Analyzing Financials

So it’s budgeting time at the theatre and as Managing Director, I get to put together the budgets for the next season. Now, of course, my budgets aren’t set in stone the second I turn them in (if only….) and they often take a couple of months of give and take from various board of directors type people, but ultimately after this process we have a budget.

Sounds easy, right?

I Laugh at you.

There is nothing about this process that’s easy, but it’s so necessary, you have to get past the crap going into it and suck it up and do it. The budget is what your theatre SHOULD live and die by for the upcoming season. How are you going to know if your spending too much money? How do your producers know what their directors can spend? This is why it’s so vital to DO a budget.

I know, I know, we’re theatre people…we don’t do …..MATH. Guess what, open up Excel and suck it up. This is the single most important thing you can do to have a successful season. Here’s a couple of things I do when it comes to budgets

1. You can’t budget if you don’t know what your season is. Get on your Artistic Director and get them to pick your season. The earlier, the better as it gives you a lot of time to figure out what you may or may not need in terms of production costs. You can’t even get the first numbers down until you know what plays you are doing.

2. Do NOT ask directors what they need for cash Any director worth his salt is going to be thinking big and they will ask for big numbers. Your job is to take a look at the show and with your Artistic Director, determine what the needs of the show are and then you give the director and producer their budget. They don’t tell you, you tell them.

3. Make sure you have historical information You can’t just walk into each season and budget from scratch. How do you know what your trends are if you don’t have historical information? Run at least your P&L from the last season and if you can, the last two. Look at a show by show comparison. What shows did well, what didn’t…was it because they were a comedy, Drama, musical….what time of year was it? Do you know you have to work harder because people don’t come see your summer shows?

4.Do your revenue first Too many people think they have to get their expenses done first and then figure out what revenue they need to cover those expenses. Figure out your revenue first, then do your expenses. If you realistically budget your revenue based on historical information, then you’ll know what you can spend to not be in the red at the end of the season. If you aren’t hitting your revenue targets, you can adjust your expenses accordingly.

5. Use metrics that matter As you are looking at your numbers, there are elements that you need to look at to determine how you are doing financially. Too many theaters don’t look at what matters. For Example, if you have been budgeting using a metric like Paid % House (How many paid seats you have), you are putting yourself at a disadvantage. Or counting Comps as an expense. That too is wrong (Comps are 0 income revenue items and, in a sense, represent opportunity costs).

My advice is to use these metrics: Net Income (Revenue – Expenses), % Occupied (Total occupancy including comps), Average Ticket Price (including comps!), RevPAS (revenue per available seat; take your revenue and divide it by the total number of seats. This number will give you a good historic indication of where you have been. If this number is growing, you are making more money).

6. Do a budget for each month, the year, and each show A Profit and Loss Statement shows how much revenue and expenses you had for a certain period of time. If you subtract one from the other it shows your Net Income. A P&L is usually done for each month as the months are over. As you budget, you do the same exercise for each month….but you should also do one for each show. This way you know what each show should bring in to pay for itself and that revenue can go into the total monthly P&L. All of that feeds into your fiscal year P&L.

My way is not the only way to do budgeting, but it is the way that works for me. After you get your yearly budget done, you’ll be better equipped to have a financially successful season. I know that we are not usually math oriented folk, but the better your budgeting is, the better chance your have to survive to your next season.

The Perfect Show

It feels like it has been forever since I updated this site and with good reason. First, I was in Las Vegas at the Catersource/Event Solutions conference at the Las Vegas Hilton and then I had tech week for A Midsummer Night’s Dream. Needless to say, it was a exhausting 2 weeks which I am only now recovering from.

Midsummer has gone exceptionally well and in many cases better than exceptionally well. It had a better opening weekend than any show over the last two seasons. Normally, I would be doing jumping jacks and cheering, but I’m actually not very surprised. See, I have realized something very interesting about this show

The Universe has been working for the last 20 years to get this show in place.

No, I’m not crazy. Yes, I realize I sound like a New Age crazy person, but just go with me for a second……

So, orginally I was to direct Accomplice by Rupert Holmes which was to open on March 6 of this year. We had everything in place (except actors) but it just didn’t feel right. Our theater needed a hit and something low cost and Accomplice was probably not going to be that (especially not with the BEAST of a set that it required). My wife came up with a great idea to do A Midsummer Night’s Dream and I approached my Artistic Director with it….and she said yes. So, 100 days ago, we completey changed the show.

That required a whole new list of designers, adding a dramaturg, figuring out how to fit 18 actors into our little space (we eventually dropped it down to 15) and a whole other slew of problems which, with some creativity, we solved. We cast the show, it opened to a great audience, it was a hit….and cheap to do.

But looking at all the crazy things that happened…I can’t help feel that the Universe set this show into motion YEARS ago.

Have you ever had a show like that? I mean all shows have some feeling of comraderie attached to them, but it’s usually a, “Hey this is pretty cool! I’m sure glad I got to work with you!” kind of feeling. Not so here. Everything fell into place and I often wonder if I’ll ever have a show like this again.

