Here's the plot: A fledgling theater company loses the rights to its holiday show at the last minute. One of the company founders dashes off a script; a soap opera star returns from New York to be in the show, and everything falls apart once they get onstage. But the audience loves it.

Honestly, where do these ideas come from?

Real life, in the case of Yellow Tree Theatre in Osseo. Founders Jason and Jessica Peterson were weeks into their first season in 2008 when they lost the rights to "Jacob Marley's Christmas Carol." Rather than curling up in self-pity, the Petersons got to work.

Jessica wrote "Miracle on Cristmas Lake" based not so loosely on what had just happened to Yellow Tree and, just like a Hallmark Christmas story, the show opened on time. Jessica recalled turning to her husband on opening night and asking anxiously, "Is this play funny?" Jason admitted he had no idea. There's moral support for you.

But audiences lapped up "Miracle at Christmas Lake." It sold 90 percent capacity for 18 shows in 2008; this year, the second time around for the sequel "Miracle at Christmas Lake II," Yellow Tree expects to sell nearly every ticket for 37 shows. The holiday slot has become the bulwark of the little company based in Osseo, providing about 25 percent of the company's $285,000 annual budget.

Neighborhood groups are lined up already to fill the 120-seat theater for holiday celebrations. They even set up Crock-Pots and casseroles in the lobby for their post-show parties.

"It was the best thing that could have happened to us," Jason Peterson said of the theater losing the rights to the Marley show. "Every time I see Richard Cook [whose Park Square exercised those rights in 2008], he tells me, 'You're welcome.'"

Yellow Tree has grown up in other ways since that auspicious 2008 season. The company will produce five shows this season, including an original musical, and projects attendance of about 10,000.

"The thing I love about them is their audience," said Jon Cranney, the longtime director and actor. "They've developed an audience of their own from the area, and the audience has a sense of ownership."

College sweethearts

Jessica Lind and Jason Peterson met at the University of Minnesota Duluth about 10 years ago. Both were theater majors. After marrying, they moved to New York. Jason had a few acting jobs. Like the character in "Christmas Lake," he did some soap opera work, but he was no star. His biggest opportunity was stillborn when producers of "As the World Turns" got cold feet and pulled the plug on a gay character he was to have played. They turned the role straight and decided that he wasn't right for the job.

After having a baby five years ago, the couple moved back to the Twin Cities. Jason had grown up in Champlin, so they found space in nearby Osseo with tall ceilings and room for a spacious lobby and put out their shingle. Jason thought he'd found a good deal on banquet chairs for the auditorium but his mother said she thought they looked uncomfortable. Wouldn't lawn chairs be better?

"I went to eight different Targets with a trailer and bought 120 lawn chairs," said Jessica.

They are indeed comfortable and this year they have reserved seating.

Roughly 45 percent of their audience members come from Osseo, Maple Grove, Brooklyn Center and Brooklyn Park.

"Most of them were first-time theatergoers," said Jessica Peterson. "There was a show early on where the audience did the wave before the show."

You mean the thing sports crowds do when they've gotten bored with the game?

"We were backstage before the show and we heard this whooooooo! and we looked out and they were doing the wave," she said.

Arts in the suburbs

Cranney, who has been intrigued by suburban theater for years, caught a Yellow Tree show the first year and then a couple the second season. He liked the work and asked Jason how he could help.

"In a way, I've become their uncle," Cranney said. "I've been trying to do friend-raising, bringing people out to support them."

Cranney also directed "The Glass Menagerie" last spring.

"It really turned out to be a lovely experience," he said. Jessica Peterson hopes Yellow Tree will become an artistic hub for the northwestern suburbs, with concerts, artwork displayed in the lobby and other theater companies using the space.

The couple live in Champlin with their two children, now 3 and 5. They find moral support and companionship from other couples trying to make a living at theater -- such as Jeremiah and Vanessa Gamble of Theater for the Thirsty. Jason also takes acting jobs at other theaters, including the Jungle, where he has a part in "Fool for Love" next season.

And the future? Jason wants Jessica to write a third "Christmas Lake" show and run them in rep.

"We want Yellow Tree to live beyond us, not that we have any plans of leaving," Jason said.

Graydon Royce • 612-673-7299