Showing posts with label Theatre Co-operation. Show all posts
Showing posts with label Theatre Co-operation. Show all posts

Saturday, June 23, 2012

So where is the money?


I was really pleased by the reaction to my last post, so thank you to everybody who commented on it on Facebook. Only one person has left a comment on the blog so far, so please feel free to leave comments here this time. There were negative comments but I had to search for them and I wish they'd been left on the blog. An interesting conversation could have ensued. One prevailing complaint was that I was just stating the obvious: that we had to look for money somewhere else, but I wasn't saying where we should go to look for that money. I'll try to answer this.

So, now that the Arts Council has fulfilled the logic of numbers set out by John O'Kane in Wexford in 2008 and admitted that it will fund only five clients where does that leave everybody else? (Incidentally at least three of those clients had better start thinking about a succession policy or they too could suffer the cut).

Anyway, on to the business of this blog: where is the money. The simplest model is the commercial one. Calculate your potential box office income. Set your budget at no greater than 50% of that figure. Raise that amount in advance. Raise it from family, friends or friends of family. At 50% of potential income there's a good chance they'll make all or most of their money back. If your box office exceeds 50% of potential income they'll make a profit. You will need to prepare an investment prospectus for them, so check out this link. Remember that these people are investing, not donating. They are underwriting the cost of your production and they expect to be paid back so they have first call on the box office income. However, If you're playing a 100 seat theatre for 2 weeks you can't raise a lot of money (probably about €9,000). Spend it wisely and have a smart marketing plan in place. Remember your choice of show and cast is part of that marketing plan (At the very least make sure you read the Arts Attendance in Ireland report).

However, if you are a charity, you can't look for investment. You can look for donations. Under Irish tax regulations at present if a PAYE worker gives you a donation they get...nothing. You can apply to the revenue and they will top up the donation based on the donors higher rate of tax. A self employed person can apply for a rebate based on their higher rate of tax. Compare this to the US where every donor can reduce their taxable income by the amount donated, or the UK where a theatre investor can write off the gains on one show against the losses on another. Also in Ireland an individual can invest in a start up business and claim 41% back and if the company fails to show a profit after 3 years they can sell their shares back to the company at a discount and claim a capital gains loss. It seems to be that the tax regulations are heavily weighted against charitable donors. Lobbying for change on this would benefit us greatly.

It's also worth thinking about how much you want to raise from donations and how much work you can put into it and - most importantly - who you can ask. Lets say you want to raise €20,000 in donations. You set a target of 40 people at €500 a head. Consider this: a PAYE worker on €100,000 is taking home, after taxes and charges, just over a €1000 per week. Factor in living expenses commensurate with their income (and a little bit of negative equity)  and that person does not have €500 to give to you (They might have it there was some real tax benefit to them). So you could reduce the amount you ask for and increase the number of people you ask but this increases the time and the cost of the fundraising. You could target people  in the €200,000 per anum bracket but do you have ready access to them? Bear this in mind as well: according to The Arts Attendance in Ireland report mentioned above there are only 484,000 arts attendees in Dublin. Your question now is how many of these are sympathetic to theatre and how many are in a relevant income bracket. You'll probably find that the people who could donate to you have already been recruited by the major institutions. Again the market is small and the numbers stacked against us. Without meaningful tax incentives the donation windfall will remain elusive.

So what about sponsorship? The brand managers talk a lot about shared values. This is important. How does your event, your brand support theirs. Remember that what you are selling to the sponsor is your audience. Not your event, your audience. So you need to know your audience and how you intend to reach them. The more focused your demographic and sales channels are the better chance you have.

I've spent a lot of time looking for sponsorship over the years and the big question is how much can i ask for? Usually we ask for too much and that's the end of the conversation. It used to be the case in the US that it was calculated on an 8/10 ratio. That was $8 for every 10 audience members. That works out at about €6.40. So if you're playing a 100 seat theatre for two weeks that gives you an ask of about €760. Which, in my experience is about right. Bear in mind that this is not worth your while or theirs. Also bear in mind that a Dublin festival with a large title sponsor only gets €10,000 in cash so you can see the figures are not far off. There are, of course, exceptions to this rule.  Remember as well that the real value of a sponsor is the marketing support they bring to the sponsorship which will boost your box office making the project more attractive to investors.

