It was only two years ago, in these very pages, that Linda Geeson, writing about the 1999 version of TCG’s Theatre Facts, touted how “record-setting U.S. economic expansion” had played “on the stages of America’s nonprofit theatres.” These boom times contributed to a fiscal climate that encouraged expanded repertories, increased financial stability and spawned a greater investment in art and artists. Moving beyond the simple question of survival—the bugbear that had historically plagued regional theatres—the challenge came to be about securing economic independence and stability, usually via building endowments and riding the fiscal tide of a bullish stock market. The title of the essay said it all: “Growing the Art in Times of Plenty.”
What a difference two years make. Theatre Facts 2001, Theatre Communications Group’s annual survey on the fiscal health of the American nonprofit theatre, paints a considerably different—and less rosy—financial picture. Though theatres contributed $923 million to the U.S. economy, attendance remained high (22.5 million patrons—up a wee bit from last year’s numbers), and showings hit a record number (81,800 performances of more than 4,700 productions), nearly half of the theatres that participated in the survey still found themselves operating in the red.
By tracking the major economic indicators and trends of the past five years, Theatre Facts 2001 tries to shed some light on that question. The report, authored once again by Duke University professor Zannie Giraud Voss and North Carolina State University professor Glenn B. Voss, with contributions from TCG’s Christopher Shuff and Hillary Jackson, is based on the responses of a record total of 363 theatres. This includes 197 Profiled Theatres that responded to the full 2001 survey (covering a myriad of organizations with budgets ranging from $48,000 to $52 million), plus 166 other theatres that sent in summaries of key fiscal, attendance and employment information. The end result—available free online (www.tcg.org) or by mail for $5 (contact TCG’s customer service department at 212-609-5900)—offers the most comprehensive snapshot available of the economic status of the national nonprofit theatre world.
Comprised of three sections, Theatre Facts 2001 examines four sets of analyses, with each analysis providing an increased degree of detail. The first section, which includes the Survey Universe and the Universe Trend Theatres, is an overview of the 363 theatres that provided basic fiscal, attendance and performance information and shows the broadest snapshot of the industry in 2001. Then, the report offers fiscal analysis for the 77 Trend Theatres that have participated in the fiscal survey over the last five years. Finally, Theatre Facts 2001 provides the greatest level of detail, with an in-depth industry analysis of the 197 Profiled Theatres that responded to the full 16-page 2001 survey.
The end result is a dizzying array of facts and figures that are indispensable to anyone who wants their finger on the pulse of the nonprofit theatre economy. Fiscal year 2001 was a rollercoaster ride for theatres, thanks mostly to a U.S. economy that was in freefall during the period tracked (the study is based on information drawn from the fiscal year that theatres completed any time between Sept. 1, 2000 through August 31, 2001). This was reflected in the fact that 44 percent of the Survey Universe Theatres ended the year with a negative change in unrestricted net assets (CUNA)—13 percent more than in 2000.
For those of you who find the language confusing, CUNA tells you whether a theatre is making or losing money. Before 1997, this number only took into account a theatre’s net surplus or deficit in annual operating expenses. It was changed in that year to also take into account a theatre’s unrestricted net assets—which could include anything from endowment earnings to plant funds. It gives a broader picture of the institutions’ fiscal situation. In previous years, this meant that a less-than-magnificent season at the box office could have been offset by a successful capital campaign or by a theatre’s stock rising in the super-heated economies of 1999 and 2000. Therefore, an institution’s CUNA could still be positive despite an overall dip in annual operating income versus expenses. Conversely, a theatre could end the year with a surplus in the operating budget but still end with a negative CUNA due to investment losses.
However, just as many investors saw their portfolios disintegrate before their very eyes in 2001, theatres that had a considerable investment in the market saw a marked drop in their CUNAs. Indeed, if we just look at the numbers from the year before, the change is astonishing: In 2000, the percentage of theatres that lost money hovered at 31 percent (a record low). For fiscal year 2001, that percentage shot up 13 points, to 44 percent. Also, for the first time in five years, less than 10 percent of theatres had total income that exceeded expenses by more than 20 percent. While this news isn’t rosy, there is solace in the fact that, of the theatres that experienced negative CUNA, the vast majority saw income fall less than 10 percent short of their budgets. Perhaps most problematic is that this year’s low CUNA would take an even deeper dive if only operating funds were considered.
