Two weeks ago, this column explored the tensions between accountants and creatives in the theatre and the issue remains topical.
Gradually, more London theatres are announcing indoor performances scheduled to open during the autumn. Before getting into the economics, the first issue that may need to be overcome is the prospect that, with the coronavirus statistics beginning to rise at an ever-increasing rate, despite the fact that many are unable to get tests, there are suggestions that the government could take further precipitate action.
Unfortunately, theatres would be a very easy target for closures, utilising the weak and specious rationalisation that such a step could allow schools to remain open. If that were the case, then vast amounts of effort and considerable sums of money could be completely wasted.
Putting that aside for the moment, the Royal Court and National Theatre have both announced new productions in the last week, but the most interesting press release has come from Nimax Theatres, which has plans to reopen all of its theatres, although the big shows like Harry Potter and the Cursed Child and Everybody’s Talking about Jamie remain on hold until social distancing is relaxed.
In fact, there were two versions of the release, as it appears that so many questions were raised by the initial announcement of a very limited season spread across the company’s six venues that Chief Executive Nica Burns felt obliged to deliver a detailed explanation of the rationale behind the decision to reopen.
Ms Burns is a wonderful advocate for the theatre in general and an incredibly positive character. Indeed, much of what she has to say is highly commendable, since her reasoning contains a significant element of what is effectively charity, showing a desire to give her employees and the freelancers who have supported the business for so many years some work and a desperately needed lifeline.
As she explains, opening theatres may lose money but it will make a contribution to costs. However, those have already been pared to the bone and even putting on a solo show requires the employment of numerous freelancers and payments to “the many teams in businesses which together give our audiences a night to remember”. Equally laudable are a desire to “re-energise the beating heart of our city” and a strong belief that the audiences are there, particularly given the limited capacity.
There is then a note entitled “Why is Nimax opening at a loss?”:
Like all businesses, we looked at our business strategy post October 31st when the furlough scheme ends. As part of this, we looked at the financial and human cost of large-scale redundancies. We preferred to put the potential redundancy monies towards employment rather than unemployment. When we then fully open, we will have our fantastic workforce in place saving the cost of recruiting again. With this plan we will not be making a profit but we will be earning a contribution to our costs post-furlough which will enable us to achieve 4 key aims...
In brief, these are:
- Attempting to save 355+ jobs as well as hiring temporary and freelance staff.
- Assisting in the stimulation of the London economy.
- Fulfilling audience demand.
- Helping to build consumer confidence.
She further explains that Nimax has a relatively low cost base and therefore can more easily reopen its theatres.
Finally, and arguably most significantly, she sets out the key issues for theatres to open fully:
- The theatre industry desperately needs a government backed insurance scheme for business interruption cancellation including COVID risk.
- The government must eventually permit theatres to open fully i.e. without social distancing. As she points out, there is a lead time of 3 to 6 months from any decision.
The big question that nobody can answer is how long it will take before theatres can open at full capacity. This would appear to require either a vaccine or a cure for COVID-19, neither of which is imminent.
Perhaps the most depressing news recently was the announcement by Anthony Fauci, suddenly a household name on both sides of the Atlantic, that he could not imagine normality until far into 2021 i.e. a year or more from now. There is no reason to believe that London will be any different and the stance of those producing big shows such as Andrew Lloyd Webber and Cameron Mackintosh gives little hope for anything much sooner.
If that is the case, Nimax should take care. While it is laudable to spend money that you believe would otherwise be paying for redundancies in putting on shows, that business model only works if you do not subsequently have to make those employees redundant. With ongoing fixed costs, if theatres are forced to remain closed for a period that could ultimately be 18 months or more, further redundancies are inevitable. Then, not only will theatres lose money on current productions but they will still face the same redundancy costs, making their financial status even worse.
Sonia Friedman has predicted that 70% of theatres will be closed by the end of this year. Inevitably, that figure may be an understatement if theatres cannot get back to normal until late in 2021 or even further down the road. Urgent action is needed.
Readers will be very well aware that this critic has been disappointed by the government’s lack of desire to help out the arts generally and theatres more specifically. It is unfortunate that, at a time when the pandemic is threatening the future of the whole industry, we have been landed with a Culture Secretary who shows no obvious interest in the arts and little innate understanding of what they have to offer.
It may now be time for those in the industry to consider lobbying the Chancellor of the Exchequer instead. While he may have no greater appreciation of the finer things of cultural life, the really strong economic arguments regarding the benefits that the theatre offers to the economy might well persuade a numbers man like Rishi Sunak that a sensible investment would pay rich dividends.