One of the more fundamental differences between the commercial and subsidised theatre sectors concerns their respective attitudes towards income generation.
As Robert Cogo-Fawcett points out in his valuable report on the relationships between subsidised and commercial theatre (p3), theatre investment in the commercial sector is “an enormously risky activity… where the result of the endeavour produces few tangible assets.” It is hardly surprising, then, that those willing to take such financial risks are keen on good potential returns. The higher the ticket prices that can be commanded, the happier they are going to be – and who can blame them. Clearly theatres operating in the subsidised sector do not face the same financial imperative to make money, but neither do they enjoy the luxury of such simple financial goals. Theirs is the unenviable task of fulfilling the access criteria of their funders, whilst generating sufficient revenues to make up the short-fall between the value of their grants and the costs of running their businesses. Under the circumstances then, it is perhaps surprising that the concept of yield management advocated by Tim Baker (p5) has to date received so little attention. Whilst most arts organisations will have toyed with a range of concessions and pondered on the merits of stand-by seats and group booking discounts, it would be interesting to know just how many have conducted any serious analysis of the potential financial value of their seats. Those with the requisite skills to conduct such analysis are, sadly, few and far between, and their skills are probably under-rated by most employers in the arts. But managers are missing a trick. If CBSO can make an extra £80,000 a year by changing its price bands, then there’s no reason to suspect that others can’t do much the same. It may require a rather hefty initial investment, but then the potential returns must surely be worth the risk. That’s an equation that commercial theatres understand only too well.
Published: 06-10-2003