There is of course corporate philanthropy which is different from sponsorship (I think a lot of people in Ireland confuse these two).  Corporate philanthropy is a long game built on smart networking and personal relationships.

So, where is the money? What lessons can we learn? On the commercial model we need to ensure that audience capacity is high (about 400 seats minimum), the run is about four weeks and the recurring costs are kept low ( i.e. small cast and crew). Always, always pay back the investor. It doesn't matter if the show is a box office flop and you made no money; if you paid back the investors then you can can ask them to invest again.

On sponsorship, size is also important and we need to remember that what we are selling is our audience so we need as much accurate information on that audience as we can get. Also the real value of sponsorship is the marketing support provided.

On donations we need to remember that the numbers are working against us. Without a change in the tax regulations there is no incentive for small, significant donations. We have to target high net worth individuals and for most of us that's a long game and a lot of networking. How many of us know fifty people willing to give us a grand each?

A final word on crowd funding. It takes a lot of careful planning. To my knowledge the biggest amount for theatre raised on FundIt was €15,000 for Misterman. And that had Cillian Murphy in it. A brilliant marketing decision.

So that's my experience. Think big. Think of the audience. Plan your networking and then work that network. Prepare for a long game. Work out the mix. Demand a change in the tax regime. Always pay back your investors.

What do you think?

There is another aspect to this question of where the money is. Ireland has a population about the same as greater Birmingham. Just over half of the population are  "regular" (not less than once a year) arts attenders; 1.3million people claim to have attended a play not less than once a year, and Dublin has a total of 484,000 regular arts attenders. Its a tiny, tiny market. Whether we're looking to sell tickets, convince a sponsor, or raise donations the numbers are not stacked in our favour.  There needs to be a lot of very creative thinking to make the numbers work. Perhaps that's the real challenge.


Monday, April 2, 2012

A Business Plan for the Arts? Should we even Bother


"The Avalanche has already started. It is too late for the pebbles to vote" - Babylon 5

I was looking at the job description for Director of Theatre Forum recently and I began to think about the purpose of these organisations. This, combined with this article from the Irish examiner, prompted this post.

OK, so here are some of the questions: what is the future of the theatre sector in Ireland in a political culture committed to a strategy of continual cuts? What is its future in a society in which rising unemployment and declining wage levels have consumed the greater part of all disposable income? What is its future in a country where an arts based education has never been on the table for serious discussion?

In short what is its future when the traditional sources of income (funding and box office) are both being squeezed and its support base is being reduced by short-sighted educational and arts policies?

The size of the theatre industry - and with it the range and type of imaginations available - is being reduced. It will shrink around the five major clients and it is possible that those clients will be seriously affected in a couple of years.

During the years of growth in Arts Funding the support organisations were mandated to provide information and resources that would professionalise the industry and give it a "voice". During the first years of the cuts the the purpose of the support organisations began to change, to refocus on lobbying, on making the case for the arts. The Campaign for the Arts ran a strong campaign: the arguments were sound, the lobbying was intensive, the cuts continued.

The NCFA argument was based on the "multiplier effect". The straightforward, essentially Keynesian, argument that investment (state spending) on the arts created wealth, provided employment, consumed resources, pushed demand. This is a "demand side" argument: investment stimulates demand, pushes growth. Its a good argument. Unfortunately it never had a snowball's chance in hell.

We live in an economic culture dominated by "supply side" economics - a school of thought beloved of Reagan, Thatcher, the Republican party and others. You get the picture. Trying to win a demand side argument in a supply side culture is a sectarian struggle. I'm reminded of a line from the Rat in The Skull that went something like " ...two fellas in a ditch clubbing each other till one of them gave up and died". 

The funding argument as it is currently formulated cannot be won because of fundamental differences between the suppliers and the consumers of funding. Cutting state support is an article of faith.

