NFP Theatres Saw Trouble Even Before the Recession

It appears that the stress of the coming recession was affecting not-for-profit theatres before anyone used the "R" word.

Theatre Communications Group (TCG) released its latest survey of member NFP professional theatres. The survey covered fiscal years ending between November 2007 and September 2008. Theatre Facts 2008 in pdf format can be viewed here. Sarah Hart, writing about the report in the November 2009 edition of TCG's magazine American Theatre, noted that "not-for-profit theatres can often be like canaries in the coal mine, the first to show the effects of a poisonous environment."

The 2008 survey showed more than half of surveyed theatres ended the year with a budget deficit. In the five years before the opposite was true, most theatres ended the year with a surplus. Cash reserves were the lowest in the past five years when adjusted for inflation. Earned income dropped 7.2% between 2007 and 2008. Expenses rose; payroll for example went up 12.5% over inflation. With expenses rising, the percent of budget covered by earned income fell to 56.5% from 65.2% the previous year. And average endowment income was down.

The managing director of People's Light & Theatre Company in Malvern, Pa, said "I don't think we've ever seen anything like this. This year feels worse than 1990. I'm hopeful, but we may still have hard years ahead." In their 2008 IRS filing People's Light & Theatre reported revenues of $5.6 million and expenses of $4.6 million. Only 30% of income was earned income. It held assets worth about $6.5 million, a little over one year's budget. This is not a theatre in crisis, but it is worrisome that so much of its budget is covered by donations and grants.

The Impact of Brands in Theatre

Our book, Stage Money, notes that making money on Broadway or off-Broadway is not the only concern of a producer. Another need is to create a brand that can be exploited on the road and in regional theatres. Producers would like always to make money in New York, but they can see long-term returns for shows that at least create an image in the minds of local presenters and artistic directors. On November 20, Variety noted that for writers, too, a brand can mean money down the road, even if the NYC production closes at a loss to investors.

Robert Hofler's piece, "Life after death on Broadway: Even flops make money in amateur, stock productions," quotes Joe DePietro, book author of the Elvis Presley musical All Shook Up. Shook grossed over $12 million in 32 weeks on Broadway in 2005, rarely running at 75% or more of house. Ben Brantley reviewing the production for the New York Times declared "Yet another synthetic jukebox musical opened last night on Broadway, fresh off the assembly line" In its annual tote of Broadways hits and misses, Variety called All Shook Up a miss, meaning it did not return its investors' money. DePietro says, "I made tens of thousands of dollars from my first quarterly royalty check for the stock and amateur rights. I could barely make a living with 'All Shook Up' on Broadway. I bought a nice country house [from] 'All Shook Up' in stock and amateur."

The 2000 Broadway flop Seussical gets more than 700 productions annually in the US. Of the 2006 flop The Wedding Singer (picture on left), composer Matthew Sklar says, "It hasn't made me a rich person, but it has allowed me to write two more shows in the last two years. There are usually 60-70 productions of 'Wedding Singer' being planned at a time." The off-Broadway succès d’estime musical The Last Five Years is the financial "bedrock" of composer Jason Robert Brown's career. "If the only validation I got in this business was from the reception of my shows in New York City, I'd be doing something else by now," he said.

Note that usually producers and investors share in royalties for professional productions for 18 years after the first-class production opens but typically do not share in amateur rights.

By the way, I'd post a link to the Variety article, but Variety has essentially closed down its website to all but paying customers.

It Could Be Worse for the Arts; Like Sports

Anyone who has seen Avenue Q—and if you haven't, you should—knows the meaning of the word schadenfreude. It's one of those German portmanteau words, combining the word for "sorrow" and the word for "joy." It means to take pleasure in someone's misfortune. I think of a quote attributed to Clarence Darrow, the mid-20th century lawyer for liberal lost causes: "I have never killed a person, but I've read many obituaries with great pleasure."

All this is a lead-in to write about an essay by Mike Boehm in the Los Angeles Times concerning the NEA's "Survey of Public Participation in the Arts." Boehm's article, titled "The arts see encouraging news in NEA survey," can be found here. The only encouragement in the NEA survey I can see is that some findings are an occasion for schadenfreude, although Boehm doesn't use the word.

Some parts of the survey were released by the NEA last summer. Those findings are reflected in the Afterword of Stage Money, by the way. The whole report was published November 2009.

The overall finding is that attendance at all arts is down by 4.4%, compared to the survey the NEA conducted six years before. Two arts categories did increase, non-ballet dance performances and musical theatre. The musical theatre as a percentage of the population went down a smidgen but population growth increased the total number of attendees. Since the NEA's first survey in 1982, attendance at musical plays declined from 18.6% to 16.7%. For non-musical plays, the decline was more modest: from 11.9% to 9.4%.

What's the encouragement here? It's this: attendance at sporting events went down even more, from 48% in 1982 to 30.6% in 2008.

I don't find this encouraging. Sports are encountering the same pressures on audience numbers as the arts: competition from television and the internet and to some extent a reduction in free time and spending money.

A principal with AMS Planning & Research, a consulting firm advising performing arts centers, is quoted in the LA Times piece, saying, "A lot of times sports is better on television -- instant replay, the comfort of your chair, the close-ups. An arts experience is essentially a live experience, and it's an intimate experience. I think that's helping to keep people going."

Amen.