Theatre Communications Group, the national organization for nonprofit theater, is about to release its latest annual report on the fiscal health of the field, Theatre Facts 2021. (Yes, it’s almost 2023, but this stuff takes time to collect.)
The news is not great.
The report, which compares results over a five-year period, tracks the startling COVID-era jolts the theaters experienced. Average income from single ticket sales, for example, was 93 percent lower in fiscal 2021 than in 2017. And subscription income took an 83 percent dive.
It was a crash. But, says TCG communications director Corinna Schulenburg, there was a financial upside: expenses were down during that period when theaters were shuttered, while government aid kicked in. The result was a frothy blip of budget surpluses.
“Because of federal funding, and because theaters were producing less, they actually had some liquidity,” Schulenburg says. In fact, “what we call their working capital, which essentially is cash flow,” hit a peak in 2021.
It was so good that, according to a “snapshot survey” TCG conducted earlier this year, only 10 percent of reporting nonprofit theaters had a deficit budget in 2021, and over 70 percent reported an operating surplus that year.
Now, Schulenburg says, the challenge is that the federal funding has gone away, and the cash cushion is disappearing. By 2022, according to the same survey, 30 percent of responding theaters were projecting deficit operating budgets, and there’s a huge increase in that cohort on the horizon: 62 percent are projecting budget deficits in 2023.
Meanwhile, audiences have not been fully returning. (Arts Alliance Illinois says, anecdotally, that members are seeing a 30-to-50 percent drop in performing arts audiences.) And Schulenberg notes that board member and individual giving has also declined.
“This was a big surprise for us,” Schulenburg says. “We’ve seen individual giving continue to rise, annually. Theaters have been able to count on that kind of community support.” But from 2020 to 2021, trustee giving declined 26 percent, while individual giving was down 7 percent. “The pandemic is still active, shows are being canceled, and audiences are not totally returning. From our perspective, we know how resilient our field is, but we’re deeply concerned.”
The bright spot in all this, Schulenburg says, is the success of advocacy for federal funding at the height of the pandemic. It was “really remarkable; the investment from the shuttered venues operators grant and especially the PPP, as well as the ERTC [Employee Retention Tax Credit].” Over 97 percent of surveyed theaters received some form of federal relief funding, a level of investment not seen since the Federal Theatre Project during the Great Depression.
Goodman Theatre executive director Roche Schulfer Courtesy Goodman Theatre
Schulenburg mentions a presentation on nonprofit theater economics (“Why Not-for-Profit Theatre?”) that Goodman Theatre executive director Roche Schulfer delivered at a TCG forum in 2017. It was “prescient,” she says.
I went to the source for an update.
“In 1966, two economists, William Baumol and William Bowen, wrote a book [Performing Arts: The Economic Dilemma] illustrating the basic economic challenge of the performing arts, which is that you can’t take advantage of gains in productivity or technology like other sectors of the economy. It takes the same number of musicians the same amount of time to play Beethoven’s symphonies, or actors to do Shakespeare’s plays, as it did when they were written,” Schulfer says. “So, as the cost of labor goes up, unless there’s a significant gain in fundraising, there’s a gap that’s filled by increased ticket prices.”
“Over the last 50 years or so, ticket prices have risen by far more than the cost of living. At the Goodman, for example, our top ticket is around $90 now. If it had followed the cost of living, it would be in the range of $33. We’ve been raising prices to make up for the gap in fundraising.”
“Our mission is to provide new and engaging work, and not to just respond to what the marketplace wants,” he told me. “But consumers will pay more for something they’re familiar with than for something unknown to them.”
Schulfer says this disconnect, amid a shift in institutional funding, means tough times ahead:
“I think there are going to be major performing arts organizations around the country that are going to face real crises in the next 48 months. Groups like Arts Alliance Illinois and TCG are trying to build on what happened during the pandemic, which was an awareness of the importance of the arts to the overall economy. There’s an effort to build on that through the National Endowment for the Arts or other federal programs. We’ll see if that happens.”