So what is the role of the support organisations?  What use is their advice and drive for professionalism when we can no longer afford to be "professional" and when they themselves will be in line for cuts sooner or later?

In terms of the theatre industry, Theatre Forum in collaboration with its members and the NCFA  needs to address and  answer these questions, needs to formulate strategies based on those answers, and needs to support the implementation of those strategies.

In short, I would argue that the industry as a whole needs a new business plan - and  Theatre Forum is ideally positioned to deliver that plan.

It is possible that when we look a the industry in its entirety, as if it was one large corporation, we may find that it just doesn't make financial sense and that all of these cuts are the only way forward. Or we may find that the industry - as a whole - is way more powerful and profitable than any arrangement of discrete, small, underfunded companies. That a large co-ordinated self managed industry is capable of creating not just a diversity of voice and expression but capable of generating properties with significant profit potential, reinvesting that profit and returning investment directly to the key investor - the tax payer.

If an industry is to survive we need to stop talking about art and artists and start building a context in which a artists can create and make a living. 

Over the years the industry paradigm was to make  funding strategies and decisions focused on the quality of the art and the artists (without ever providing a set of criteria against which the quality could be measured). Again, this is not a criticism - the "quality" of art is very hard to systematically describe and usually comes down to a personal opinion or preference. However, in favoring individual artists or specific endeavours they failed to build a sustainable industry, failed to even understand the nature of such an industry.

On the other side of the coin those of us working in the industry ( and I include myself in this) were very concerned with process - the right way of doing it. Whether it was the right way to rehearse or - when the emphasis moved on to administration - the right kind of company to have or the right way to put on a show. This concern with doing it the right way was reinforced by the funding strategies (if you were funded you were doing something right), but it meant that we too were not concerned with building an industry that could sustain us.

I would argue that we all became so concerned with creating the right kind of art that we failed to attend to the context in which that art was being made.

You can solve a problem by tinkering with the innards (creating new funding tools) or by examining the context - there may be nothing wrong with your car, its the potholes in the road causing the problem.

There will be less and less money available from the traditional sources over the coming years. That's a fact. No funding tool will create more money. So how do we create a sustainable industry when the traditional source of investment is drying up. That's the problem. That's the challenge. We have to solve it in the language and within the parameters of the dominant economic ideology.

I never made the application to Theatre Forum. I missed the deadline.

Thursday, June 25, 2009

Practical Suggestions for Collaboration in the Theatre Sector

In the light of the presentations made at the Theatre Forum Conference and in the light of the Arts Council’s document “EXAMINING NEW WAYS TO FUND THE PRODUCTION AND PRESENTATION OF THEATRE” I would like to make the following observations and practical suggestions

THE CONTEXT:

The call from the conference was to collaborate or collapse. Find new ways of working or not work at all.

I'm not very good at the grand concept so I want to outline a way of thinking, and a plan of action.

First the problem is systemic and two fold.

* Over the years we have become dependent on a single revenue stream;
* The supply of cash has dried up.

If this is the problem then we have to find solutions to both our dependency and the cash supply problem. I'll return to this in a moment.

Annette Clancy posed a very interesting question during the panel discussion: what have we done with all the money. Here's an answer: we have invested in the development of a human and capital infrastructure of considerable resilience and cash generating potential when viewed as a unified whole and not as a loose assembly of disparate organisations, each fighting its own corner for a share of an ever decreasing pie. If we damage that infrastructure now its ability to earn will be greatly diminished.

OK lets go back to the solution:

The theatre sector – according to the ITI is 85 venues of various size and 146 production companies (some of them I assume are no longer in operation, but it’s still a significant number) spread across the country.

Extrapolating out from my experience as a venue manager and as a company manager I would estimate that together they have mailing lists of about 350,000. According to a DataBox representative this network of 85 venues and 146 production companies generates online ticket sales per month of in excess of €400K; according to Heather Maitland its becoming increasingly skilled at audience data capture, and audience segmentation, which means that those lists are growing and that they are being well managed.