I think we all work to ward having that feeling, where everyone gets along and everyone looks forward to going to rehearsal. Where you almost don’t want to open because that means the end of play time with the director and the actors. Where people you cast have random connections to each other that you didn’t even know was possible.

For example:

- I asked my wife to co-costume design and help me cast. I asked a friend of mine to do the set design. The set designer was in a show at his college. He told a fellow cast member about the auditions and that gentlemen came to read for the part of Lysander. The guy who came to read Lysander went to high school with my wife and they hadn’t seen each other in years.

- My producer found my dramaturg who was in Romeo and Juliet with me year prior. My producer had no knowledge of that…and my dramaturg and I both forgot the other one was in that show until midway through auditions

- I was in Romeo and Juliet with another person who founded a Shakespeare only troupe with the gentleman I cast as Oberon. Had no idea they knew each other

- The gentleman I cast as Oberon works in the same department I used to work in at a local Casino….we know the same people but never worked together

- The lovely lady I cast as Titania went to the same church in Chula Vista I went to as a kid….never met each other.

-The guy I cast as Lysander (the one who knew my wife) has a best friend who was my wife’s high school boyfriend….is now “hanging out” with girl who plays Titania

- My dramaturg brought me my awesome Assistant Director, who also randomly is an acquaintance of my set designer….and I hadn’t met her until auditions

- 2 of my actors started dating (not unusual, but still pretty cool)

I’m sure there are more, but the amazing coincidence are just astounding. Which makes me realize the power that theatre has. Everyone got along, everyone is friends with everyone else. We hang out outside of rehearsal, for fun. The creativity was astounding….every element just perfectly fit and got what we were doing. I have never worked in any other medium where that has happened.

Theatre truly is more than the sum of its parts and this show proves it. This is why we do it and I know I will spend the rest of my life trying to find another show that works like this one does.

A New Season

February is always a fun time for the theatre I work for. February is the time of year where we select our next season slate. Our season runs 6 mainstage shows from July through June which means right about 1st Quarter of any given year, we need to sit down an decide what our upcoming season will be. With 2 shows left in the existing season, we have an opportunity to market our next season to our existing patrons.

Going into season selection is always an interesting thing. In the past, before I accepted the role of Managing Director, I was always excited about what was going to be picked. I was a little younger then, but there was always an excitement about what shows we were going to do. I remember one year the we picked both “Cabaret” and “The Graduate” in the same season was very exciting from an artistic point of view. It was just a good season and as an director and artist I was very excited about the shows we were going to put on

Fast forward a couple of years and I am now our Managing Director. My focus has changed greatly from where it was before. While there still is a focus on artistic merit, it has also moved into something I never thought I would be looking at….the financial aspect of our season.

The process goes as this. My Artistic Director takes submissions from local directors who are passionate about directing the show they are submitting. From those submissions, she puts together her season of 6 shows (plus some season extras). She presents it to the board and we vote on the slate. She has to figure out what 6 shows, with what directors, in what order, will fit on our stage. Coming from an artistic point of view, there usually is a through line where we try to ask, artistically, about this upcoming season. What is the through line? What are the directors that we have going to bring this season? Who are the best directors for these shows? What kind of actors can we expect to audition? These are all questions that the Artistic Director asks herself.

I don’t really care about any of that.

Ok, I do. As a director who wants to direct a show a season, I work very closely with my Artistic Director on my submissions and how they fit into the artistic through-line for the season. However, as the Managing Director, my main questions are: Are these shows going to bring us money? Are they situated in such a way that will bring us money? What are the costs associated with teh production of these plays?

And THAT’S what you have to think about when going into a season from a BUSINESS point of view. Artistic Merit is extremely important, but, as a theatre teacher I once had said to me, for every avant garde show you do, you have to do “Oklahoma.” And in this economy….you have to do “Oklahoma” twice. You need name shows to bring in your $$$$$$$.

So, what are my criteria for looking at shows my Artistic Director picks:

1. Name shows – As an audience member, I want to see name shows. I want to see “Barefoot in the Park.” I want to see “Romeo and Juliet.” I want to see a “Cabaret” or a “Graduate.” These are name shows. Name shows people see and recognize. It doesn’t matter what marketing you use, people see these titles and remember them. They will say, “God yes, I want to go see ‘The Goodbye Girl’, cause I really like that song.”

2. Director’s concept – Not in regards to artistic merit….but in regards to “How much is this going to cost me?” It’s great if I want to do Chicago, but if the director wants to do this giant set with expensive costumes….it’s not going to help the bottom line. We can’t do that type of show. I LOVE seeing a show which would have possibly cost me a bundle, pared down because the director thinks they can get the point across very minimally.

3. Production through-line – When picking a season, I need to look at what type of production elements there are in the various shows. For example, did my Artistic Director pick shows that work together artistically that all have living room sets? All living room sets mean minimal build time and minimal lumber costs because we are just moving around doors and doing set dressing. Lumber and paint is a HUGE cost for me. Also, Actors get on a finished set earlier which helps tremendously with their blocking. And then, because I’ve saved all these costs, I can then have one HUGE tent-pole show in a season.

