Theatre Bay Area Chatterbox

Thursday, June 2, 2011

Can We Really "Do Less, But Better, with the Same?"

Sasha Hnatkovich is the Communications Director of Marin Theatre Company. He has an MA in Community Development and Planning from Clark University and previously worked with Philharmonia Baroque Orchestra, Trinity Church in the City of Boston and as a freelance writer. His views do not necessarily reflect those of Theatre Bay Area or those of his employer.

Can we really ‘Do less, but better, with the same?’
A follow-up to the 2011 Theatre Bay Area Annual Conference Plenary

During the Supply and Demand Plenary at the 2011 Theatre Bay Area Annual Conference, it took me a moment to realize just how misleading the advice of Ralph Remington of the NEA and John McGuirk of the Hewlett Foundation was. ‘Do less, but better, with the same’ was the gist of their statements. The suggestion was not to, for example, continue spending $10,000 on five shows, but rather spend $10,000 on four shows (or three or two), increasing the budget per show and thus, according to the speakers, increasing the excellence of the artistic product.

With further thought, I see two problems with this advice.

First, the advice of Remington and McGuirk was based in what is, in my opinion, false logic: Funding equates to excellence of artistic product. In other words: if more funding, then better art; less funding, worse art. I think we can all agree that we have all, on more than one occasion, seen quite the opposite: small budget projects succeeding because of creative solutions to having less and big budget projects failing because of uninspired excesses from having more. That is not to say there is not excellence being produced with more (or crap with less), only that it is impossible to support the claim that that funding is the sole catalyst of artistic excellence.

Second, the advice of Remington and McGuirk was based on math that did not account for the less-than-flexible variable of earned income.

Let us say that we run a theatre company and our budget for our 2010-11 season of five productions was $10,000 (we’ll roll the operational budget into the production to keep this simple). For the sake of easy math, let us divide our budget equally among the productions: $2,000 per production. That’s all we had to spend on each show.

Of course, we are fiscally responsible managers in our hypothetical example and our expenses are based not only on what it would take to accomplish our artistic vision but also our pragmatic revenue expectations. We don’t think running up a cumulative deficit year after year is very healthy, so we aim to earn at least $10,000 (or $2,000 a production) to balance the books.

Being a nonprofit performing arts organization, we tend to only earn about 50% of our income from ticket sales. We earn the remainder from donations and grants. So, let’s say we are able to recoup the costs of each $2,000 productions with $1,000 in ticket sales and $1,000 in contributions, like this:

$1,000 earned + $1,000 contributed = $2,000 x 5 = $10,000 total season revenue

Aren’t our auditors happy?

However, let’s say we were inspired by the advice given by Remington and McGuirk at the 2011 TBA Conference! If we decided to “focus on excellence” by reducing the number of productions (in this case, we’ll say from five to two) while keeping our budget flat, as was suggested by Remington and McGuirk, then we’d expect to get a model like this in 2011-12:

$2,500 earned + $2,500 contributed = $5,000 x 2 = $10,000 total season revenue

Right?

If you are or have ever been responsible for ticket sale income, you are probably hyperventilating. You’ve been squeezing blood from of a stone for years with your pathetic marketing budget just to sell $1,000 worth of tickets to each show. Now, you’re expected increase income by 150%?! In one year?! And this expectation comes with fewer chances to recoup losses (you only have two productions to earn your budgeted income) and a just slightly less-than-pathetic marketing budget. But wait, wait, you have capital-E Excellence on your side!

Edgar Allen Poe once said: “There are few cases in which mere popularity should be considered a proper test of merit.” A marketer knows this. He or she knows that merit is not enough fuel sales of a product. More often than not, sales of a product are related to consumer behavior, brand or product reputation, customer and business networks, price points, persuasiveness of messaging, accessibility to bandwidth (and so much more) rather than just excellence alone. In other words, our hypothetical theatre company will be lucky to pull this off in 2011-12:

$1,500 earned (a miraculous 50% increase from 2010-11) + $2,500 contributed = $4,000 x 2 = $8,000 total season revenue

Oh crap, we kept our spending flat at $10,000 and now we have a $2,000 deficit. But Remington and McGuirk's advice, to spend the same on fewer shows, in fact puts the burden of funding our artistic product on their organizations–the very organizations that they say are unable to increase funding to us. In the example above, contributed income would have to increase 40% (now the folks in charge of development are hyperventilating) to break even.

