On October 26th, 1999, an elated Michael Colgan, once referred to as the "perennial boy wonder" of Irish theatre, sat down at his desk and wrote a confident and expectant letter to the Arts Council. He was a happy man. It had been a great year.
The Gate, the most commercially-minded theatre in the State, through the efforts of Colgan and his small team, was consolidating its name in Ireland and expanding into new terrain abroad.
Its director was on a high, with cheers ringing in his ears from audiences stretching from New York to London. Its traditionally bigger rival, the Abbey, was finding it hard to keep up.
The Gate's productions that year pulled in huge audiences. Beckett's Endgame sold out, Wilde's An Ideal Husband played to delighted audiences for 14 weeks and the theatre pulled off a minor coup by recruiting British writer John Mortimer to stage a version of the Dickens' classic A Christmas Carol.
In his letter, Colgan told the council it could be a partner in this dizzy success. All it needed to do was dispense a new grant. "The Gate would like to partner the Arts Council in developing the sector, in achieving new audiences, in upgrading our building and, of course, in the pursuit of excellence and innovation".
Colgan dashed off the letter to Arts Council director, Patricia Quinn, and included extensive details of the Gate's plans for 2000.
The council's reply (written by Mr Dermot McLaughlin, a senior Arts Council official) next May was, in contrast to the almost breathless Gate submission, downbeat and circumspect.
"The council has decided to defer confirming its decision in response to your application until a number of issues have been clarified and resolved to the council's satisfaction", it said.
Seven issues were cited as of concern. They would not normally concern most companies or organisations, including as they did "the financial health of the company" and "the exceptionally high level of performance and success achieved by the Gate".
These "issues" immediately came between the council and the Gate and are causing great bitterness to this day. At the heart of the dispute, lofty questions about State patronage of the arts mingle with the hard-headed concerns of business.
The dispute boils down to a row about what the State should do for the arts and what responsibilities cultural institutions have, in turn, towards the State.
The council claims it is responsible for public money and will only give grants based on "need" and detailed financial information. It claims this has not been forthcoming from the Gate. It says receiving public money requires total accountability.
Colgan, on the other hand, claims the Gate is one of the few theatres that has achieved that rare feat of mixing artistic and commercial success.
This was done by using the Arts Council money to pay for "fixed overheads" only, Colgan told the council during a meeting on October 26th. This gave individual productions the chance to break even or make a profit.
He believes these profits can be used to better actors' pay, to create opportunities for new writers and to improve the Gate. He said this approach had served the theatre well for 17 years.
The council differed, and to this day it says the Gate should only get a grant based on "need", and this need can only be assessed when it provides detailed internal financial information.
The clash first began to get serious last May when a Gate delegation went to meet the council. According to a memo from McLaughlin, the Gate "made it clear to us" it took exception to conditions being laid down by the council before it would give the Gate its grant for 2000.
Among the council's requirements were audited accounts for 1999, quarterly management accounts into the future and a detailed breakdown of all the Gate's spending. It also brought up the thorny issue of the Gate's financial success.
It said it was not happy with the way the Gate and Mr Colgan were using their grant. The council said the Gate was using it to pay for overheads only and not putting it towards artistic productions.
Instead, it said, the Gate was making profits from the productions and retaining the surpluses. The extent of the surpluses are not disclosed in the latest documents but are understood to run to several hundreds of thousands of pounds.
Between May and June attempts were made by the Gate to meet the council's conditions, but the council remained concerned.
On June 8th Colgan wrote to Patricia Quinn: "Reluctant as I am to damage in any way the excellent relationship which has prevailed for 17 years . . . I am nevertheless forced to write to say how disappointed we are that the council should choose to treat us with such disdain."
On July 3rd Quinn wrote back saying "outstanding questions" about the "transparency of the Gate's use of funds in 1999" had not been answered.
THESE question marks over the Gate drew an angry response from Colgan, who wrote in July to Quinn: "There can be no doubt that the relationship between the Arts Council and the Gate is now at an all-time low". He was "both surprised and saddened" that Quinn appeared to be doing nothing to change this.
He asked Quinn to withdraw the reference to the "transparency" of the Gate's use of funds and said the theatre had not been told it had to meet all the conditions laid down.
The Gate sent management accounts on July 20th, but they were deemed to fall short of the council's requirements. There was not enough detail, wrote a council official, about where the money was being spent, said an internal memo.
But in a remark likely to rile the Gate staff, it added: "Nothing less than the detail which the board of the Abbey receives at each of its board meetings should be the standard which the Gate aspires to achieve".
The Gate by August was becoming increasingly exasperated by the council's requirements and no doubt by being compared unfavourably with its larger cousin, the Abbey.
A telephone conversation between Colgan and McLaughlin - a transcript of which has been released - catches the mood.
Colgan angrily told McLaughlin the Gate had 17 years of hard work behind it and had the reviews to prove it. He asked if the council was trying to make an example of the theatre. He also suggested the council was trying to bring the Gate "to heel". McLaughlin denied these charges.
Colgan said if the Gate could not get council funding it would either close or have to appeal to the Department for Arts, Heritage, Gaeltacht and the Islands for the money.
The council sent Colgan a outline of the management accounts it wanted. Among the details requested was the pay of the theatre's top managers.
The Gate was also asked to account for a range of expenses, and the council also wanted separate budgets and reports on its overseas touring income. More accounts went to Merrion Square, but officials said: "They raise more questions than they answer".
The question of the Gate's handsome surpluses also surfaced at a meeting on October 26th. There Quinn was clear the council could not ignore the Gate's war chest. The meeting did not resolve the issues, and they rumbled on into December.
In December the council delivered its judgment on the Gate's 2000 grant application. Quinn reiterated the council's "admiration for the success of the Gate", but said it still had not got a "sufficiently clear picture" of the Gate's financial position.
Contrary to dire warnings of closure from the Gate, she said: "It is not clear to us that your activities are operating at a significant loss".
THE council insisted again it needed better information: a statement of affairs, likely results and projected balance sheet for 2000. An internal memo of December 3rd shows it also wanted details on all payments made to the Gate's staff pension plan.
The council also evaluated the financial statements of the Gate which had come in. "Very healthy profit and loss", "could be described as cash-rich", concluded its finance official, Ms Ellen Pugh.
She also noted an increase in the theatre's pay bill. "I did note that the staff figures have remained the same, 27. However, salary costs have increased by approximately 30 per cent. It could be due to minimum wage agreements or just well-deserved salary increases, but it did catch my attention".
With the council refusing to regard the Gate as a poor supplicant, it moved in December 19th to slash the Gate's grant. The theatre applied, and was expected to get, £600,000, but the council gave it £200,000. The Gate was said to be "devastated at the news", and Colgan subsequently appealed, but this was also rejected. The frosty relations continued to the end of January when Colgan wrote to Quinn telling her the decision would cause the Gate "irreparable damage".
The theatre's grant for 2001 is currently being considered by the council, and the arts community will watch with interest how much the Gate gets this time. Meanwhile the theatre's war chest, "hard won and hard earned", according to an angry Colgan, is being used to make up for the greatly reduced grant from the council.