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Renovation Feasibility Study building creativity April 2013 Renovation Feasibility Study Orpheum Theatre Wichita, KS Webb Management Services Inc. 1 Orpheum Theatre Renovation Feasibility Study table of contents 1.#INTRODUCTION#................................................................................................................................................#3! 2.#THE#ORPHEUM#THEATRE#.............................................................................................................................#4! 3.#FACILITY#SUPPLY#.............................................................................................................................................#6! 4.#RENTAL#DEMAND#............................................................................................................................................#9! 5.#AUDIENCE#DEMAND#.....................................................................................................................................#11! 6.#PROJECT#BENEFITS#&#IMPACTS#...............................................................................................................#15! 7.#FORCES#&#TRENDS#........................................................................................................................................#16! 8.CONCLUSIONS/RECOMMENDATIONS#.....................................................................................................#22! 9.#OPERATING#GOALS#.......................................................................................................................................#24! 10.#PROGRAMMING#&#PARTNERS#................................................................................................................#25! 11.#FACILITY#MANAGEMENT#.........................................................................................................................#26! 12.#GOVERNANCE#&#STAFFING#......................................................................................................................#30! 13.#PRODFORMA#OPERATING#BUDGET#.......................................................................................................#33! 14.#ANNUAL#FUNDING#......................................................................................................................................#36! 15.#ECONOMIC#IMPACTS#.................................................................................................................................#37! 16.#NEXT#STEPS#..................................................................................................................................................#41! Appendix A: Study Participants Appendix B: Activity and Financial Summary Appendix C: Facility Information Appendix D: Market Description and Analysis Appendix E: Comparable Markets Appendix F: Customer Survey Appendix G: Comparable Projects Appendix H: Pro-forma Operating Budget Appendix I: Economic Impact Multipliers for Sedgwick County Appendix J: Critical Path Plan Webb Management Services, Inc. April 2013 Page 2 Orpheum Theatre Renovation Feasibility Study 1. introduction Webb Management Services, Inc. is a management consulting practice for the development and operation of performing arts facilities. We work for government, schools, developers and arts organizations on facility feasibility, business planning and strategic planning. The practice was founded in 1997 and we just started our 298th assignment. This is our first assignment in Kansas, but we have worked on a number of renovation studies in communities like Wichita that will inform our work. The situation, as we understand it, is that the organization running the Orpheum Theater wishes to pursue the completion of the theater’s renovation. To that end, they have engaged architects and planners to develop a concept and budget for the fully realized vision of what the Orpheum might become. This includes substantial work in public space, the auditorium, the stage, and significant expansion of backstage areas. And the early budget for this work suggests a capital campaign of up to $50 million (including a large endowment). Before proceeding any further, the leadership team wishes to confirm the validity of the renovation in terms of market issues and the potential role and impact of the project as a community development effort. In addition, there is the need to develop a preliminary business plan for renovated facilities, considering how they might be programmed, operated and sustained. In order to complete our work, we have completed a comprehensive set of interviews with internal and external stakeholders (List of interviewees attached as Appendix A), collected market, activity and financial data, toured facilities and researched comparable projects. Thanks to all of those who participated in the effort, especially Orpheum staff for their help with logistics and our extensive data collection effort. Webb Management Services, Inc. April 2013 Page 3 Orpheum Theatre Renovation Feasibility Study 2. the orpheum theatre The Orpheum Theatre opened in 1922 as a vaudeville house and then converted into a movie palace seven years later. It is architecturally significant having been designed by John Eberson as his first atmospheric theater. The mission of the Orpheum is “to serve our community by providing performing arts and educational opportunities in a nationally recognized historic venue.” After many years of operation, the theater closed and was deteriorating rapidly before a group of community leaders stepped in to save the building. The theater re-opened in 2000 and was gradually improved, with $4.5 million raised and spent on the marquis, restrooms, concessions area, lobby, dressing rooms, fire escapes, wiring and the stage roof. The theater is now quite functional for a range of events, mostly music and film. There are significant physical limitations to the space, though. Patrons complain about uncomfortable seating, lobbies are no sufficient for effective food service, and the room itself is a bit run down. More significant is the small size of the stage and limited backstage accommodations. An ambitious renovation and upgrade plan has been proposed with the help of Holzman Moss Bottino Architects. This would upgrade the auditorium, add new public spaces and a second smaller performance space, and expand backstage accommodations. The renovation plan does not significantly expand the stage size. Over the course of our interviews, it became clear that many people in Wichita value the Orpheum Theatre and are committed to the idea that it should be saved and improved for the good of the community. But we also heard some frustration that the effort to complete the renovation has already gone on for so long, and there is some skepticism that the requests for financial support will ever end. In addition, most of the complaints about the theater were about very basic things – like uncomfortable seats. Appendix B includes a spreadsheet that summarizes activity in the Orpheum over the past three years. Here is a quick summary. The most important fact is that the theater has been fairly busy over these three years with an activity presenting program and some rentals. The focus of the presenting has been on commercial music (pop, country, jazz), then film, some variety acts and then a few nights for more traditional cultural programming. There are additional private rentals, but the number has dropped off a lot since 2010. Webb Management Services, Inc. April 2013 Page 4 Orpheum Theatre Renovation Feasibility Study The average income per attender is based on a net number (box office proceeds less direct costs), and shows the extreme variability of these various programs over time. It is notable that the best margins are now for private events, and the worst are for films. What is deceptive there is that those margins do not account for food and beverage income. Appendix B also includes a summary of budgets for the past three years. Here again is a brief summary. We are showing actuals for 2010 through 2012. With the help of staff, we have isolated the operating budget from activities related to the capital campaign for 2012 and 2011. This allows us to show how the basic operation is performing. The chart shows that while earned and contributed income have both been growing, expense growth (particularly for personnel) has been faster. Part of that payroll increase is due to the fact that the Orpheum now has its first paid Executive Director and Development Director. Webb Management Services, Inc. April 2013 Page 5 Orpheum Theatre Renovation Feasibility Study 3. facility supply There are a number of larger performing arts and entertainment facilities in Wichita that are relevant to the Orpheum Theatre and the choices we face there. Appendix C is a summary of all facilities in the regional market. Facility Map: The first page simply maps the location of facilities, showing the primarily downtown locations of key facilities. Facility Features: The next chart shows our list of facilities in the region, organized by seating capacity. The chart suggests that the Orpheum has more functionality that most of the smaller facilities, but less than the larger ones. It is notable how many facilities can show films, serve alcohol and change their seating configuration. Facility Programming: The second chart shows how all of these facilities come to life. What is striking here is how many of these facilities are programmed with music and other pop events, plus the fact that so many of them
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