Agenda item number: 7 Appendix 1

The and Performing Arts Venues

Report

Beckwith Consulting Ltd October 2014

Agenda item number: 7 Appendix 1

Contents

Page

1.0 Introduction 1

2.0 Performing Arts Venues in Guildford 1

2.1 2

2.2 3

3.0 The Electric Theatre 4

3.1 Financial Analysis 4

3.2 Guildford Amateur Theatre Association 5

3.3 Professional v Amateur v Subsidy 6

3.4 Festivals 7

3.5 Current Management 7

3.6 The Future 8

3.7 Options 8

4.0 Conclusion 10

5.0 Recommendations 10

Agenda item number: 7 Appendix 1

1.0 Introduction

The Electric Theatre is a 210 seat facility which was converted to a theatre from a redundant electricity works building in 1997. The theatre is owned and directly operated by Guildford Borough Council.

The conversion of the building to the Electric Theatre was due to successful lobbying from the Guildford Amateur Theatre Association (GATA) who also provided technical equipment. A legal agreement gives GATA priority booking rights and concessionary hire rates.

The Council has been considering the role the theatre plays in contributing to the overall performing arts provision in Guildford. It is important to the Council that any decisions on the future of the Electric Theatre are taken in the context of the other performing arts venues and affordability in light of competing priorities for the Council’s declining revenue budget.

A stakeholder workshop was held at the Electric Theatre in March 2014 with an aim to understand the cultural offer, purpose and future of the theatre. Although the main discussion areas were focussed on the operational issues of marketing and catering there was acknowledgment that any future plans should address: business model, vision, user/community engagement, the relationship with GATA, partnership working and income generation. The outcomes from the workshop did not include any wider options for future direction or operation of the theatre.

Following the stakeholder event Beckwith Consulting Ltd were engaged to carry out this review with the objective of identifying options for The Electric Theatre and an initial assessment of the Yvonne Arnaud Theatre and G Live.

2.0 Performing Arts Venues in Guildford

The town of Guildford has a relatively high number of performing arts venues compared to towns of a similar size. The Council’s revenue expenditure for performing arts venues in 2012/13 was £994,734. The principal venues are:

 Yvonne Arnaud Theatre – A purpose built Grade II listed theatre with an auditorium of 600 seats and an adjacent studio theatre of 80 seats. The Council own the freehold of the theatre and it is managed and operated by a charitable trust. The Council provided a revenue grant in 2012/13 of £318,170.

 G Live – Opened in 2011 as a concert and touring venue it is owned by the Council and operated by means of a ten year contract with HQ Theatres Ltd. There are 1031 seats and a capacity of up to 1700 seating/standing. The annual subsidy for 2012/13 was £321,796.

 The Electric Theatre – A converted industrial building owned and directly operated by the Council with a capacity of 210. The subsidy in 2012/13 was £354,768.

 The Boiler Room – A converted public house which is operated as a contemporary music venue with a capacity of 300. It is privately owned and run commercially.

 Ivy Centre – A purpose built performing arts centre owned and directly operated by the University of with an auditorium capacity of 200.

1 Agenda item number: 7 Appendix 1 Of the three performing arts venues that the Council funds The Electric Theatre is the subject of this wider report and Yvonne Arnaud Theatre and G Live are considered in more detail below.

2.1 Yvonne Arnaud Theatre

Yvonne Arnaud Theatre (YAT) is well respected in the theatre industry and promotes Guildford in a positive light through touring its in-house productions nationally.

The theatre has recently been operating under a perfect storm of financial constraints. These include:

 The cost of maintaining an ageing listed building  The wider economic downturn leading to less disposable income for theatre attenders  A reduction in the quantity of good quality touring productions  Loss of Arts Council England funding in 2009  Reduction in annual grant from Guildford Borough Council

The Council’s annual grant to YAT in 2012/13 was £318,170 and attendances were 140,000. It is estimated that the Council subsidy per attendee in 2012/13 was £2.27 and the subsidy per head of population was £2.32 based on a population of 137,200.