Whether these changes are permanent or anomalous is tough to say. More worrisome is the fact that these statistics do not include the effects of 9/11 on the economy.
Earned Vs. Contributed Income
According to the information supplied by the Universe Trend Theatres, contributed income is playing an increasingly important role. As expenses have outpaced earned income, contributed income has grown faster than expenses, sustaining an overall average positive CUNA. The composition of theatres’ income has shifted as well, with a 3.6 percent shift in the proportion of income that came from contributed as compared to earned sources. For example, in 1997, the earned vs. contributed ratio was 60 to 40 percent. In 2001, the numbers shifted to 57 to 43 percent. It’s difficult to say whether this constitutes a trend, since the ratio has fluctuated a few percentage points within the 60 to 40 range for many years. The numbers shift considerably if we look specifically at theatres with budgets of less than $250,000, with these institutions showing 47 percent earned to 53 percent contributed. Still, these ratios are worth tracking if only because of the shifting situation that’s taking place in the funding world.
In contributed income, local and state funding has replaced necessary dollars pared away by the decline in federal funding (which has decreased 18 percent over the past five years). Indeed, local funding grew more than any other income source since 1997, demonstrating that city and county governments are recognizing the importance of the nonprofit art world. Of all sources of contributed income, individual giving was, as in every other year, the largest source of contributed funds. Trustees, in particular, are stepping up to the increased challenges of running a theatre: The average trustee gift rose from a 1997 average of $5,331 to $7,278 in 2001, a 28 percent rise. Still, the median gift decreased in 2001 from highs of the previous two years. Meanwhile, the average gift from other individuals rose 63 percent over inflation since 1997, and jumped 20 percent in the last year alone. So, the good news is that individuals are heeding the call.
And that’s fortunate, since the corporate world—which took a beating in 2001—is falling behind. Indeed, this year marked the first time in the last five years that average total corporate giving declined, from $356,287 in 2000 to $347,852 in 2001 (a 2.4 percent decrease). The average number of corporate donors per theatre declined 18 percent over the last five years as well (from 71 to 58). The recession’s effects on corporate giving are obvious, as profits are directly tied to the ability to give.
Foundation Support and Other Trends
Foundation support is also dropping. While theatres are receiving more foundation gifts, and foundation giving rose a record 64 percent over the last five years, the growth in the average gift is still not keeping pace with inflation. Most arts managers believe that the foundation side of giving will be an area worth keeping an eye on in the future for this and two other reasons. First, in light of the recent cuts in government social programs, many foundations are feeling the need to pick up the slack and fill the gap. Second, if the country’s economic recovery continues to be sluggish, foundations’ assets will most likely remain static or continue to decrease. As payouts are typically calculated based on a three-year rolling average of assets, presently we’re seeing an echo effect, with foundations still reflecting the positive economic performance of the late ’90s.
However, some managers are skeptical of this scenario. “I think that’s a red herring,” says Paul Tetreault, managing director of the Alley Theatre, of Houston, Tex. “That could play out for major institutions…but for the majority of institutions—which are being funded by foundations in the $100,000 to $150,000 range—I really don’t think that annual support will get cut. You may see them cut back on special projects and capital campaigns, but foundations generally take a long view.
“I think we need to be careful of throwing such rhetoric about,” Tetreault continues. “If we talk too much about foundations cutting back, we’re going to give them an excuse to do just that.”
Some other income facts worth noting (via the 77 Trend Theatres):
- After three years of steady increases, endowment earnings hit a five-year low in 2001, dropping 22.7 percent in the last year alone.
- Fewer theatres are co-producing, with a drop in the past three years from 22 theatres reporting co-production income in 1999 to only 15 in 2001. Note: This income is from collaborations with other nonprofit theatres, and shouldn’t be confused with enhancement monies from commercial producers, which have fluctuated wildly over the past five years. Despite the financial benefits of sharing expenses, non-monetary issues that can complicate a production (artistic control, scale of production, communication between parties, etc.) may have led theatres to be more selective and cautious concerning co-productions. However, when times get hard, financial considerations might weigh more heavily. Furthermore, this drop in co-producing, combined with the decline in the number of workshops and readings (see below), also raises questions about how new work is being and will be developed.
