Shifting Currents

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.”