In recent years YAT has been dependent on its reserves to continue trading. The total deficit for 2012/13 was £134,956 compared to a deficit of £145,567 in 2011/12.

The core business for YAT is the touring productions it receives in the main auditorium. YAT also has a busy studio theatre hosting small scale theatre particularly aimed at young people and children and a significant education programme.

YAT also creates productions some of which go on tour to other venues. The number of these in-house or co-productions has reduced in the last few years due to the lack of finance and increasing risk. For instance there were 9 YAT productions in 2012, 6 in 2013 and 4 in 2014.

The Council’s grant appears to contribute to the overall running costs of YAT rather than being targeted to support a specific element of the business or to further specific Council priorities.

The Council’s ongoing relationship with YAT involves receiving financial information and occasional meetings. It is clear that YAT is dependent on the grant it receives from the Council in order to continue to run the current breadth of activities. The Council is, however, under increasing financial pressure and is looking to identify savings across its expenditure. It may therefore be beneficial to be more proactive by deciding if there is a particular area of YAT’s business that is less of a priority such as the provision or extent of the education programme, the studio theatre or producing in house shows. This would help the Council decide on an appropriate level of grant and YAT would have a better understanding of what the Council is expecting in the way of outcomes. The Council could also consider interest free loans or capital grants to help with the maintenance of the building and any “invest to save” initiatives such as energy reduction.

If the Council continues to be a significant funder of YAT’s running costs then it should ensure that the use of public funding is providing value for money. The Council has already provided advice on the procurement of utilities but could also review the breadth of activities YAT provides with a view to advising on significant areas of expenditure such as staffing. A Scrutiny Task and Finish group could be utilised to carry out the review. 2 Agenda item number: 7 Appendix 1

Recommendation 1 – That the Council determines the outcomes it expects Yvonne Arnaud Theatre to achieve, assesses the value of the outcomes and agrees an appropriate level of revenue grant through a Scrutiny Task and Finish review.

The nature of operating theatres is that programming has a lead in time of up to two years and difficulties arise when external funding decisions are only known shortly before the commencement of a financial year. The Council could contribute to more robust financial planning of YAT by entering into two or three year grant funding agreements. By having advanced notice of funding YAT would have the ability to adjust the programming and audience development plans accordingly.

Recommendation 2 – That the Council consider offering Yvonne Arnaud Theatre a grant funding agreement of up to three years.

Performing arts venues are complex businesses to manage and although the Council has extensive financial and business expertise it lacks the technical expertise required to fully evaluate the ongoing performance of YAT in relation to its grant. This lack of technical expertise also applies to the monitoring and evaluation of other council funded venues such as G Live and The Electric Theatre. The fact that the Council would only require this expertise on an occasional basis, for example to attend monitoring meetings or to help evaluate grants or budgets, means it would not be viable to consider direct employment. For example the Council could obtain this expertise by utilising a suitably experienced officer from another local authority.

Recommendation 3 – That the Council identifies appropriate performing arts/theatre knowledge and experience to assist in the ongoing monitoring and evaluation of the venues it funds.

2.2 G Live

The Council has entered into a ten year commercial contract and lease with HQ Theatres to operate the G Live. The venue appears to be well run and has quickly established itself as a desirable location for touring product. According to the 2012/13 annual report the year 2 subsidy was £321,796 after profit share, the Council subsidy per ticket was £2.61 based on a total of 123,140 tickets sold and the Council subsidy per head of population was £2.35 based on a population of 137,200.

The venue underperformed its target of 145,131 attendances by about 6% which in light of the lack of previous audience data (due to the building only being opened for a short time) is not a significant variance.

The Council has expenditure related to G Live other than the direct subsidy and the total estimated net direct expenditure for 2013/14 was £414k including employee, premises and supplies and services costs. This reduced in the 2014/15 budget to £368k however £20k of this was due to a transfer of the concession grant budget to the new Community Grant budget. The Council should consider including the full cost of G Live when formally reporting performance information to Members.