- The most dramatic change in earned income came from capital gains/losses, a 180 percent drop over the last five years, and 163 percent drop in the last year alone. (Note: capital gains/losses refers to the change in the market value of investments no matter whether they were liquidated or held.) For the first time in five years, theatres averaged a capital loss. Most of this drop can be accounted for through the dip in the market value of theatres’ portfolios, usually the monies that were collected via capital campaigns that were in turn invested in the stock market.
With all of this talk about endowments, capital losses and portfolios, you might be inclined to think that these issues are only the domains of larger, wealthier institutions, and that these problems are irrelevant to smaller, scrappier theatres. Not so, according to Linda Barry, general manager of the Actors Theatre of Phoenix, Ariz. “The economic and stock market downturns didn’t really affect us directly,” she says. “We don’t own a building or anything like that. But there’s definitely a trickle-down effect. There’s been a drop in individual and corporate giving. And if funders are not giving to the big theatres, then they’re certainly not giving to us.”
Single Tickets Vs. Subscriptions
Just who goes to theatre is also changing. The big news in attendance is the fundamental shift that is happening in single ticket income versus subscriptions, with the average number of subscribers declining by a striking 10 percent over the last five years. This raises a number of sticky questions, since the subscription market has historically been the meat and potatoes income for the nonprofit theatre world. The shift not only affects marketing, but ultimately programming as well. [See sidebar.]
Ticket income is an area where size seems to matter. While the largest theatres’ subscription income outpaces single-ticket sales (with the exception of two theatres in the $10 million and over group, who accounted for 62 percent of total single ticket sales for the group), all of the theatres with budgets of less than $5 million—the vast majority surveyed—see most of their ticket income coming from single-ticket buyers. Interestingly, a subscription ticket to a smaller company will generally cost about a dollar more than a single ticket purchased at the box office, suggesting that these subscribers may be less interested in getting a deal than impelled by a variety of reasons that could include the other benefits of subscription (assured seats, exchanges, special events) as well as an interest in supporting a specific theatre’s mission.
Theatres are producing more performances than they did five years ago—to the tune of almost six percent more for mainstage productions—and total attendance is also up about the same amount. Special productions—such as holiday offerings that are not offered on regular subscription packages—have become increasingly more popular. Theatres produced almost four percent more of these types of shows from 1997 to 2001, and saw a corresponding rise in attendance of 23 percent.
While mainstage work and special offerings have been steadily rising since 1997, the 77 Trend Theatres seem to also be doing less in a couple of areas. Though the number of readings and workshops has increased almost 5 percent over the last five years, last year showed a substantial drop from the year before (down to 237 from 305—a 22 percent drop). Whether this is going to be a continuing trend is something that will certainly be worth watching, since it will obviously have an effect on how new artists get cultivated. Just as disturbing is the fact that children’s series have been noticeably hit over the last five years, declining almost 14 percent.
During the glory days of the over-heated economy of the late ’90s, endowment talk was all the rage. There was tremendous pressure from a variety of areas for theatres to embark on capital campaigns. Indeed, the National Arts Stabilization (NAS) recommended that institutions put aside 200 to 500 percent of their annual operating budgets. Historically, theatres surveyed for Theatre Facts have rarely been able to make these kinds of numbers a reality, and this year is no different, with only two Profiled Theatres meeting these guidelines.
Now theatres that made steps toward endowments have seen their hard work dry up before their eyes. Still, many take the long-view. “You have to have a little faith that the external conditions are going to change,” says Chris Lino of Pioneer Theatre Company in Salt Lake City, Utah. “We have an endowment that is worth 25 percent less than three years ago, because of investments. Still, I think that, in the long run, it will right itself. We all made 22 percent a year through the ’90s and now we’re taking our lumps. But I think it will settle.
“I certainly hope it will,” he adds with a nervous laugh. “My pension plan is invested in the same way!”
The economic changes of the last year may have had one interesting result—the administrative line in many theatres is going up. While direct production expenses—artist and production payroll, royalties, artist housing and travel, designer costs and production materials—represent roughly half of all expenses, regardless of budget size, and artistic payroll remains the greatest allocation of resources, administrative payroll has steadily increased over the past few years. According to the 77 Trend Theatres polled, the gap between artistic and administrative payrolls is getting smaller, as compared to five years ago when there was a difference of four percent. [See sidebar.]