4. Royalties – Royalties are what we have to pay in order to put a show on. If my artistic director wants to put on a musical, that’s going to have HUGE Royalties associated with it and I am going to want to know what other royalties I’ll have to pay for each of the remaining shows. Remember, royalties occur before we start sewing costumes, hanging lights, or casting actors. They cause every show to start at a net loss. ANd it’s not just musicals which cost a lot. If “Barefoot in the Park” is submitted, that play is going to cost me about $50 more per performance on average (Neil Simon) than other shows. It’s almost the cost of a musical! I have to ask myself, is this financially worth it? Am I going to get the same or better return on this show than others with lower royalty costs? Same or better than a musical? And, should you find a royalty-show that doesn’t have high audience attendance and low ticket sales, your profit percentage on that show will be closer (if not better still) than other shows that season, simply because there are no up-front royalty costs.

5. Ticket Prices Our theatre has several different discounts for various conditions of who you are: Student, Senior, Military, Groups over 10, Groups over 20…..and on and on and on. When picking a show, I need to look at what that audience for that show is. You do “Romeo and Juliet,” you’ll probably get a lot of high school kids (as long as you market to high school kids). Student prices are obviously lower…meaning I’m going to have a lower RevPAS (Revenue per available seat), lower average ticket price, and lower box office return. However, I may also get a higher occupancy which will cover the lower revenue. I nned to look at each show and kind of figure out what my revenue rectangle for each show we have is. If I think we can sell the show to it’s intended audience and get the profit % we need…I’m happy. It’s great if you want to do “Closer” and try to get those full price tickets, but if you offend your lower ticket cost people and don’t get as full houses you want at the higher ticket price, you may not make the revenue you need.

6 Cast Size – I alway look at how many people are in any cast. The more people in a cast, the more people who are instantly connected with that show. A show like “Three Days of Rain” has three cast members. Those 3 people only know a fininte number of people and it’s way less than something like “To Kill A Mockingbird,” which has a cast of 17. Look at the math….if each actor brings 8 people to see the show, I get 24 paid seats in “Three Days of Rain” and 51 out of “Mockingbird.” For a community theatre, the number of paid seats is crucial. Stack your season with too many small cast shows and you run the risk of losing paid seats which would have been there with the large cast show

So, as you can see, there is WAY more that goes into picking a season than what shows would be fun to put on or what shows have artistic merit. Those things are VERY important as well, but you have to keep a head for your business or you won’t have a theatre to perform those shows in.

Andrew Rogers…Photographing Genius

I just wanted to give a shout out to a photographer I found to do my production shots. If you are in the San Diego Area and are looking for a photographer, I highly recommend him. His name is Andrew Rogers and he can be reached at drewrog@gmail.com (The website is a work in progress…I asked!).

Below are some shots he took for A Midsummer Night’s Dream at OnStage Playhouse in Chula Vista. I personally think they are amazing.

He’s also recently done some stuff for Coronado Playhouse Definately check out his stuff here.

So if you need a good photographer for your show, drop him an e-mail! You won’t be sorry

Theatre as a Special Event

I just got back from a day at  The Special Event convention at the San Diego Convention Center.  Event Planners are an interesting bunch of people to watch in their own element.  They are creative, passionate, and have a great sense of humor about what they do.  They pride themselves on telling a “story” through their events  and do their best to get different technical elements (lights, sound, entertainers) to help them tell that story.  They are great with the show part of their job and sometimes not so good with the business part of their job…..remind you of anyone.

It dawned on me that most of us theater folk sort of fall into the same category.  If that’s the case, then isn’t really any show you do a “Special Event”, albeit one that goes for mulitple weeks.  This is a huge shift in thinking for what we do.

From my experience, people tend to view a play like they would a movie down at their local 20plex.  When is it? What time is it playing?  They go like they are going to sit for two hours and watch a “live” motion picture.  But if a play isn’t a movie, but a Special Event, just think of what that does to they way you approach it.

People are excited to go to events.  They like to feel like they are one of the few who got to experience that particular set of circumstances. It give thema feeling of importance and people like to feel important.  Your audience members should feel like they are a part of this event and as such, will be more apt to come again.

This new mind set also works wonders for your actors.  No matter what any Event Planner says to the contrary, people are excited to be working for events.  Yes, they are hard.  Yes, they can be a bear to get through.  Ultimately, however, there is a feeling of comeraderie from the staff because they worked as a team to get the event off without a hitch.  What is more “theatre” that that?  If your actors are no longer just “doing” a play, then the energy that they put into the show would increase 10-fold.

And it’s not just each show that’s a special event, but each performance within that show.  Each night, there is a new crowd, coming for a new event.  And we get to put on that event and tell a story using performers, sets, costumes, sound, and lighting.  Our two industries are closer than we think.

Now if we can only get Event Planners to get that Special Events are Theatre….one thing at a time.