, but we need a lot more. Seattle has a very entrepreneurial business culture, so perhaps it will spawn donors who like the research-and-development side of the arts – mostly the mid-sized organizations that have adventurous audiences, an ability to react quickly to new ideas, and a penchant for disrupting the establishment.