August 2010 Field Letter
Written on July 29, 2010
Dear Friends,
We gain crucial information from Captivate, our elevator TV news
service, as we ride the 24 floors to TCG’s offices. We learn
new vocabulary words we never knew existed, how the markets are
faring and various world news updates. Last week, a phrase flashed
across the screen, "slow is the new fast." It’s
odd to read that on an elevator television monitor, which is pummeling
us with news and advertisements when we could be having a moment
of respite. Its message is also a far cry from the old Target motto,
“speed is life!” It's a reminder that even in fast times
of rapid change and endless communication, there is an important
place for “slow and steady wins the race.”
Late July is when TCG completes Theatre Facts, our annual
report on the attendance, performance and fiscal health of the field
based on responses to the TCG Fiscal Survey. Theatre
Facts 2009 is derived from data for the fiscal year that
theatres completed between October 31, 2008, and September 30, 2009.
I’ve had many conversations with colleagues about the usefulness
of any financial information that is more than a few months old
in these radical economic times. In response to these conversations
and the pressing need for instant field-wide fiscal information
during the recent economic crisis, TCG initiated the Taking
Your Fiscal Pulse Snapshot Survey series in September 2008.
Through short surveys circulated to the field at six-month intervals,
we were able to glean and report “up-to-the-minute”
information about fundraising, ticket sales, budget cuts, year-end
projections and so on. (Going forward, we plan to conduct Fiscal
Pulse surveys only at the beginning of the calendar year, when the
majority of theatres will have completed their last fiscal year
and have a sense of how they expect to end the one they are in.)
While the Taking Your Fiscal Pulse Snapshot Surveys are
a valuable addition to our research efforts, they cannot take the
place of an in-depth fiscal survey. TCG’s steady commitment
over the last 36 years to gathering, verifying and analyzing fiscal
information from member theatres has created a tremendous body of
knowledge and historical information for the benefit of the field.
The annual TCG Fiscal Survey serves an important function both as
useful information for the present moment and as an historic profile
of our field and its growth. It’s helped us get to know ourselves
and each other better, and I would venture to say that it has strengthened
our field by providing a regular benchmarking mechanism for those
theatres opting to use it in such a way.
When the Fiscal Survey was first launched for the 1973-74 fiscal
year, then-executive director Peter Zeisler wrote:
This cooperative and reciprocal project is an indication of
the growing trend among these theatres to see themselves not only
as individual institutions serving specific regions and communities,
but also as segments of a larger phenomenon which reflects many
mutual concerns and characteristics and may be considered America’s
“National Theatre.”
Before arriving at TCG, I was leading TCG member theatres in
a variety of locales, and I always found the Fiscal Survey to be
incredibly useful in educating boards about the economic make-up
of our field. The theatres that complete the survey have access
to the data supplied by each theatre as well as a variety of tools
for sorting and further analysis. (Contact Ilana Rose at irose@tcg.org
for further information about how to use these tools.) In my own
work, I’d identify three or four theatres that I most wanted
to emulate and then compare my theatre’s economic makeup and
performance with theirs. Often I would share that information with
my artistic director and board, and we would strategize about the
areas we wanted to improve. As I travel now, I have been in many
a board room where entire presentations have been based on comparisons
among theatres—and on the TCG Fiscal Survey.
There’s an enormous amount of information in Theatre
Facts 2009, and I wanted to share with you a few items that
grabbed my attention. 2009 was the first full year in which TCG
theatres absorbed the impacts of the recession. The Profiled Theatres
section of the report includes a budget group breakdown of the data
from 180 theatres that participated in 2009 and tells an important
story about what happened that year, but it is also fascinating
to look back through the data supplied by our Trend Theatres—the
112 theatres that have participated in each of the past five years—to
see where the shifts are occurring.
CUNA (Change in Unrestricted Net Assets)
CUNA is what is also referred to occasionally in the report as the
surplus or deficit for a year. It is the surplus/deficit “writ
large” as it includes investment gains and losses, as well
as assets released from restriction for capital projects—both
of which remove the numbers from what is a strict operating result.