A Sobering Picture
All in all, the “facts” in Theatre Facts 2001 present the most sobering picture in recent memory, what with high rates of negative CUNA, income barely exceeding expenses for the majority of theatres and the decrease in the percentage of earned income. There is also the gradual decline of subscription audiences, which is a gnawing question many companies are now grappling with. Finally, the drop in corporate underwriting has been steep, and it may only be the tip of the iceberg. There are those who might say that the downturn was inevitable, and that in certain ways many theatres will simply readapt themselves to the kind of hard-scrabble existence that was de rigeur in previous decades. There are also those who suggest that the downturn is temporary. However, nobody is sure just what “temporary” means, or whether this decline is actually a sign of something larger and more long-term.
It’s worth reiterating that the period of time covered in Theatre Facts 2001 (the fiscal year that was completed any time between Sept. 1, 2000 through Aug. 31, 2001) ended two weeks before Sept. 11. In an attempt to get a sense of what has happened to the industry since 9/11, TCG conducted a rare mid-season survey of its members. Not surprisingly, the news was troubling: 55 percent of theatres were seeing shortfalls in single ticket sales, subscription and attendance. Over 54 percent have also seen drops in corporate giving, but, as a disturbing harbinger of what the future could look like, 49 percent saw shortfalls in individual donations and 41 percent saw falls in foundation giving. (Note: these findings were projections as of Dec. 31, 2001, long before the end of most theatres’ fiscal year.)
General economic news hasn’t suggested that a quick fix is around the corner. Some forecasters were already saying the worst was behind us when 9/11 hit. Then, in the winter, we were assured that happy days were here again, only to see markets plunge once more. Since then, the “anemic” recovery has been sidetracked by a different scandal every week, be it Enron, Arthur Anderson, WorldCom or MCI. As a result, investors are fretful, consumers are insecure and businesses are cutting back. Worse still, unemployment has spiked; the country lost 1.8 million jobs from March 2001 through April and only 60,000 have reappeared since then. This, of all the economic indicators, may be one of the chief areas for nonprofits to keep their eyes on, since it most likely will affect ticket sales and individual giving.
All of this indicates an inevitable time of retrenchment and rethinking of priorities for nonprofit theatres across the country. It may mean that theatres need to reconnect with their most valuable resource—the audience—in radical new ways. In a strange sort of way, these hard times could be looked upon as an opportunity. Indeed, not everyone subscribes to the “difficult-economic-times-equal-
destitution-for-nonprofits” scenario. Susan Trapnell, managing director of the Guthrie Theater of Minneapolis, sees the downturn as a source of possibility. “Look at it this way,” she says, “Nonprofits only benefit indirectly from economic booms. While a boom time can be an opportunity for ticket sales, it’s not a sure thing, mostly because everyone has more options and people rarely want to make firm commitments. During boom times people are less likely to be interested in pursuing bargains, since they don’t have to plan their time or their money as carefully.
“Everyone only has 24 hours,” she continues, “and when we ask for two, three, four hours of their time, we’re actually asking for the most valuable thing they have. A bad economy gives people more time. People are not working as many hours and there aren’t as many options for travel. So there’s less competition for time. In some ways, there are advantages for nonprofits in downtimes. Our value to life is more visible.”
The Rest of the Story: Theatres speak out on administrators, subscribers and the economic crunch
Investing in Administrators
After years of being the low man on the totem pole, the over-worked, underpaid administrator may finally be closing the gap between “under” and “paid”; at least this is what Theatre Facts 2001 seems to suggest. According to the 77 Trend Theatres surveyed, administrative payrolls have seen a larger jump than either the technical or artistic lines. While technical expenditures increased by 40 percent and artistic rose 35 percent, the administrative lines have jumped a whopping 54 percent since 1997, with an 18 percent change in the last year alone.
Why this sudden attention to the administrative side of things? Every theatre has different reasons, but the recurring answer comes straight out of Bill Clinton’s first campaign for president: “It’s the economy, stupid.” Since unemployment until recently has been at record lows, the expectation of the work force has changed.
“There’s an issue that’s left over from a previous period,” says Susan Trapnell, managing director of the Guthrie Theater of Minneapolis, which has seen a massive increase in administrative staff since 1997. “We assume that people are cheaper than they really are. But because of the new economy, discounted labor has disappeared over the past 10 years. When I started working in this field in the early 1980s, we were filling receptionist jobs with Ph.D. candidates who just wanted to be involved in the theatre. Three years ago, you could barely find someone…to fill these kinds of jobs.”
