Fast forward a couple of months, and we received news that San Jose Repertory Theater would be closing its doors after 34 years. Many of us knew that San Jose Rep had been struggling, and questions surfaced as to why a regional theater could not seem to sustainably operate in the resource rich Silicon Valley. Soon after the announcement was made, some began to declare that San Jose’s closing was due to their inability to deeply connect with their community. In an interview with the San Jose Mercury News, local scholar and director Tlaloc Rivas stated “This is what happens when your theater is deliberately indifferent to the diversity of your city.”
As
501(c)3 non-profit organizations, we have a responsibility to represent our
communities, and in some cases, our communities have changed or are rapidly
changing and our arts organizations haven’t adapted. It is almost as if some
are programming their organizations to reflect the 1960s version of their
cities. But why? I believe this is occurring at least in part not because of
the reasons that have already been discussed, but primarily as a result of
fear. During the global economic crisis, several theaters exhausted their cash
reserves and dipped into their endowments to offset plummeting sources of
contributed revenue. Many survived, but emerged on life support. Earned revenue
became much more of a driving factor as support from state and local
government, corporations and foundations nose-dived. It became clear that in
order to stay alive, many would have to rely on box office revenue as their
primary revenue source. As marketers, we know that when looking at the 4 Ps of
marketing (product, place, price and promotion), that by far product is the
most impactful on box office revenue. In an attempt to adapt to the worsening
economic environment, some theaters began to program “safer” seasons, and
increased ticket prices to drive more revenue. Many adopted models that looked
far more similar to Broadway than the regional theater just a few years prior. I
don’t say this to be judgmental, only to illustrate that desperate times
required desperate measures for some.
As
a consultant, I noticed that many of my clients during this time selected their
seasons from a place of fear. And I couldn’t blame them. The one thing they
could control was their operating expenses as no one could reasonably predict
revenues. Shows got smaller, cheaper and less “risky” (though as I have previously blogged
about,
trying to determine what is “safe” in the theater can be a fool’s errand).Given
their financial positions, one wrong move and it was over. Gone were the days
of unrestricted operating grants, endowment draws and investment gains that
could offset programmatic risks. Many Artistic Directors needed to ensure that
the audiences they had would stay with them through the storm, and therefore,
some programmed “tried and true” plays that they believed would please their
audiences. Perhaps necessary at the time, this is not a forward-thinking
strategy.
Five
years after the market crash, the stock market is at an all-time high, and experts
are declaring that we’ve emerged from the recession. But some temporary
programmatic measures adopted during the recession continue today at some
theaters across the country. And I believe there is an easy explanation.
Theatre Communications Group in its most recent Theater Facts reports shows that working
capital at theaters nationwide has decreased by 82% from 2008 to 2012. In
addition, growth in cash reserves lagged inflation by 16%. The working capital
ratio for theaters dropped by 25% in four years. So, what does all this mean?
Many theaters remain as risk-adverse today as they were during the height of
the recession because there is no safety net. However, those that are waiting
until sunnier days to make programmatic adjustments are living in a fool’s
paradise. And I would argue that it is perhaps riskier not to make programmatic
adjustments to better reflect the communities you serve than it is to “play it
safe” and make programming decisions for an audience that is rapidly
decreasing.
Some
unsolicited advice for arts organizations that find themselves in this
situation:
1)
Build an artistic
capital fund if possible. Typically, I would say that nothing is less sexy than
hitting up donors to help create cash reserves. But, you need risk capital. If
you are living constantly on the edge, you’ll never be able to look beyond
today. And as your community changes, you’ll stagnant. Consider this an
innovation fund. Something that gives you the freedom to risk and improve
without the fear that a small failure will cause your demise.
2) Look at the unmet needs in your community, and develop
programming for them. You don’t have to radically change everything overnight,
but take incremental steps to program to underrepresented and underserved
populations in your community.
3) Marketers must become relationship builders as much as we
are revenue generators. To be successful, we’ll need to develop new
relationships and outreach strategies. I’m impressed by recent initiatives at Pasadena Playhouse riffing off concepts
pioneered by Woolly Mammoth
Theater Company’s
Connectivity Program where they have marketing staff that are much more akin to
community organizers. If you are new and trying to build new relationships,
don’t be surprised if some view you as suspect. In some cases, you might be
speaking with someone, to use a term coined by Donna Walker-Kuhne, who has never been
invited to the party before. So they may be curious why now?
4) Don’t give up quickly. Don’t expect immediate results, and avoid developing transactional
relationships. This is about becoming a better citizen of our communities. Arts
organizations that have excellent track records for developing young and
diverse audiences have committed countless hours and significant resource for
years.
5) Listen. We don’t operate in vacuums. We operate in
complex and evolving communities. Don’t assume that you know what’s best for
your community. Invite people into the process. Hear their voices. You may be
much more successful at certain initiatives than you thought, and you could
find that you need to dedicate more time and attention to initiatives you’ve
never considered. If you are a larger institution, be careful that national
aspirations don’t trump local needs. Many of us operate in both national and
local communities, but unless you are a destination organization, your
audiences are local. I think I’ll call this the Eric Cantor principle.
6) As we’ve been taught, the biggest thing to fear is fear
itself.
I’m always amazed by the number of managers who would rather stick with a
failing business plan that is destined to lead to disastrous results than risk
throwing it out the window for a shot at success. Why rearrange the chairs on
the Titanic? Put on a life vest and take a leap. In an attempt to keep your
organization afloat by maintain status quo, you may ensure you’ll be alive
tomorrow but you can be certain you’ll be dead soon thereafter.
Adopting
temporary tactics to whether a storm is perfectly understandable in some
respects. But non-profit arts organizations cannot adopt long-term strategic
plans that focus primarily on staying alive. If we aren’t fulfilling our
missions or serving our communities as they are today, then what is the point?
We have an obligation (and the privilege) to produce art that is reflective of
the diverse communities we serve. To employ artists that push us beyond our
comfort zone. To engage, develop and nurture a heterogeneous talent pool that
challenges us to examine the issues our communities grapple with from multiple
perspectives. And if fear of taking a leap into the unknown is what is holding
you back, what you really should be afraid of is becoming irrelevant – because
I can guarantee that will happen. And then it is over.
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