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Recommendation 4 – That the full cost to the Council of operating G Live is used when reporting performance information to Members.

In light of the facts that G Live is a new venue, has a successful programme and is the subject of a ten year commercial contract it is not considered appropriate to suggest any fundamental changes to the current arrangements. It is suggested that a full review be carried out prior to 2021 to ensure that any strategic changes and associated financial costs/savings can be incorporated into any subsequent contracts. In the meantime targets and key performance indicators should be annually reviewed in the light of emerging programming and audience trends.

3.0 The Electric Theatre

3.1 Financial Analysis

The Electric Theatre programme consists of a 50/50 mix of amateur and professional productions. It is a varied programme containing musicals, drama, music, comedy, film and dance.

The net direct expenditure in 2012/13 was £354,768. The Council subsidy per attendee was £14.76 based on 24,040 tickets sold and the subsidy per head of population was £2.59 based on a population of 137,200.

A financial summary of the budget for 2014/15 and actual expenditure for the previous three years is below.

Table 1 – The Electric Theatre Financial Summary 2014-15 2013-14 2012-13 2011-12 Description Budget Actual Actual Actual Employee 330,750 294,898 357,295 263,528 Premises 122,130 63,423 117,714 70,324 Supplies & Services 133,960 222,795 198,395 122,807 Transport 230 689 594 1,047 Total Direct Expenditure 587,070 581,805 673,998 457,706

Income -333,800 -238,178 -319,230 -291,744 Net Direct Expenditure 253,270 343,627 354,768 165,962

The financial years 2012/13 and 2013/14 contain exceptional costs where the Theatre Manager was absent and an additional interim resource was employed to provide cover. During this period there was also a reduction in programming. The 2014/15 budget reflects a positon where a Theatre Manager is in post and normal programming has resumed.

In the light of these exceptional changes to the service it would be more appropriate to calculate any benchmarking data on the 2014/15 budget estimates. Based on the 2014/15 budget estimate and tickets sold in 2011/12 (prior to the staffing disruption) of 26,473 the Council subsidy per attendee would be £9.56 and the subsidy per head of population would be £1.85.

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A comparison of the Council subsidy per attendee and subsidy per head of population for the three main performing arts venues in Guildford is below.

Table 2 – Subsidy Comparisons Subsidy Subsidy per Additional Venue Attendees per head of visitor spend Attendee population £ Yvonne Arnaud Theatre 140,000 2.27 2.32 1,087,800 G Live 123,140 2.61 2.35 956,797 The Electric Theatre 26,473 9.56 1.85 205,695

Table 2 indicates that The Electric Theatre has a high subsidy per attendee and low subsidy per head of population. The Electric Theatre can be seen as relatively poor value for money in the context that both YAT and G Live have over four times the number of attendees contributing to the wider economy of Guildford. An Arts Council England report in 2004 estimated that the additional visitor spend for theatre audiences on food, transport and childcare was £7.77. When this figure is multiplied by the number of attendees The Electric Theatre’s wider economic impact is considerably lower than the other two venues.

It should be noted that these calculations are only indicative as the additional visitor spend multiplier is over ten years old, attendance figures for The Electric Theatre have been estimated based on previous years and attendances for activities other than ticketed shows have not been included for G Live or The Electric Theatre. These other activities would include catering, meetings, exhibitions and education events. The attendance figure for YAT has not been verified and may contain attendances other than ticket sales.

It is accepted that the actual contribution that performing arts venues make to the wider economy is significantly more than just the additional visitor spend. For instance the amount employees and visiting artists spend can be significant and the organisations make contributions through purchasing supplies and services and taxes including National Insurance. This review has not set out to calculate the full financial impact of the venues but has used the additional visitor spend as a way of benchmarking the venues.