Ira Hillman, general manager of the Round House Theatre of Bethesda, Md., agrees. “Unemployment has been down substantially during the last five years,” he says. “We have to keep the salary numbers up in order to compete with the for-profit administrative world. Someone doing marketing for us could just as easily do similar work in a corporate environment, just as someone who is a fiscal manager could be a comptroller for a for-profit corporation. We need the salaries to be up enough to attract the right people.”
Theatres also seem to be trying to get out of the “new-staff-every-two-years” rut, realizing that such turnover has hidden costs. “We need to keep pace with the for-profit sector in order to retain them as well,” says Hillman. “Otherwise you’re just retraining people every couple of years.”
Finding this new breed of administrators requires a different mentality. “We used to attract people because they were aware of the work and were attracted to the art,” says Allen Nause, producing director of Actors Repertory Theatre of Portland, Ore. “As we’ve grown, we’ve found that we’re having to go out and look for people out in the marketplace, so we need to be more competitive. Ten years ago everyone came in and worked their way up—they might start as an administrative assistant and eventually make their way up to marketing and P.R. They basically just had a passion for the theatre and wanted to be here. Now, when we’re hiring we’re hiring through ads in ARTSEARCH.”
While the increases in administrative lines have been generally consistent, every theatre seems to have its own individual story. For the Guthrie, it was about a commitment to wooing back alienated patrons. “We added programs and figured out the needs of the community…it just takes more and more people,” admits Trapnell. In some cases, it was riding the wave of expansion of the 1990s. Hillman said that over the last five years, the area saw a doubling of the number of theatres. “In order to compete, we had to bump up our staff because marketing and development expenses are how we generate income.”
Finally, the rise in administrative spending may also owe something to the new technology that is a necessity in the contemporary marketplace. As computer needs have increased—five years ago, the majority of TCG theatres didn’t even have websites—the time of having the friendly board member come in and load some software into the three PCs has come to an end. Now I.T. specialists—whether they are jobbed in or actually put on the staff—are the norm, and they cost real money. Most theatres think it’s a worthwhile investment. “It’s definitely worth the money we spend on maintaining our website,” says Hillman. “We sold a significant amount of tickets for our first show in our new space through our website. I’d say five-to-ten percent were sold online, which is a big boom, since we could handle the increased ticket sales without having to hire an extra box-office person to deal with the phone.”
In spite of the outside economic pressures, looking for answers (and bodies) from the for-profit universe can only get you so far. It takes a special animal to work in the office of a nonprofit theatre, and some managers are concerned that the next generation may not be up to such a hard-knock life, opting instead for the commercial sector. “I’m a little troubled that we’re not focusing on cultivating the interest and talent of people who are interested in the administrative end of the arts,” says Hillman. “If we are continually focused on trying to pull people from the for-profit sector, we’re going to find ourselves out-bid a lot of the time. We need to nurture people who have the interest and the passion for the arts. There are plenty of schools that are generating the actors of tomorrow, but there are only a handful that are creating the administrators of tomorrow. It’s getting to be slim-pickings out there, and that’s a problem because there’s always going to have to be someone to pay the bills and raise the money so the artist can pursue their vision.”
Indeed, it’s that last point that sometimes gets lost in the shuffle. Inevitably, there will be those who look askance at the increase in administrative numbers, seeing it as a sign of the corporatization of nonprofits; another nail in the creative coffin of the regional theatre movement; a sign that the managers are taking over. For her part, Trapnell thinks that such an “us versus them” mentality is not only unrealistic—it’s also unhealthy.
“Because these organizations were started by artists,” she says, “we tend to think of them as ‘artist organizations.’ But it requires so much administrative work to make them run. You have to realize what it takes to bring revenue through the door—and that’s people in the office. It looks like red tape, but in fact it’s a connection with the community.
“Remember,” she adds, “these organizations are given tax-exempt status to serve a community. It’s a vehicle for an artist to bring their skill to a community. The important thing to remember is that the administrator is the person who actually connects with the community. That relationship has to be strong because that’s where the money comes from.”