Does consolidating resources in fewer shows make for better shows? Can it even be done? Do you know of any examples to support this advice? Let me know in the comment section below. I’m hoping you’ll prove my logic exercise wrong.

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6 Comments:

At June 9, 2011 at 1:50 PM , Blogger OriginalTheatrebum said...

This, I believe, is an exemplary example of living inside the box that we have created for ourselves. You are correct, based on your assumptions, that doing less and better with the same is not rationally possible. But the funding models of our institutions are only one part of the equation.

I don’t agree that Remington and McGuirk’s logic is false. Perhaps misguided. (I am loathe to agree with individuals from organizations who seem so out of touch with their constituents.) The logic of the statements may come into question - but the underlying IDEA of their statement is sound. The idea of “less is more” has been around for quite some time, and has been a proven model of success.

Let’s look at your season example. If you’re producing 5 shows a year for $2000 each, you’re also spending about 2 months of time per show. (Time being a resource that was ignored in your example.) You theorize that to break even you need to make $1000 in ticket sales and $1000 in contributions per show. Now, according to Remington and McGuirk, you need to do 2 shows instead of 5 while keeping the rest of your budget flat. If you are truly keeping your budget flat that means you have $10000 to spend on a season of 2 shows. That equates to $5000 and 6 months per show.

Let’s further use your example and stick with an equal earned/contributed split. So before you had 2 months to fill a house and earn $1000 or $500 a month. Now you have 6 months to fill a house and earn $2500 or a little more than $400 a month. Let’s further say you have 40 seats in your house and your shows were running for 20 performances or so. If your average ticket was $20 per seat then you needed to sell 50 tickets every two months. Now let’s say you’re using the 2 show per season model: now you have to sell 125 tickets every 6 months. That’s 25 tickets a month versus 20 tickets a month.

Given this example of house size and length of performance, there are 800 seats to fill per show. In your 5 show season there are 4000 seats. In the 2 show season 1600 seats. That would mean that per show (to break even) 50 patrons are seeing 5 shows every year - or 250 people out of a possible 4000 a year enjoy your performances. With only two shows you still get 250 people but out of only 1600 yearly available seats. Thats a running capacity of 6% vs. 16%.

 
At June 9, 2011 at 1:50 PM , Blogger OriginalTheatrebum said...

What have you gained by switching to 2 shows per year? For one, less stress. There is more time to mount a fully realized show. Your creative team is not working at a break-neck pace to put up 5 shows a year. You don’t have to find talent for 5 shows, or make postcards and publicity material every few months. You can take your TIME and produce something that everyone is happy with. Believing that the only way to produce creative work is to produce more of it and faster is a recipe for mediocrity. You can either produce more work with fewer resources and hope that something hits home for your patrons, or you can spend more time on less work and make sure your quality product reaches the patrons it’s intended for.

Guess what else you’ve made? Scarcity. Your shows are more valuable now because there are less of them at a higher quality.

Obviously, all of these numbers are fictitious and silly - but the concept remains the same. You simply can’t look at numbers in a vacuum the way you suggest and hope that real life will follow suit. The concept of time and quality and the very real notion of artistic and creative burnout are simply ignored when you base all of your calculations on the bottom line instead of considering the whole process and all of the available resources.

I think the false logic here is actually the idea that a funding model that requires outside revenue from donations and grants instead of earned revenue is the only and correct way to present creative work.