The theatre sector, our industry of 85 venues and 146 production companies, needs to realise the earning potential and sustainability of the sector as a whole. No single organisation can leverage the kind of investment and support the whole sector can when we act together. Here’s how we can do that.

SPONSORSHIP

We all know how difficult it is secure meaningful sponsorship for our venue or our company. But imagine this: we walk into a sponsor with a shiny powerpoint presentation that says do you want to be part of a year long event that happens throughout the country every week, with mailing lists of 350,00 and growing, with print and advertising opportunities continuous throughout the year, with thousands of unique web visitors per month and the added PR opportunity of saving an entire art form?

We have a chance of securing the second largest sponsorship deal in the country.

Tie this into the planned national campaign being developed by the Arts Council to promote the arts with Failte Ireland and this has very considerable earning potential.

I've heard the argument that this wouldn't work because the big organisations would take the most – but that’s what's happening now! Precisely because they are large they are attracting the support. But how much could we raise if we stop seeing lots of small companies and organisations and see one very large, multi-faceted network?

T he GAA were constantly referenced at the Conference. They have done this and the money HAS passed down to the clubs. Of course there are issues about how the money would be divided. But not to act on this NOW is like not getting into a lifeboat because we can’t agree on the style of rowing.

PUTTING THE CASH FLOW TO WORK

Nearly every venue in the country has outsourced its outline ticketing to DataBox or a similar CRM provider. Until recently it took two weeks for the money from an online sale to arrive in a venues account. Also Databox had a charge on every transaction.

If the sector (that’s all of us acting together) controlled the online ticketing then the booking charges could accrue to the sector (that’s about €30,000 per month). Also if we agreed that all on-line sales that pass through our wholly owned online booking system be allowed to sit in an account for a month then we would be moving toward a situation where we would have an amount in excess of €400,000 permanantly on deposit, earning interest, throughout the year.

THE VALUE OF THE MAILING LIST

The GAA (again) as well as many other representative organisations use affinity schemes. Here’s how they work. There is a particular telecoms provider that runs a scheme whereby any individual or organisation affilliated to the GAA can switch to their telecoms service and have their monthly bill reduced by 10%. The telecoms provider will then pay 15% of that phone bill to the GAA EVERY MONTH.

If we assume that we have mailing lists of 350,000; if we assume that we convince 30% of our collective mailing lists to switch to our telecom provider within the next 18 months; if we assume that the average domestic bill is €35per month...

Then in 18 months time we would have a monthly income of €551,250, that’s €6,615,000 per year...

So that’s income from Sponsorship, interest on deposits, and affinity schemes, which when taken together have serious earning potential. And we haven't sold a single extra ticket....

THE MILLIONAIRE DONOR

We are all of us running around looking for the secret millionaire angel, operating small friends and patrons schemes - but alone we are too small to attract the serious donation. Together we can put in place a National Endowment for the Art of Theatre Trust Fund and we can actively pursue those elusive millionaires to leave some money in their will until over time we have an a trust dedicated to the art of theatre. It's not that hard to convince a wealthy actor to assign their back end rights in one movie for the good of all actors in Ireland. (The Screen Actors Guild of America and British already operate such funds – usually for pension purposes).

CONCLUSION
I’ve outlined four simple strategies (and by the way I’ve spoken to a number of Sponsorship Brand Managers, Financial Managers, and Affinity Scheme Operators and they have all agreed that there is no reason why this couldn’t work – but that it requires the sector, that’s all of us, to act together) that can use leverage the power of the sheer size of the theatre sector to generate multiple revenue streams over time.

Of course there are problems with all of this and of course the devil is in the detail.

But to answer the question what have we have built over the years is: we have put in place the elements of an infrastructure with enormous earning potential and the capacity to work with the funding agents as equals and not as dependents; an infrastructure that is flexible and resilient. All we have to do is join up the dots and realise that our venue, our company, and our talent is a part of a very powerful system. If we look out from our own anxious and nervous positions and realise what we can achieve collectively we can create work rather than shedding it and we can build a resilient industry in which there is room for all of us.

All of this has to happen now before a substantial part of the existing infrastructure is dismantled.