The Civic could lose £20,000 in funding from Barnsley Council as a result of budget cuts.
The council is outlining areas where money can be saved and is looking to reduce funding to meet next year's budget target of savings of £18.1m.
Council leader Sir Steve Houghton said the cut would not affect the Civic as a going-concern and it would still be able to provide a wide range of shows.
He added: "We've agreed that figure with The Civic. Yes, it's a cut but we're grateful to the Civic for the contribution to the budget.
"If we had gone any deeper it would have affected the Civic's business plan and could have affected the Arts Council funding it receives, and we don't want to lose that."
This year, the Civic received £160,434 from the Arts Council and is set to receive £162,992 for 2014/15.
As part of that funding agreement, the Civic is expected to show a number of prescribed productions. But the Chronicle understands that some performances have attracted audiences of as few as 50 people in an auditorium which can hold up to 264.
Coun Houghton said people seem to enjoy the range of shows put on by the Civic.
"People think it's great. There is a diverse offer in the town which people have only ever had in Manchester, Sheffield or Leeds and to have it in Barnsley is great.
"We get a lot of compliments."
A spokesman for the Arts Council said he was not aware of any issues at the Civic.