Your mathematical and anecdotal examples are somewhat correct given our current state of affairs. However, I think you’re missing the point, or points. One: creativity and excellence OFTEN come from adversity and few resources. Two: we’re being told - straight from the proverbial horses mouth - that one of our current resources is diminishing or disappearing all together. It would be very unwise to ignore that.

Creative people come up with creative ideas to work over, under or around roadblocks placed in their path. Funders are clearly saying they have no more money to give us. Let’s look at that as a simple roadblock to be worked around instead of the end of the world. Let’s look at ways to innovate and become more relevant to our patrons instead of beating old and soon to be outdated business models and marketing practices to death.

Wouldn’t it be great if, instead of hearing our doom pronounced by Remington and McGuirk we heard our opportunity for rebirth? I would love to see the day when the conversation goes like this:

Remington & McGuirk: “We have no more money to give. You simply need to make do with less.”

Artistic Community: “We hear you Major Funders. We thank you for the effort you’ve given us thus far. But you know what? Don’t worry about us. We can go it alone from here. Our collective creativity and innovation will bring us new ways of thinking, producing and presenting our work.”

 
At June 12, 2011 at 2:23 PM , Blogger Boy with Girl's Name said...

From the author:
Thank you for your comment. I will work backward to address some of your points:

First, I did not suggest that we arts NPOs NOT change our way of doing business, in fact, I believe we should. While I am disgusted by NPOs who think they are servicing their communities by running cumulative deficits year after year, it was not a part of the scope of the post. I merely asked if the advice given by our funders was sound (which you seem to agree that it is not).

Second, the funding model to receive government and donated resources is not a a logical assumption but actually the LEGAL requirement of all arts nonprofits to be nonprofit (unless you provide more education than performance in your services and products). Our nonprofit status is allowed under 501(c)3 because we are public charitable organizations, “organized and operated for purposes that are beneficial to the public,” that “receive a substantial part of [our] support from a governmental unit or from the general public.” We literally have to prove that at least 1/3 of our income will be unearned, so to speak, to become nonprofits. While new business model alternatives are beginning to arise... these were again not a apart of the scope of the post since NEA and Hewlett (though they claim this is changing) still grant exclusively to 501(c) organizations and the representatives of those funders did not suggest any alternatives.

Third, and related to the #2, you and I both are overlooking a key element (although I did that purposely): programming. For-profit production Book of Mormon can run for 6 months on Broadway, but can Clybourne Park at nonprofit A.C.T.? For-profit production Wicked can run for 6 months anywhere but can Ruined at nonprofit Berkeley Rep? For-profit production Spiderman: Turn Off the Dark can run for 6 months (in previews!) on Broadway but can for-profit/nonprofit collaborations Good People or Motherfucker with a Hat even make it that long on the strip? Does the artistic work NPOs choose limit their runs by limiting their audience, no matter how Excellent (or what price) the productions are? Should these organizations continue presenting or producing risky, innovative, engaging work rather than entertainments even though they are not lucrative?

Fourth, while I agree that time may help create a better product, that is time spent spending money, not earning it (unless you're in infinite previews like Spiderman). And, again, as you even point out, time, like money, is not the only catalyst for excellence. In fact, one could argue, much like I did for money, that a lack of time, though stressful, can lead to creative solutions in the face of limitations and result in Artistic Excellence, or not, but, like money, is not the sole catalyst.

While I may be living in the box (my career has thus far been exclusively with NPOs), I am not thinking in it. Funding is getting more competitive and may require changes in the way NPOs currently do business. However, advice like that of McGuirk and Remington only distracts from that discussion. This is why I challenged their advice and asked the question I did: Are there examples of organizations who successfully scale back the number of productions that they offer a year while retaining the same production budget? The assumption being that an alternative business models would be spotlighted since the current system of NPO finance and management will not allow their advice to come to fruition.

– Sasha Hnatkovich

 
At October 26, 2011 at 1:18 PM , Blogger abd-ur-raheem said...

you have good post. After reading it i have to say that we being a manager, one has to do every the things in a effective way. of the budget is limited then it has to do withing this budget but it must be reasonable.
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