In the last five years, the percentage of theatres with negative
Changes in Unrestricted Net Assets went from 39% to 60%. This was
driven primarily by investment losses that particularly affected
the larger theatres. In FY09, the average deficit for 180 theatres
responding to the survey was ($465,729). The negatives were the
highest in the largest theatres with Group 6 at ($2,477,483) and
Group 5 at ($657,974). For fun, I subtracted from the equation the
gains and losses on investments—which typically are not included
when a theatre is evaluating their surplus/deficit for the year—and
the average surplus/deficit numbers look more like this:
Group 6: ($369,211)
Group 5: ($496,993)
Group 4: $222,490
Group 3: $4,010
Group 2: ($3,326)
Group 1: $19,677
While it’s been a difficult time for everyone, the larger
theatres on average had deficits while the mid-size and smallest
theatres, on average, did not. Any assets released from restriction
for capitalized items such as buildings are still skewing these
numbers to the positive.
(NOTE: One Group 1 theatre had six-digit positive CUNA; without
that theatre, the group overall would have averaged negative CUNA.
Groups 3 and 4 theatres averaged positive CUNA.)
Working Capital
Poor cash flow is one of the biggest contributors to sleep deprivation
among American theatre leaders. The part of our survey that gives
a clear snapshot of our field’s liquidity is the analysis
of working capital—theatres’ ability to meet day-to-day
cash needs and current obligations.
In the Profiled Theatres section, working capital is calculated
for 169 theatres; the average was ($1,648,113) and total negative
working capital for the aggregate was approximately ($278 million).
If every TCG member theatre responded to the survey, I imagine the
number would be closer to ($500 million). On one hand, this is a
large number for the field to be managing—i.e.: a lot of lost
shut eye. On the other hand, it is small when compared to, say,
the $700 billion bank bailout which was approved by Congress in
2008.
Workforce
An important feature of the Fiscal Survey is an extrapolation of
the findings to a larger Universe of theatres, allowing us to estimate
activity by 1,825 not-for-profit theatres operating in the U.S.
in 2009.
The estimate for total paid workforce is 128,200. Artistic and production
jobs far outnumber administrative jobs. The breakdown is as follows:
Artistic (63%), production/technical (25%) and administrative (12%).
The number of jobs is down from the previous year by 2,800, a 2.1%
shift.
Among Trend Theatres, administrative payroll exceeded artistic payroll
in each year from 2005-2009, and the amount that payroll exceeded
inflation in the last five years is as follows: 4.1% for artistic,
12.6% for administrative, and 17% for production/technical.
Exceeding or trailing inflation?
The Trend Theatres section of Theatre Facts 2009 reveals how various
income and expense items either exceeded inflation or did not keep
pace with it over the 5-year period from 2005-2009. Interestingly,
the trend in earned income decreased 23% over the 5-year period.
This was primarily driven by negative changes in investment income,
which fell short of inflation by 244.4%. Ticket sales only decreased
by 2.2%, while “other earned income”—non-ticket
income from tour contracts/presenting, educational/outreach programs,
royalties, concessions, enhancement/co-productions, advertising,
rentals, etc.—actually increased by 13.4% over the 5-year
period. If investment income is excluded from the equation, then,
earned income growth for the period was 0.8% above inflation. Theatres
are finding ways to complement traditional forms of income with
new income streams. Still, overall expense growth from 2005-2009
exceeded inflation by 9.7%. Most expense categories saw increases
in the double-digits; only royalty expense and production/technical
non-payroll (physical production) expense decreased during the 5-year
period.
Also of note: There were double-digit increases in federal, foundation,
trustee, in-kind and “other” support and double-digit
decreases in state, city/county, corporate and United Arts Funds
support. Overall income decreased 12% over the 5-year period and
supported 20.3% less of total expenses in 2009 than 2005, the lowest
level of expense support during the period. Despite theatres’
dramatic capital losses in 2008 and 2009, both fixed assets and
investments had inflation-adjusted growth in the double-digits over
the 5-year period.
Longer term trends: 10-year Trend Theatres
While the exact same set of theatres do not participate in the Fiscal
Survey each year, there is a subset of sixty six Trend Theatres
that have been a part of the survey for the last ten. This special
10-Year View can be found on pages 19-21 of the report, and the
following quote from Peter Zeisler, from his launch of the Fiscal
Survey in 1973-74, exemplifies how this body of knowledge was intended
to gain value over time:
This survey was conceived as an annual TCG service, and its usefulness
will increase in the years to come, when valid specific comparisons
can be made from year to year. The statistics indicate the strong
base most of the theatre institutions have developed, and considering
how young the nonprofit professional theatre is in our society,
this survey reflects its extraordinary growth so far.
What strikes you as you look at Theatre Facts 2009 and the trends contained therein?
Until next month, all the best,
Teresa Eyring
Executive Director