Sundance pulls out of theater deal; Fry pledges that project will go on

The partnership backing the Sundance Cinemas complex at 40th and Walnut streets has unexpectedly collapsed, putting its future in question and forcing the University to take control of the project. General Cinemas, which entered into a joint venture with Robert Redford's Sundance Cinemas company three years ago -- and was providing the majority of funding for the long-awaited theater -- filed for bankruptcy last month. In recent days, Sundance officials told the University that they have been unable to find an alternative source of financing. The theater complex was to be just one in a chain of independent movie theaters that Redford planned to open. Penn officials had expected that the 40th Street complex would be the first of its kind to open. Another Sundance theater, in Portland, Ore., is stopping construction with 75 percent of it completed. But with the project's prime financial support gone and Sundance unable to find another source of funding, University officials must now hope they can find a new company to operate and help finance the 50,000-square-foot theater complex. Admitting that the General Cinemas bankruptcy is a major setback, Penn Executive Vice President John Fry said that the project will move forward in some fashion. "There is no backing away," Fry said. "This is something we're going to deal with and fix." Redford and University President Judith Rodin announced plans for the project in the fall of 1998, expecting it to open last spring. But sluggish construction and architectural complications slowed the process, leaving the theater only half finished and not expected to open until January. Though Sundance told Penn they would secure another partner after General Cinemas filed for bankruptcy, about 10 days ago they alerted the University that they were unable to do so. Sundance's role in the project is now unclear. Though Penn officials have said they hope to keep Redford's organization involved, a source familiar with the situation said Sundance is essentially unable to proceed in the effort. The University has already begun seeking out and meeting with possible replacement operators. According to Fry, the new financial partner will not be a national corporation like General Cinemas and hopefully will be determined within the next few months. Meanwhile, Fry said that construction will slow down considerably and officials are looking at the cost of sealing the building off until they are ready to move forward. He said he expects Sundance and General Cinemas to provide the money to do that. The concept behind the Sundance complex -- combining films with a restaurant and bar to enhance the moviegoing experience -- complicates the decision. Penn's goal of making 40th Street a destination spot for all Philadelphians rests on the movie theater housing a restaurant and other amenities. In switching roles from the project's landlord to its leader, the University may end up investing considerably more money than the $15 million officials originally planned. But before they commit to increasing University funding, Fry said officials will try to seek additional equity from third parties. If that doesn't work, officials may have to cut back on some of the complex's more expensive design features. General Cinema's bankruptcy is part of the recent financial difficulties plaguing the entire movie exhibition industry. Fueled by the emphasis in the late-1990s on bigger movie complexes, many film exhibitors throughout the nation overbuilt in the past five years, racking up debts they have since failed to pay off and which sent many of the nation's largest exhibition companies into Chapter 11. General Cinemas spokesman Brian Callaghan estimated that the number of theaters in the country has increased by about 60 percent, from 22,000 to about 37,000, in the last decade. In the past two months, General Cinemas has closed down about 53 of its 130 locations throughout the nation. "No one... could have predicted how in three years the general movie theater market would have changed," Rodin said. Fry stood behind Penn's decision to partner with Sundance and General Cinemas on the project, emphasizing that the current fiasco was out of Penn's control. "We feel we did a really good deal two years ago," he said. "We felt the two of them together, with us, would be able to materialize something very special." Penn's top real estate official, Tom Lussenhop, argued that though the industry as a whole is ailing, the unique nature of the Sundance idea will allow it to thrive in University City. "The nation is still going to the movies," Lussenhop said. He cited a feasibility study done before construction began that found Philadelphia to be "significantly underscreened" and the 40th Street location viable for a theater. Communications Professor Joe Turow, who teaches a class on mass media, said that while the market for independent films is small, Sundance's location next to a university would increase its chances of success. "Young adults and teenagers go to the movies more than any other age group," he added. University officials hoped the theater and Freshgrocer, a neighboring supermarket expected to open in January, would serve as an anchor for the 40th Street corridor, drawing people from throughout the city. But Fry admitted that the current state of Sundance might hinder development, though officials are still actively seeking out retail ventures for the area. "This is right in the middle of all the things that we're trying to do with 40th Street," he said. "That we have something sitting there that's half completed does nothing for any of our other plans to create a vibrant 40th Street." University City District Executive Director Paul Steinke said he did not think the upheaval will affect any of the neighboring businesses. "There's no doubt in my mind that, given the commitment Penn has made to 40th Street and the community, they will find a way to make this happen," Steinke said. While Steinke sees the Sundance name as an advantage, he said he believes the theater will do well without the name. "I don't think Sundance is necessarily the only identity that it can have in order to be successful," Steinke said.

The history of the Sundance theater project

Delays plague 40th Street Construction Published on Thursday, August 31, 2000 The construction sites located at the corners of 40th and Walnut streets will remain just that until well into the fall semester. Full Story

Sundance Cinemas on target for fall 2000 opening Published on Friday, April 28, 2000 When students return in the fall, their arrival will be followed by the completion of the long-awaited Sundance Cinemas complex. Full Story

New Sundance theater complex stalled again Published on Thursday, February 3, 1999 Students hoping to catch a film at the highly-anticipated Sundance Cinemas complex over the summer will now have to wait until the fall at the earliest. Full Story

Construction of cinema delayed Published on Tuesday, October 26, 1999 The Sundance Cinema complex will open several months later than planned because of design modifications to the structure, according to Tom Lussenhop, the University's top real estate official. Full Story

40th & WALNUT Published on Friday, September 3, 1999 Officials said they believe the complex -- which will cost a hefty $33.8 million -- will be a "catalyst" for the 40th Street area, attracting large crowds that will create more of a street presence and encouraging further redevelopment of the western side of campus. Full Story

Construction begins on 40th St. theater, market Published on Friday, September 3, 1999 While students were away on summer vacation, work on Hamilton Square proceeded on schedule and the complex is still expected to be finished by the spring of next year. Full Story

Work begins on Hamilton Square Published on Friday, May 14, 1999 The storyline has been scripted, the actors cast and the location set. And now, the final scene is about to be shot. Full Story

New 40th St. sites on the 'cutting edge' Published on Monday, April 12, 1999 Whether you'll be there for the movies, the food or the convenient parking, the Sundance Cinemas movie complex, fresh foods market and parking garage is more than just a place to go on a Friday night -- it's a work of art, say the project's planners. Full Story

Work set to begin on new 40th St. Published on Tuesday, April 6, 1999 With the beginning of construction on the Sundance Cinema complex, a fresh foods market and a parking garage just weeks away, University officials released yesterday the designs of the project they expect to revitalize the 40th Street corridor. Full Story

Redford, U. to announce theater deal tomorrow Published on Thursday, October 1, 1998 The Sundance Kid, Robert Redford, will ride into Philadelphia tomorrow to announce that Sundance Cinemas, his art-house movie theater chain, will open a site on Penn's campus, a person with close knowledge of the trip confirmed yesterday. Full Story

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