Theatre isn’t dying. A business model is.
My early professional upbringing as an arts administrator was in the professional theatre world. Now, I find myself running a multi-disciplinary arts center in a small community, and I can't believe how fortunate I am. This is surprising because I hadn't planned on leaving my dream of directing and producing theatre in LORT (League of Resident Theatres) theatres, but that's how things worked out. As I read article after article about the challenges faced by regional professional theatres, I look at our business model of a multidisciplinary arts center and see a more resilient delivery system for the arts than the professional theatre model I once aspired to work in.
To start, what is happening to the professional regional theatres in large and mid-sized cities? The answer is, a lot, and I believe many are doing a good job of diagnosing it. I encourage you to read the American Theatre article entitled "Theatre in Crisis: What We’re Losing, and What Comes Next." Also, worth a read are Michael Paulson’s recent New York Times article and Peter Marks' piece in the Washington Post.
Subscriptions
The business model, originally built on subscriptions, has been slowly declining for decades as subscription audiences age. COVID was another dramatic blow to this already shrinking revenue model. Companies now have to rely heavily on single ticket sales, which are unreliable, more commercially driven, and drive up marketing costs. Michael Paulson has recently written an article in the New York Times focused specifically on the decline of subscriptions in the regional professional theatre.
The traditional professional theatre producing industry has outgrown demand after a period of growth since the 1950s. The most recent surge, in the 1990s and early 2000s, was propelled by funding for downtown revitalization efforts that rightly used the arts as an economic development tool. Now, many theatres anchored in urban cores are falling victim to national shifts in both where Americans work and where they can afford to live. The remote work movement has shifted a large percentage of the “after work” audience away from downtown desks to suburban home offices. They are not traveling to the urban core where many of these companies are located as often. Affordable housing has also driven people away from the high cost of living in major cities to smaller and more affordable communities throughout the United States. Smaller communities like my own in Virginia benefit from this trend.
Changes in the labor force
The social and political movements of the last three years have put pressure on theatre companies and their hiring and HR practices. Payroll and workforce-related costs have gone up due to workforce empowerment during the "great resignation," but this is happening at a difficult time for LORT theaters as their revenues are declining. Most of these organizations are also unionized, which compounds the calls for workforce change and their associated costs.
Changes in programming
Social and political movements have also influenced what companies were producing over the last three years. Artistic Directors responded to the social and political upheaval of 2020 with productions directly addressing the issues of the time. There are theories about the impact this had on ticket sales. One theory is that these production choices might be turning off a large portion of traditional ticket buyers, even those who agree with the political stances being espoused. Perhaps audiences want a break from the constant social strife presented through social media and 24-hour news cycles. In other words, many audiences (though not all) may seek art as a diversion, not activism. This doesn’t mean there aren't audiences for the work being produced, but building a new audience with this interest within a few years is a major task.
Charitable giving
Charitable giving has been shifting for several years. National, regional, and local funding that helped launch and sustain many of these organizations is increasingly directed towards other initiatives like climate, poverty, and political action. This shift has been gradual, but the now-pressing climate crisis and national political upheaval driven by income inequality are accelerating the flow of charitable dollars away from the arts.
Facility depreciation
Lastly, as these organizations age, so do their buildings. Less attention has been given to this aspect, but I am well-acquainted with it as I oversee two theatres in our venues. Keeping up with facility depreciation requires robust revenue streams that cover not only production and associated costs (which are rising) but also ongoing maintenance, repair, and upkeep. The hard truth is that when constructing a building, the nonprofit sector often adopts an optimistic outlook on revenue generation capacity to secure construction funding. During inevitable turbulent moments like recessions or global pandemics, operating models struggle to cope with the financial strain imposed by these buildings. Notably, many of the theatres closing are in the 20 to 30-year age range, which aligns with the lifecycle of major equipment like HVAC systems and roofs. These facility costs, coupled with rising utility costs, create significant strain on available cash for operating expenses.
Theatre isn’t dying. A business model is.
Despite the attention-grabbing headlines suggesting the potential demise of the American theatre, this is not what's happening. Instead, we might be witnessing a significant change in how professional theatre is produced due to a declining business model. The art of theatre, where live actors perform for a live audience, is not ending. I understand that professionals dedicated to the LORT model might feel like this signifies the possible death of their industry, but the live theatre ecosystem extends beyond the highly visible companies belonging to Theatre Communications Group. The referenced articles provide examples of where professional theatre might be heading. I don't possess clairvoyance about the future, but I can share insights with my former colleagues and friends in the sector.