3.2 Guildford Amateur Theatre Association

It is recognised that without the lobbying and fundraising by GATA The Electric Theatre would not exist. GATA members are the principal providers of the community and amateur content of the theatre’s programme.

A legal agreement between the Council and GATA was signed in 1997 to reflect that GATA had provided the theatrical equipment listed in the schedule. The agreement has no defined term however it can be terminated by either party on not less than twelve months notice. Clause 12.1 of the agreement states that GATA members are given priority booking of the Theatre at least fourteen months prior to the first day of a full year diary period. Clause 12.3 states that GATA members will be charged a concessionary hire rate.

The hire rate that GATA pay is substantially discounted. For example in 2013/14 the charge for one days hire for commercial organisations was £1095, Amateur groups £485 + 10% of box office income and GATA members £340 + 10% of box office income. In this example GATA members are therefore getting a 30% discount on what other amateur groups were charged. It is not possible to do a direct comparison between GATA and commercial charges due to the variable nature of the box office share.

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Historically around 40 groups were members of GATA however this has reduced to around 20. There are other arts groups who would like to join GATA but are unable to as they do not meet the eligibility criteria. The main attraction for new groups to join GATA is to benefit from the discounted hire rates.

The concessionary charge for GATA members appears to be unnecessarily generous and in light of the fact that they have had these substantially reduced rates for 17 years it could be argued that they have had more than a fair return on their initial investment of equipment.

The priority booking arrangement constrains the ability of the theatre manager to programme effectively and there have even been instances where GATA members have booked the theatre in advance but then had cause to cancel. GATA members contribute to a varied programme at the theatre but the business case may be strengthened by having more non GATA shows and the associated higher income.

The Council has been a strong supporter of community and amateur theatre in the past. However with new financial constraints the Council is right to consider the level of funding it can afford to invest in this area particularly in light of its overall funding of performing arts venues.

A low hire cost enables amateur groups to produce shows that members choose to perform in rather than shows that have maximum attraction to a wider audience. There is an argument that if a group chose to put on a production attractive to the performers they would still attract an audience as family and friends would continue to buy tickets. This may not, however, be the type of show that the Council would choose to prioritise to subsidise.

If the cost to amateur groups of hiring the venue increases then it is likely that they would have to ensure that their productions were appealing to the widest possible audience in both the type and choice of show but also the quality. An outcome of increased hire fees could result in less but more financially viable shows. The dilemma is what else would be programmed if there were less amateur productions.

It is suggested that the Council considers immediately serving notice on GATA to terminate the 1997 agreement and commences discussions on terms for an appropriate arrangement for the future. Any decision on a potential new agreement would need to be informed by the Council’s wider decision of how the building will operate in the medium term.

Recommendation 5 – That the Council immediately serves notice on GATA to terminate the 1997 agreement and works with GATA to identify an appropriate arrangement for the future.

3.3 Professional v Amateur v Subsidy

With the programme at YAT and G Live being predominantly professional the Council already provides a significant subsidy to professional performing arts. This raises the question of why the Council also subsides the 50% of The Electric Theatre’s programme which is also professional. The Council presumably never planned to do this (the 1997 GATA agreement describes the theatre primarily for amateur use) however it is something that has evolved partly to fill the programme and partly to make a contribution to reduce the overall financial deficit.

One of the reasons the Council chooses to subsidise professional performing arts is the contribution the audiences make to the wider economy. There is an argument based on the figures in Table 2 that over three times the value of the subsidy for YAT and G Live is benefited in the wider economy through the additional visitor spend whilst for The Electric Theatre the additional visitor spend is less than the subsidy. Agenda item number: 7 Appendix 1 6

This identifies a dilemma for the Council as to why it would choose to continue to subsidise The Electric Theatre to the level it does.

3.4 Festivals

Guildford has a number of good quality festivals which contributes to the overall arts provision and to the visitor economy. Two of these make significant use of The Electric Theatre and these are the bi annual International Music Festival and the Guildford Book Festival. The Electric Theatre also promotes its own film festival.

