The history of the Theatre, as well as the entire history of Menaxus, was false. It was created by Irving Braxiatel, including faked documents, as part of a plot to overthrow the Heletian government in the late 40th century.
According to the documents, the theatre was built sometime after 2176 by Pithess. The opening performance of Stanoff Osterling's The Captain's Honour supposedly occurred there in 2295. Included was a map sketch of the theatre, attributed to De Witte in 2314. Also in the documents was an application by Di Pietro Palladio in 2315 for the post of Admissions Overseer at the Theatre.
The Theatre was built as part of a set of ruins to support the history. The Seventh Doctor realised it was all fake, partly because the Theatre was open air on a planet with a great deal of rain, and the acoustics were ideal only when the Theatre was empty. (PROSE: Theatre of War)