Subscribe Now…and Then
In his 1977 bible of the nonprofit marketing world, Subscribe Now!, P.R. guru Danny Newman railed against the “slothful, fickle single-ticket buyer,” the individual who “stays home if it snows, if there’s ice on the roads, sleet in the air, or if any of those unfavorable weather conditions so much as threatens.” Instead, he called for the cultivation of the “saintly season subscriber,” a character who “commits himself in advance.” Through the years, the successful subscription campaign quickly became the necessary building block of any thriving theatre company.
Now, a quarter of a century later, Newman’s tune hasn’t changed very much. Dismissing what he calls “the subscription revisionists,” he insists that the subscriber is just as important as ever. “There’s an attitude that losing subscribers is no big deal,” the marketing sovereign says. “You can just fill the seats with single-ticket buyers. Well, it’s not that easy.”
Despite Newman’s suggestions otherwise (“I invented the concept!”) his brilliance wasn’t that he created the idea of a subscriber base—symphonies and museums had been touting such memberships to the elite for ages—but he added a kind of populist, middle-class spin that was a perfect fit with the burgeoning nonprofit theatre movement of the 1970s. Subscribing to a local theatre or other arts company was a sign of one’s commitment to the community. To the middle-class audience, it also suggested that you had finally arrived.
Over the last 15 years, however, a fiscal squeeze has been put on those middle classes. As a result, even Newman might have to admit that the subscription equation is getting more complicated. Theatre Facts 2001 indicates that over the last five years the subscription base has dropped substantially, while those “slothful single-ticket buyers” are gaining. On the surface, it looks as if the dependable six-play subscribers, the folks who have been members of the theatre for years, sitting in their seventh-row aisle seats on the third Thursday evenings of every month, are going the way of the buggy whip—or at least they’re morphing into some new kind of customer. It’s a concern that theatre managers across the country have all noticed and are trying, in a variety of ways, to come to grips with.
Why the change? Most administrators cite a general shift in the culture. “It’s the change in lifestyles that we’ve seen over the past 15 years,” says Dean Gladden, managing director of Ohio’s Cleveland Play House. “People are unwilling to commit to packages and prefer to pick and choose. They’re willing to pay the higher price of a single ticket.”
“People’s lives are such that they are commitment phobic,” says Jacques Lamarre, director of marketing and public relations at Connecticut’s Hartford Stage Company. “In most urban markets, there are a lot of different choices for entertainment.” As he points out, in the Hartford area there are four regional theatres all within an hour’s drive from one another—and that doesn’t figure in commercial touring houses, dance, music, opera or that new Connecticut entertainment phenomenon, casinos. “With such a proliferation of choices, there’s less loyalty to an institution.”
For Hartford Stage, that means a couple of things: First, the company has been forced to market beyond its traditional boundaries. “While we’ve never made it a top priority to attract non-Hartford audiences,” offers Lamarre, “the fact is, if your viewership is declining, you’ve got to make it up somewhere. We’ve certainly been advertising in New Haven, and I know that Long Wharf Theatre and Yale Repertory Theatre advertise in Hartford.”
Secondly, the company has had to bend over backwards to keep the subscribers it has. “Subscribers’ expectations have changed,” says Lamarre. “The level of service has had to increase for people to feel okay about making the investment. There are so many people out there clamoring for their money, you have to be careful. If they have one bad experience, they’ll say, ‘Fine. I’ll go somewhere else.'”
Part of the problem, managers confess, is that the commercial arena has stepped into the regional theatre’s territory. Christopher Lino, managing director of the Pioneer Theatre Company of Salt Lake City, Utah, has seen a large drop in subscriptions over the past five years. He puts part of the blame on recent Broadway tours. “The national tour of Phantom came in, plopped itself down in the middle of downtown, and sucked much of the revenue out of this community,” he says. In Hartford, things are not much different. “These Broadway megashows changed the viability of the subscriber market,” Lamarre says. “They were pushing Phantom a year before it arrived, covering the TV and radio with commercials.” Ultimately, though, Lamarre thinks that the touring shows are feeling the recent economic spiral in a more dramatic way than resident theatres. “The big monster shows are dying out.”