While it would be desirable in any future management option to use The Electric Theatre for festivals it is by no means essential as one of the advantages of festivals is that they can take place in different and non-traditional venues. It is likely that the promotion of festivals will become an increasingly important part of Guildford’s visitor offer but these need not be a deciding factor in The Electric Theatre’s future.

3.5 Current Management

The theatre is currently managed by staff directly employed by the Council. The team are remarkably enthusiastic and loyal considering the uncertainty surrounding the theatre in the last few years.

There are currently some vacant posts and other posts have been filled on fixed term appointments. A decision on the future of the theatre following this review will enable these staffing issues to be resolved. The number of posts appears to be adequate for the current operation however this is an area that would need to be evaluated further in any future business plan.

There are a number of issues which hold back the operation of the theatre, some of which are already being addressed. These include:

 Ticketing system – a system is being procured jointly with the TIC  Website – the new ticket system will enable an enhanced website to be developed  Catering – a market testing exercise is currently underway  Outdoor seating – furniture has been ordered  Outdoor signage – a new sign has been commissioned for the front of the building  Business plan – currently on hold but expected to move forward depending on the outcome of this review

There are some more strategic issues which constrain the performance of the venue which need longer term planning and funding. These include:

 Directional signage  Poor pedestrian connections from the retail area  No dedicated onsite customer parking  Noise and views of the ring road dominating the area  An unsightly electricity substation in front of the building

There are some significant opportunities that can be exploited. These include:

 The river frontage  Town centre location  Large student population  Town centre regeneration plans 7 Agenda item number: 7 Appendix 1

3.6 The Future

A clear message that has come through this review is that a status quo option is not acceptable. There is a feeling that The Electric Theatre has drifted for the last few years and that a decision needs to be made on its future direction.

The Council is in the process of developing ambitious plans for the regeneration of the town centre and until it is clear how those plans will affect the theatre and adjacent land a long term decision on its direction cannot be made. It is suggested that for now the Council considers medium term options that will provide certainty for the next five to ten years.

Pressure is mounting on the Council’s revenue budget and increasingly it will need to examine its financial commitments and make some difficult decisions to identify savings and increase income. Any options for the future management and operation of the theatre will therefore need to reduce the current financial deficit.

3.7 Options

The medium term options for the theatre are set out below.

In House - Even if the Council ultimately decide to pursue another option the venue will still need to operate in house for the short term.

A business or forward plan is required that sets out the following:

 Artistic objectives  Audience development  Marketing plan  Financial plan  Building maintenance/capital improvements

The management team need support to have a more entrepreneurial outlook. A decision on direction for the catering service is essential and the opportunity to exploit ancillary sales to existing audiences such as ice cream and confectionary needs urgent consideration. The introduction of premium parking spaces on the theatre forecourt is conservatively estimated to provide income in excess of £50k a year.

The percentage of film programmed could be increased and new projection equipment would enable the transmission of live arts performances from elsewhere.

Investment of time in electronic marketing is essential. The new ticketing system will allow the capturing of email addresses and enable low cost targeted marketing to a wider audience. This together with the increased use of social media will transform the marketing of the programme but will need an investment of staff time.

There is currently a friends’ group who fundraise and provide volunteer front of house staff for performances. The friends pay a membership fee of £12 a year and in return receive a discount on tickets and at the café. The promotion of the friends’ group is poor (not all theatre users are aware they exist) and there are difficulties when volunteers are not able to cover some performances. There is scope to work closely with the friends to revitalise the group and increase their role and impact.

The in house option will result in the Council continuing to provide a subsidy however the level of current subsidy could be reduced through the implementation of the new business plan.

Agenda item number: 7 Appendix 1 8

Voluntary Theatre – The Council could seek a voluntary sector partner to take over the day to day management of the theatre which would preserve the theatre for amateur and community use. It is likely that there would be no professional content to the programme and overall utilisation of the building is likely to be significantly less than current. Any voluntary model would be reliant on sufficient numbers of people being able to devote their time and experience to the operation and would probably require the Council to continue to maintain the fabric of the building to make it a financially viable option.