To begin, I'd like to focus on a quote from the aforementioned American Theatre article. Clive Worsley of the California Shakespeare Festival suggests an approach where they provide infrastructure for smaller organizations producing theatrical work. "The idea is that we become a multidisciplinary performing arts venue," said Worsley. "Cal Shakes will be the resident theatre company at the center of it. Our education programs will continue, and we will make the space available to other performing arts groups to share with their audience, merging our audiences. We will also engage in revenue-positive rental activities." I believe Mr. Worsley is on to something.
A recent opinion piece by Monica Byrne in the Washington Post calls for a changing of the guard and argues that professional theatre, as currently produced, doesn't deserve to continue. While I may not fully agree, the concept of creating space for a new generation of artists who are more diverse and closely connected to new audiences is worth considering. Perhaps we can maintain some traditional institutions while also opening doors for a new generation.
What about a new model? A call for “cultural infrastructure.”
I oversee the Academy Center of the Arts in a community of 80,000 residents (with a greater area population of about 250,000) in Central Virginia. While my art center is not a theatre company, live theatrical events do take place in our venues. Over my eight years with the organization, including a major historic theatre restoration and reopening, I've realized that a significant value we offer our community is our cultural infrastructure. We had the capability to undergo a $30 million dollar renovation and facility expansion, something most smaller cultural organizations in our community couldn't manage. In return, we provide our venues at reduced costs to five resident companies, as well as various "performance partners," such as emerging performing arts organizations and youth-oriented dance studios. We also collaborate with concert promoters. The revenue from rentals and ticketing fees covers space usage costs and enhances our community impact. If we were producing our own theatrical productions at the same volume, we'd be in financial trouble. By not producing our own artistic work, we lower overhead and expenses while still promoting and nurturing the arts.
In addition to rental revenue, we feature national touring acts. This is essential for driving our annual giving and corporate sponsorship programs. While these shows generally break even, they attract charitable donations – a critical aspect since our local government doesn't provide significant financial support annually. These shows also minimize space use by usually loading in and loading out in the same 24 hour period, keeping the spaces widely available for third party use. We also offer education programs, galleries/art sales, and a pottery studio, which together create a diverse set of revenue streams.
Of course, our business model isn't flawless. Many systemic issues within the nonprofit cultural sector also apply to us. Scaling is challenging, and each year requires strenuous efforts to secure the necessary charitable funding to keep the organization on budget and meet cultural demands. However, we're not facing closure, and our impact figures are strong. This is why I feel fortunate. If we can boost our endowment in the next decade, the organization can maintain its existence, something many LORT theatres currently struggle with.
I'm increasingly curious whether our approach in Lynchburg, VA could be adapted to larger markets. Back when I was a young theatre artist in Philadelphia in the early 2000s, I started a theatre company. I was working with talented peers and had ample energy. What I lacked was infrastructure. During my participation in the Lincoln Center Director's Lab in 2002, I found that my fellow early-career colleagues also needed performance space. Conversations often revolved around the costs of performance space in New York City which were often cost prohibitive and the spaces that were available were lacking in modern technology and ammenities. Could a future see established venues that have primarily produced their own productions for decades transition to hosting the work of others? Such a shift could leverage their infrastructure while accommodating a business model in decline, while also paving the way for younger, more eager artists who might serve as a bridge to a new audience.
This doesn't imply that these storied theatre companies should cease producing, but perhaps they could produce less and allocate a significant portion of their calendars, resources, and buildings to smaller theatre organizations ready for the next chapter of the American theatre. This would likely change the role of the artistic director but that might be okay. This was a job that was created to build a season and an artistic identity for a theatre company through its subscription series. Maybe this is a job now dedicated to fostering and supporting new talent. I believe that programming can still be curated through the producing partners that the “cultural infrastructure” company chooses to work with. These theatre complexes can still have an artistic identity but now reinforced through the third parties they select, cultivate, and support.
Maybe just maybe, we have some ideas here in small town America. The Academy Center of the Arts, due to our community size, is a hub for culture. We are here primarily to lift up those in our community producing and creating artistic work. What if these larger theatre companies in bigger markets let go of their traditional role as producer and instead become hubs for a network of smaller, hungrier, and more diverse organizations in their ecosystems? This could refresh the work, cultivate new audiences, and ultimately create a more sustainable business model.