• Share on Facebook
  • Share on Facebook
  • Share on Linkedin
  • Share by email
  • Share on Facebook
  • Share on Facebook
  • Share on Linkedin
  • Share by email

A research study of U.S. performing arts groups finds declining revenues and an uncertain funding climate, as arts managers report the impact of the September 11 terrorist attacks on their organisations. Steven Wolff reports.
U.S. non-profit performing arts groups face an uncertain future, according to a study of more than 850 arts organisations conducted by AMS Planning & Research Corp during early October. Arts managers report immediate deterioration in ticket sales compared to last year, sharply lower revenues from corporate sponsorships, and the expectation of mid-term declines in philanthropic and government support.

?We have not heard from our funders yet, but we are preparing for the worst,? said one dance company executive.

Lowering expectations

Results clearly indicate the expectation of an industry-wide contraction in unearned revenues over the next several years, led by decreased corporate support. On average, contributions and sponsorships from corporations account for a total of 5% to 12% of all revenues for different types of non-profit arts organisations, according to arts industry statistics*.

The re-allocation of philanthropic support and government funding to disaster relief may also be expected to negatively impact many non-profit arts groups, at least temporarily.

With contributed income shrinking, arts groups are likely to feel increased pressure on ticket sales and other forms of earned revenues. Almost half of the executives surveyed, however, expect that ticket sales will also decline over the next 12 months.

Shifts in the types and numbers of programs offered may be expected, as well as further financial stress.

While it is too soon to definitively measure the financial impact of recent events, most arts managers expressed concern over the likelihood of decreased revenues. Nearly 60% of respondents indicated that they are adjusting annual budgets downwards by between 5% and 25% and are revisiting programming plans.

For example, one large symphony orchestra reported they are considering budget reductions of $1.5m.

Retrenchment strategies include staff cuts, reductions in programming levels, less risky programming and a renewed emphasis on increasing earned revenues. ?The potential for reduced contributions has caused us to look at less expensive repertoire,? said the manager of a regional opera company.

In spite of these hardships, arts organisations are contributing to the recovery effort and contributing to the healing of the national psyche. Over a third (38%) indicated that they have collected donations at a performance or dedicated a performance or a portion of revenues from a performance to relief efforts.

Losses and cancellations

Over one-third (35%) of the performances scheduled between September 10 and 23 were cancelled (422 out of 1,201 performances offered by 278 organisations), resulting in refunded ticket sales, lost revenues and unrecovered expenses. As expected, cancelled performances were greatest in New York City, where 71% of performances scheduled for the week of September 10-16 were cancelled, and 54% of performances scheduled for September 17-23 were cancelled. The immediate financial loss to the City?s arts groups has yet to be measured, although New York City-based respondents to the survey (64 groups) reported losses of nearly $500,000. Nationally, about 15% of arts organisations reported that annual galas or special events had been cancelled or postponed, representing actual and potential losses of over $5m.


Overall, 21% of arts groups reported a ?substantial decline? (i.e., a 20%-50% dropoff) in attendance at performances held after September 11, while another one third (34%) reported ?some decline? in attendance (i.e., down 1%-20%) during the month after the terrorist attacks (see Fig 1). In New York City, a greater percentage of respondents indicated a ?substantial decline? in attendance (35%).

Reversing a trend

Subsequent ticket sales were negatively affected as well, with a majority of arts managers reporting either ?some decline? (35%) or a ?substantial? decline (23%) in ticket sales as of the date that they completed the survey (between October 2-16). New York respondents reported slightly worse figures for ticket sales.

The majority of survey respondents reported that prior to September 11, both subscription sales and single ticket sales were unchanged or better than the prior season. Since that time, expectations have deteriorated significantly. Over half of all respondents (55%) reported a decline in advance ticket sales compared to last year.

In New York City, 27% indicated that they experienced a ?substantial decline? in advance ticket sales, while 35% experienced ?some decline?. Contrary to the trend, some organisations reported increased attendance and ticket sales since September 11.These organisations were significantly more likely to be orchestras (20% reported a ?substantial increase? in attendance compared to 9% for all others).

Uncertainty delays campaigns

While arts groups may recover from the short-term decline in ticket sales and the abrupt reductions in corporate support, the high level of uncertainty about future funding levels appears to be a major concern among managers of all types of arts organisations. In fact, some respondents report that foundation representatives and individual donors have already notified some arts managers that grant awards and gift amounts will be reduced this year and/or next year.

Reasons for decreased funding include both the reallocation of funding to disaster relief and the declining value of foundation assets ? a trend that started well before September 11. Managers also reported that individual donors have put off decisions about major gifts, that endowment and capital campaigns have been postponed, and that many board members are reluctant to make solicitations that may be perceived to be inappropriate.

Several arts agency managers, whose organisations depend heavily on government funding, say that cities, counties and states are re-directing funds from ?quality of life? programs to ?public safety and preparedness? programs. In New York, City arts funding may be reduced by up to 15% and State Arts Council was already reduced by 10%.

According to respondents, several factors contribute to the uncertain funding climate, including the unknowns of the new war on terrorism, the potential for additional terrorist attacks, and the continuing deterioration of the economy.

Even corporations that are faring well are ?cleaning house? (i.e. paring expenses, laying off staff), according to several arts executives.

Commercial losses

Although commercial Broadway producers were not surveyed as part of this study, acute short-term financial losses were widely reported in the weeks following September 11. Several Broadway productions closed, and other producers quickly re-negotiated union contracts in an effort to reduce expenses.

A concerted effort by the New York theatre industry to get people back into the theatres (including a widely publicised appeal by New York Mayor Giuliani) had a positive impact on ticket sales over the weeks following the terrorist attacks.

According to research commissioned by the League of American Theatres and Producers, approximately 38% of Broadway audiences are tourists, however, and tourism remains at comparatively low levels (as of November 2001). Industry sources suggest that the cumulative effect of refunds, depressed attendance levels and lower advance sales has introduced a new volatility to traditional Broadway economics.

Recasting the future

As arts executives look ahead, it is clear that the economic situation and the tragic events of September 11 are weighing heavily on their decision-making. While 42% of respondents reported that they were engaged in contingency planning prior to September 11 (in light of the economic slowdown), 60% are now revisiting their programming forecasts and budgets. Dance/USA members and Theatre Communications Group members were significantly more likely than other respondents to report that they are revisiting programming and budget forecasts. In New York City, fully 75% of organisations are reconsidering their plans.

Both Dance/USA and OPERA America members were significantly more likely than other respondents to report that they expect a continuing negative financial impact next year.

It may be another six to twelve months before more accurate financial and attendance data can be gathered. But it is clear now that the financial (and artistic) impacts of the deteriorating economy, exacerbated by the terrorist attacks and the ongoing war on terrorism, will be substantial. Many arts managers, especially those representing organisations that are already in a precarious financial situation, anticipate a range of further cost-cutting measures and programming adjustments.


Steven A. Wolff is President of AMS Planning & Research Corp.

t: 001 203 256 1616 e:ams@ams-online.com, w: {ams-online.com}

Footnote

* Figures provided by Theatre Communications Group, Association of Performing Arts Presenters