GATA is the only voluntary group that has been identified so far that would have an interest in this option and as an umbrella organisation of a number of smaller theatre groups it does not have the ability or capacity to take this on in its present form. If GATA felt strongly enough that it would like to preserve the use of the theatre for its own members then it could be given the opportunity to reform into an appropriate organisation if it were able to do so within the Council’s time constraint to reduce its funding.

Alternatively the council could consider creating a non-profit distributing organisation to lease the building to. The advantages of this type of organisation is that they may have access to additional sources of funding such as trusts and charities and they could apply for business rate relief of around £10k a year. Experience shows that this model works best when converting venues with a track record of success and financial security and would not be recommended for The Electric Theatre.

Commercial operator – The option of procuring a commercial theatre operator to manage the theatre based on its existing or similar programme is not viable. The venue is of limited interest to theatre operators and when the need for the company to make a profit is taken into account the Council would have to provide a level of funding which is in excess of the current subsidy.

The council could consider entering into a relationship with a commercial arts organisation which would utilise the theatre for their own activity but may be able to provide some availability to hire the venue to amateur and community groups. The types of commercial organisations who may be interested include cinema operators or commercial arts education organisations.

Two commercial arts education organisations have been identified in the course of this review that would be open to entering into discussions with the Council to explore this further. The advantage with this option is that the theatre would continue to have an arts use but at little or no cost to the Council. The additional advantage of an arts education organisation is that they are likely to have under utilised time outside of term times that could be made available to community and amateur groups.

It is suggested that the Council seeks proposals from commercial arts organisations to operate the building and that the proposals be evaluated on the basis of financial return for the Council and wider arts benefits.

Recommendation 6 – That the Council seek proposals from commercial arts organisations to operate The Electric Theatre for a period of ten years

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4.0 Conclusion

The Council is under increasing financial pressure and is right to consider the level of funding it can afford to invest in the three directly funded performing arts venues.

In the short to medium term there is little scope to change the operation or level of funding of G Live due to the nature of the commercial contract which runs until 2021.

There is scope to negotiate a new two or three year funding agreement with the Yvonne Arnaud Theatre based on what the Council expects the theatre to deliver in return for its grant. Any funding agreement needs to balance the viability of the theatre and affordability to the Council.

The Electric Theatre is providing poor value for money compared to the other two venues and as it is directly controlled by the Council has the biggest scope for change. The Council should consider an option for managing the theatre for the next ten years whilst it continues to develop its wider town centre regeneration plans. The preferred option would be to offer a ten year lease to a commercial arts organisation with an aspiration to continue to allow some community use.

The GATA agreement is constraining the theatre operation and it is suggested that the Council serve notice to terminate the agreement.

There will be a need to continue to run the theatre while negotiations on future options are underway. The theatre should continue to be run in house during this period with every effort being made to continue reducing the deficit.

5.0 Recommendations

Recommendation 1 – That the Council determines the outcomes it expects Yvonne Arnaud Theatre to achieve, assesses the value of the outcomes and agrees an appropriate level of revenue grant through a Scrutiny Task and Finish review.

Recommendation 2 – That the Council consider offering Yvonne Arnaud Theatre a grant funding agreement of up to three years.

Recommendation 3 – That the Council identifies appropriate performing arts/theatre knowledge and experience to assist in the ongoing monitoring and evaluation of the venues it funds.

Recommendation 4 – That the full cost to the Council of operating G Live is used when reporting performance information to Members.

Recommendation 5 – That the Council immediately serves notice on GATA to terminate the 1997 agreement and works with GATA to identify an appropriate arrangement for the future.

Recommendation 6 – That the council seek proposals from commercial arts organisations to operate The Electric Theatre for a period of ten years.

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