More troubling is the fact that the new generation of theatregoers has a hard time dealing with the commitment of a subscription. Many busy folks can’t nail down where they’re going to be tomorrow night, let alone four months from now. As a result, some theatres have found that flexibility is the name of the game. “We made a commitment four years ago to build up subscriptions,” says Maria Centrella, marketing director for PCPA Theaterfest in Santa Maria, Calif., “because we didn’t want to be at the mercy of single-ticket sales.” PCPA offers a plethora of options for the tentative subscriber, including a “Passport” series of six tickets, which can be used in any combination for any of the nine plays in the company’s season. “People like it because it offers flexibility,” she says. “We found that for most people cost is a factor, but less of one than time. They are more willing to do something if they don’t have to commit.”
However, not everyone is embracing these flexible plans. “We had a season pass that was based on a ski-pass model,” says Lino, “and we had a 25 percent renewal rate. We thought it was a great deal. But people told us, ‘It doesn’t fit our needs because we don’t know until the last minute whether we’re going or not, and you can’t guarantee seats.’ Not only that, but without specific dates, they kept forgetting about it and never using the passes.”
With the proliferation of personal emails and the ease of online ticketing, some theatres are addressing this issue in a new way. According to Jim Royce, marketing and communications director at the Mark Taper Forum, online is the way to go. He writes in the August 2001 TCG Centerpiece, “Our company’s share of single-ticket sales online has increased from two percent in 1998 to 20 percent in 2001. Our company’s surveys show that more than 80 percent of our audience is online.” E-mails are also a great tool in building a relationship between patrons and the theatre. He writes, “Patrons like receiving breaking news or accessing tickets before the general public. And e-mail broadcasting is easy and virtually free.”
In the same TCG Centerpiece, Donna Walker-Kuhne, director of community affairs at New York’s Public Theater, describes their use of the Internet to increase sales. “We expanded our use of the Internet as a marketing tool on our production of Dogeaters by Jessica Hagedorn. We realized that many of the potential audience members were heavy Internet users and we collaborated with our graphics department to create several visual pieces that we could e-mail to targeted lists.” She goes on to discuss other uses of their website and ticketing discount options that were offered online. The online marketing effort “generated over 35 percent of the total box-office income.”
Even with the Internet as a strong marketing tool, there are still costs to losing faithful customers. First, marketing a single show—often through media outlets—is considerably costlier than having a group of telemarketers working on phonebanks. Second, and perhaps more importantly: The single-ticket buyer can be a fickle creature. And catering to that indecisiveness will undoubtedly affect programming. “Basically, you’re forced to take fewer risks,” says Gladden. “Without the subscription base, there’s no safety net for riskier plays. You’re forced to have programming that’s more conservative.”
Lino agrees. “It means that next year instead of one of our musicals being a Sondheim, we’re going to present Peter Pan in the winter, with an extra week added between Christmas and New Years,” he says.
Most managers still think that the subscription model is still important—whether it’s in a hybrid form or not. “I don’t think it’s a thing of the past,” says Gladden. “Subscription income will always play a role in the regional theatre.” The question is, what kind of role? Ultimately the subscription-based theatre may have been based on a sense of community commitment, and that kind of neighborhood mentality has fallen a victim to globalization and technological advancements.
Despite Newman’s claims otherwise, the world has changed. In 1977, the year Subscribe Now! was originally published, there were only three major television networks and computers were things that you fed cards into. Now, consumers’ choices have multiplied to an extraordinary degree, especially for the younger generation, and the lines between acting locally and thinking globally have become extremely blurred.
And it’s precisely this new generation that managers are thinking about. “The big challenge is, how do we get the younger people?” says Lamarre. “It’s not just theatre. A lot of institutions that once relied on repeat business are transitioning. It’s the same issue churches face: How do we convert? How do we evangelize? It’s the big question in this disposable culture.”
While there aren’t easy answers in this brave new marketing world, managers can take heart in the fact that this is an issue that everyone is confronting. Says Lino. “It’s comforting because at least you know that you haven’t personally screwed anything up. But it’s scary to think about the long-term ramifications.”
Feeling the Crunch
During the boom period of the 1990s, theatres shifted their strategies. In many cases, day-to-day worries of cash flow were somewhat alleviated, and a bit of breathing space was made to think outside of the box—adding a second stage, expanding the payroll, producing larger cast shows or extending the season. Many theatres were finally thinking seriously about the long term by trying to establish endowments. It was an exciting moment in which the usual nonprofit pitfalls looked like they could be renegotiated. But since most of these plans were long-term, the sudden burst of the U.S. economic bubble is leaving many companies facing an uncertain future. Should the new ways of doing things be scrubbed? Are we back to the hand-to-mouth existence of, say, the 1980s?
