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.

Front End or Back End? Where's the Real Action

How do we produce the vast majority of shows in Ireland. If we're honest a small number of highly motivated people multitask for far less time than the project needs, pay themselves a pittance and by some miracle a show opens on time, runs for a very short period to an average of about 55% capacity in an auditorium that couldn't make back the cost of production even if they sold out.

For most shows that's it. Some shows develop legs, they do the festival circuit for a bit, grow tired and fade away. But in terms of the overall industry these shows leave no legacy. All that work, that funding is gone. Get drunk and plan the next one.

Take a moment and think what would happen if every other industry used the same approach. It would be like a developer building a whole load of houses and then not bothering to sell them, just walking away and leaving them empty....

Just a second, am I suggesting that the economic meltdown happened because the  construction industry borrowed their business model from the arts!? There are similarities: the developers started to believe that all the money was at the front end, at the point of construction, and so they kept building and borrowing and destroyed their own market. In a sense the theatre sector has been doing the same thing and making the same mistake. (The film industry displays the same symptoms by the way). The theatre industry for years has focused on the front end, the point of production, believing that this was where the money was. Very few people knew, or believed, or understood that money could be made at the back end, at the point of sale (and we're not just talking about tickets here; Back end includes royalties and sell on values, territory options, film rights etc. David Pugh, one of the West Ends leading producers has pointed out that with many projects the real return is not in the theatre run but in the the other property rights acquired). 

So, both theatre and construction share an unsustainable business model (believing that money is made at the point of production and not the point of sale) and they both deal in property. Chunks of land on the one hand, bundles of intellectual and artistic property (scripts, productions, performances) on the other.

In the same way that the flow of money into construction dried up, the money available for production is drying up. State funding will be cut even more, we don't have any tax incentives in place to attract investment in theatre from those able to invest, and the big shiny sponsor on the big white horse is not going to come over the hill because the sector is too fragmented and too uncoordinated (these are the words of several senior brand managers and one international sponsorship broker). Oh, and the audience have less disposable income and for many of them, theatre is just not value for money.  In the face of all this can we turn a profit, reinvest some of that profit  and make the theatre industry sustainable?

There are a couple of things that can be done. Sell more tickets (subject of a later blog); expand the audience size for any given event (subject of a later blog) but I believe that even before that we need a fundamental rethink. Producers and production companies really need to consider how the properties they invest in can best be exploited, and they need to invest in exploitable properties. They and the state funding agencies need to rethink and move away from the "grant aid" mentality and start thinking about this relationship as an investor relationship. Yes, funding for the arts carries all kinds of secondary socio-economic benefits and there are all manner of multiplier effects which are great, but lets - for the sake of argument - keep it simple.

In the classic funded situation. A project receives an amount of money from the Arts Council which is invariably less than the cost of the project. A deal is done with a venue whereby either the venue, (funded by the Arts Council and Local Authority), "invests in" or does a box office split with the project. Any remaining shortfall in the production must be "met" by the producer/production company either from their own resources or from their "share" of the box office. The main sources of money are the Council, the Venues (using Council money), the box office and the production company (funded by the Coucil). The problem here is clear - the risk is too high, the return too low. (The audiences too small in many cases to justify the cost of the production, but that's a different days work)

The Arts Council is clearly the principle investor but at this time it it receives funds from central government which it disburses to selected artists. Money comes into the Arts Council, money goes out of the Arts Council, money is gone and no obvious wealth is created.

What if the council - as  the primary investor in the sector -  looked for a return on that investment. To use one very simple example and one very simple model lets take a theatre production in Project Upstairs. The event is budgeted at €80,000 and the potential take is €100,000. The Council should underwrite the total cost of the production, (ensuring that an effective marketing plan is in place and correctly budgeted).

The Council should then take back all of the first 50% of the potential  box office (€50,000), 50% of the box office from there to the 75% point (€12,500) and 25% of the balance (€6250). The council has recovered €68,750 of its grant (86%!), the producer has earned a profit of €31,250 (which can be used for further productions or development work) and no unacceptable risk has occurred.

If you applied this to every project funded by the Council,  then when a show has the potential to "go commercial" the council, as well as all the other artists involved including actors, get to share in that success.

It's possible that if you apply this model of investment in property to all the other arts supported by The Arts Council, then in a very short space of time the arts sector would become a net benefactor of the state as opposed to a net beneficiary. Impossible? Bear in mind that approximately 70% of all funding goes right back to the state in various taxes already so we only have to earn enough to bridge that 30%.

Look at it this way, if we put away the medieval  model of patronage and disbursement that characterises state funding models, and if we charged the funders to invest public money, taxpayers money, in such a way that wealth is created, allowing the successful artists to repay the public investment in their work over time then the Arts Council can make a simple, direct and honest case that it is a profit and not a cost centre in terms of public accounting.

A whole lot of stuff has to change for this kind of model to work.  (I was told, by an arts council officer,  that the main reason it couldn't work is that the council had no mechanism for receiving money.....I guess that's that then), but the principal change needs to occur in the  relationship between the Arts Council and its clients.

The council should not concern itself with the nature or the quality of the art or the artists it supports. The artists and the public will work that out. The council needs to begin the process of investing in a robust and sustainable infrastructure that has the capacity to provide opportunities for all artists. A sort of Cultural IDA.

On the other hand the artists and producers/production companies need to realise that they are in the property game, and that a property is developed in order for it to be sold on; and that the security and freedom they seek in and for their work as artists lies at the point of sale not at the point of production.


So, if a sustainable industry is to be established as we head into a very bleak future we need to understand what business we're in, we need to realise that the real money, the stuff that allows for growth and investment occurs at the point of sale, and the model of funding and the relationship between funder and clients need to change.

Seems simple enough. Blogging is fun.