Members of the Priestley Centre for the Arts are calling for the demolition of Bradford's Eastbrook Hall to make the theatre more accessible to the public.
Dwindling ticket sales have resulted in the Little Germany theatre facing voluntary liquidation unless it can pay its creditors by the end of the month.
Director Christiaan Hohen-zollern said a major problem facing the theatre was its location behind Eastbrook Hall, which has stood derelict since it closed in 1986 and suffered a huge fire ten years later.
"A lot of people don't know the Priestley exists. Unless they know it, or know this side of town, people just don't come here," said Mr Hohenzollern.
"We need to be more accessible, which means opening up the area to make it more a part of the city centre.
"Eastbrook Hall was once a magnificent building but sadly it has had its day.
"It has become an eyesore. It is one of the first things you see as you drive into Bradford along Leeds Road, and it's standing there derelict. It doesn't create a good impression of the city.
"It also attracts crime to the area. There are signs that the building - what's left of it - is used for drug abuse. There are often gangs of kids in there.
"We do our best to make the area around the Priestley safe. We have a security guard who escorts people back to their cars when they leave the theatre. But the hall lets the area down.
"It has become dangerous. The only option is to pull it down."
Neville Hilton, whose children Richard and Katie attend the Priestley's theatre school, backed the call for the hall's demolition.
"The Priestley is literally tucked away down a back street. It suffers from being hidden away from the city centre," he said.
"You can't see it as you drive past and if you miss the sign you wouldn't know it was there.
"Flattening Eastbrook Hall would open up that whole area."
Alan McMahon, of Aldersgate Estate, which owns Eastbrook Hall, said demolition was being considered but it would be a long process.
"Demolition would enable development to take place on the site," he said. "The problem is that in Bradford it's difficult to build anything without grant assistance.
"Even before we demolish the hall we would need grant assistance for future development. At this stage we're trying to find out what grants are available.
"I've been speaking to the Little Germany Urban Village and to Bradford Council about it and we are having a meeting soon to assess the situation."
Mr McMahon said he was disappointed that the Inland Revenue recently rejected Eastbrook Hall as a site for its new flagship office block.
Aldersgate Estate had offered to build new offices for the Inland Revenue at the back of the Hall, keeping its listed facade.
But Mr McMahon said that after spending £10,000 preparing the building for a possible sale, his company was told the site was unsuitable.
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