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The League of Chicago Theatre`s annual summer retreat, going on this weekend at Wisconsin`s Alpine Valley Resort, takes place this year with an added sense of urgency on the state of the Chicago area`s resident theaters. The retreat traditionally has been a time to get away from day-to-day business and assess the state of the art-but this year promises to have more than its share of discontent and worry.

Among these are the increased competition for audiences, the downward spiral of funding sources, a feeling of malaise over recent programming quality and increased tension between commercial and not-for-profit theaters. In addition, the League is faced with discontent by several board members with the work of Diane Olmen, the League`s executive director. Among the complaints against her are those involving the time-consuming nature of her work with the League`s ongoing exchange project with Soviet theater companies.

On the other hand, Roche Schulfer, producing director of the resident not-for-profit Goodman Theatre, resigned from the League board last Tuesday, because he believed not only that Olmen was being treated unfairly, but that the move was part of a power play by commercial theaters wanting to control the League.

”The League board accepted a proposal from the commercial theater wing of its membership to expand the number of commercial theater representatives on the 15-member board from three to six,” Schulfer says. ”That would give them effective control, and I have great concerns about that for our future.” Discussions at League retreats are always lively occasions for soul-searching dialogue, but this 10th anniversary session could produce quite a mouthful. Schulfer, for example, says, ”I wouldn`t miss it.”

Besides concern for the League`s internal troubles, there`s a consensus that the just-finished season has not been as stellar as past ones, and a feeling that both audience levels and quality are stuck on a plateau.

”It`s been a tough time for a lot of theaters,” says Dennis Zacek, artistic director Victory Gardens Theatre. ”My impression is that there have been a number of terrific productions that aren`t doing as well as they should have.”

Others are more blunt: ”We`re probably in the worst position I can remember in terms of the community having a sense of unity,” says Jeffrey Ortmann, producing director at Wisdom Bridge Theatre and a 10-year veteran of the scene. ”Whenever there are frustrations within the individual organizations, it manifests itself at the retreat. But it has never been as personal.

”I see it as community-wide,” he adds. ”I used to enjoy going to community meetings around town, because I enjoy working with my colleagues. Lately, I`ve taken to checking out the agenda first-I don`t want to sit down anymore and listen to people disagree and even yell at each other.”

The doldrums appear to be both artistic and financial. Court Theatre`s artistic director, Nicholas Rudall, says, ”I think everyone recognizes that we`re, if not in crisis, at the very least in a state of ennui. There`s only so much you can do after 10 years, and a lot of us have reached that age. It`s hard to remain invigorated.”

”I see it more in what`s happening in the relationships between the plays and the audiences,” says Larry Sloan, director of Remains Theatre.

”For all of Chicago`s great energy and theatrical style, there`s a routine that has settled into the act of going to the theater. People pay about the same money at each theater, they see the same actors and work by the same designers, and they even hold in their hands a program that looks pretty much the same from show to show. There`s a regularity in the dialogue between the audience and stage, and it`s a conversation that`s become old hat.”

The funding situation is even thornier. The gradual cutback in government grant money over the years, the crisis at the National Endowment for the Arts and the escalating competition for audiences have all had their effects on off-Loop theater bonhomie.

”There`s a sharkism out there that`s pitting one arts group against another,” warns Nan Charbonneau, producing director and something of a lone helmsman these days for the financially troubled Body Politic Theatre, currently searching for a new artistic director. ”I realize that the climate demands we be sharp and savvy in business. But is it right for one arts organization to take advantage of another? That`s what`s happening.”

She also worries about nascent commercialism. ”The golden age of off-Loop opened the door for commercial opportunities. Some of the not-for-profit groups developed a stronger business sense than others, and

certainly competition is healthy, but I worry that with grants and funding tightening up, will we be tempted more and more to go for commercial projects?”

There`s already some evidence of that. Wisdom Bridge last season mounted

”Forever Plaid,” a nostalgic musical revue, that invited comparisions with earlier commercial projects such as ”The Taffetas.” This summer, the theater unveiled ”Soft Remembrance,” with help from commercial producers Cullen, Henaghan and Platt.

Ortmann, not surprisingly, bristles. ”I hear a lot of comments about our so-called commercial shift, but I don`t think our co-presenting a Soviet troupe in `The Peace of Brest-Litovsk` at the Civic Theatre could be called commercial. We chose `Plaid` as a bit of Americana personified to run in conjunction with the Russian play downtown.

”And earlier we presented `Lady Day` (a show about Billie Holiday),” he adds, ”and it dealt with drug addiction, racism and black history.”

Generalizations are always troublesome, and indeed solutions appear to be singular. For Zacek and Victory Gardens, the hit status of one of last season`s offerings, Jim Sherman`s ”Beau Jest,” and its ongoing transfer to the Halsted Theatre Center, has helped finance riskier projects. Victory Gardens brought the fascinating ”Dear Elena Sergaevna” over from the U.S.S.R. earlier this summer, plans to take two shows to Moscow and Leningrad next year and may see two others mounted in New York-an off-Broadway version of ”Beau Jest” and a coproduction of the earlier ”Jelly Belly” with Woodie King`s New Federal Theatre.

”We`re starting to look outside Chicago as a way to expand,” Zacek says.

Rudall and Court Theatre, now in the process of looking for a replacement for outgoing managing director Mark Tiarks, are taking the time to reassess and come up with a new five-year plan. ”We`re examining ways to break the constraints of the four-week rehearsal, five-week performance syndrome. It`s hit or miss, with not enough time for artistic development. We`re looking at keeping some works in the repertory, taking them in and out on a schedule.”

Rudall also touches on a problem that concerns many of the theaters:

actors` salaries. ”Part of the idea is to come up with more dignified compensation for actors,” Rudall says. ”It`s hard to expect people at the height of their art to be earning $400 to $500 a week and remain in the profession. It`s threatening to all the theaters.”

Sloan and Remains, on the other hand, are poised for a $475,000 capital fundraising campaign to open the first permanent home for the admired troupe at the old Willow Street Carnival space at 1800 N. Clybourn Ave. He`s come up with a three-part, rotating repertory for the fall that will cost only $10 per night and will open each performance with live sets by local musicians-part of a calculated effort to ensnare newer, younger audiences.

In Evanston, Northlight Theatre, after one of its more successful seasons in recent years, is kept pretty busy round-the-clock just finding a new home now that its longtime space will be utilized as a public school again.

And not everyone shares in the unhappiness. Many observers feel Steppenwolf Theatre`s past season locally was less than distinguished. Disagreeing with that assessment, Randall Arney, Steppenwolf`s artistic director, notes that the troupe also managed to get the ambitious ”The Grapes of Wrath” on Broadway, winning Tony Awards for best play and best direction

(by Frank Galati), a sizeable first for an off-Loop troupe.

Meanwhile, Steppenwolf opened the final show of last season and will open the first two this fall in the larger Apollo Theatre in advance of plans to open a splendiferous new home on Halsted Street next March-signs if any were needed the organization is now at an institutional level to rival the Goodman Theatre.

But even the Goodman, after a season of four classics and the acclaimed, well-attended musical spectacle, ”The Gospel at Colonus,” isn`t immune to worries.

”Even though we`ve had an excellent season from the standpoint of attendance, fundraising is more and more difficult,” says the Goodman`s Schulfer. ”My guess is that we`ve increased audiences, but also improved the number of quality productions that compete for them. These are challenging times, but the theater is always a business of challenges.”