One thing is certain, everyone—on some level—is feeling the pinch. And every theatre has a different narrative. Take Arizona’s Actors Theatre of Phoenix, for example: for a smaller institution, general manager Linda Barry says, “It’s a question of cash flow. It’s always a day-to-day struggle.” Groups like Actors Theatre may have had a short respite during the recent boom times, but now they are facing the same old questions.
“It’s been rough,” says Barry. “The corporate community in Arizona was hit hard, and many of the companies have moved out. We’ve definitely felt the crunch.” Still, in a way, an organization the size of Actors Theatre can take heart, since it never had a portfolio to see washed away. “We’re not the first company that large corporate funders are going to be looking at,” she says. “Those places are probably more inclined to give their money to a larger operation.”
It seems safe to say that if the economy keeps drifting in a downward direction, some of the smaller theatres will simply not survive. However, some managers take a Darwinian stance, believing that this is just a form of nonprofit natural selection. “In Houston, there are 50 theatres with budgets in the $50,000 to $1 million range,” says Paul Tetreault, managing director of the Alley Theatre of Houston. “Many of those come and go with the wind. I don’t mean to sound cavalier, but that probably is just the environment of the small theatre culture. Some take root and some don’t.”
For a large institution like the Alley, the issues are considerably different. For one thing, the season Theatre Facts 2001 is looking at was a healthy one for the Texas institution. “Our numbers were up,” says Tetreault.
However, when it rained, it poured. Literally.
“We had a big hit coming off of that season,” he admits. “Last June tropical storm Allison came in and completely destroyed two floors of our facility.” Gone were the rehearsal studio, and the scene, prop and costume shops. “That cost us $6 million.”
In spite of all of these tribulations, the Alley still managed to squeak out a modest profit. However, Tetreault admits that next year looks different. “9/11 hit. Then, in October, Enron happened. And that, in turn, sparked the collapse of the Houston economy…For the first time in a long time, the board approved a deficit budget,” he says. “It came down to two things: one was that we simply couldn’t figure out how to get the budget to balance without simply decimating the organization. And secondly, we had an accumulated surplus. So, we had a reserve to call upon.”
Still, Tetreault says that no matter what, the $20 million endowment is off limits. “We will never touch that,” he says. Though he admits that the endowment has gone down about $4 million over the last year, he ultimately believes that the company has nothing to complain about, since $16 million is left. “We enjoyed tremendous gains during the 1980s,” he says. And size does matter: The amount of the reserve is a cushion in and of itself.
The institutions that have been hardest hit are the institutions with mid-range budgets—the ones that saw the last few years open up new possibilities, only to see them dashed against the rocks of the unstable stock market. “This theatre had accumulated a reserve and that was the main asset in our ability to have financial growth,” says Tony Forman, managing director of Wisconsin’s Madison Repertory Theatre. “Three years ago, we started new initiatives funded by that reserve. But now we see that was a bubble. The value of our holdings dropped by one third. Now there’s a re-strategizing. We have to figure out how we’re going to deal with it.”
Forman contends that their trials and tribulations are not unique. “Mid-sized theatres are really the ones taking it on the chin. There were plenty of other theatres that were proud of the fact that they accumulated assets. But suddenly they are faced with same old thing. Under-financed. Under-capitalized. It’s a slap of reality.”
Forman believes that some good can come from this “slap.” “It’s a wake-up call for the nonprofit theatre world,” he says. “We need to look long and hard at the issue of endowments. To build one is a huge undertaking. Some organizations are going to look carefully at the wisdom of investing a large amount.”
More importantly, Forman thinks that this is going to be a moment when nonprofits will have to reconnect with communities and make clear and persuasive arguments for their importance. “On good days, I think there is a light at the end of the tunnel,” he says. “But on dark days I really wonder whether our culture has changed. I question whether we have learned how to really value our cultural institutions. I don’t think there’s a deep-seated belief that these organizations are important. If people believe in the institution, if they take pride and ownership, then they’ll give more support.
“This is a moment,” he continues, “for us to say to our audiences, ‘If we went away, what would life be like here?’ We need to make the first step in re-valuing ourselves.”
Stephen Nunns was an associate editor for American Theatre from 1996 to 2000. He teaches theatre and arts and public policy at New York University and New School University.