The Math Of Shutdown

Last week, the Canadian musical theatre scene suffered a huge loss when COME FROM AWAY suddenly ended its run at the Royal Alexandra Theatre; only 7 days after its long-awaited reopening. Each piece of news about canceled shows breaks my heart, but there was something particularly devastating about this juggernaut of a homegrown musical having to shut down permanently in its home country, while still continuing its runs around the world.

The cancellation has sparked an important dialogue around how governments support the arts. While the U.S. federal government gave both the touring production and the Broadway production of COME FROM AWAY up to $10 million each to cover pandemic-related disruptions, no such support was available in Canada for commercial productions. So as Mirvish suddenly had to reduce capacity by 50% on December 18 or cancel shows due to positive COVID cases on December 23, there was no support to soften the blow. Then, even if they had pushed through these challenges, they would have received an out-of-the-blue closure effective January 5 when the Ontario government shuttered all theatres without any compensation above and beyond what they would have received as an organization had they never attempted the show in the first place.

In my view, Canada has done a remarkable job of keeping theatre companies from shutting down, but a weak job of getting them open. There is no doubt that arts organizations are important to our government. But is art?

To help explain this paradox, let me share some rough numbers from The Musical Stage Company. I am certain that these figures and models are different for every organization, but perhaps this one example will shed some light on the financial complexity of this moment:

By the end of our 2021-2022 fiscal year (July 1, 2021, to June 30, 2022), I believe we will receive $413,000 from the federal and provincial governments in emergency COVID support for this year. This will consist of:

• $300,000 towards employee costs from the Canada Emergency Wage Subsidy (which – for us – is now the Tourism and Hospitality Recovery Program).

• $13,000 from the Canada Council (those of us lucky enough to be on operating funding will receive a 20% bonus to our operating grant this year).

• $100,000 from the Reconnect Festival through the Government of Ontario (which isn’t exactly a COVID specific program, but the fund was greatly enhanced due to COVID so I’m going to count it as emergency government support for this example).

That sounds amazing, right? An extra $413,000 for a company that usually has a $2.5M operating budget covers 16% of our costs. We should be in great shape!

But before we talk art, the costs of simply keeping doors open have dramatically changed:

• Staffing costs have risen. Unfortunately in COVID times, every task takes about 2-3 times longer than it did before, with significant new complexity. Just to get to the point that we could produce in COVID, our team had to expand. Each time we have produced something in the last 18 months (which – thankfully – has been relatively frequent), we have needed more people than before to navigate the many possible contingency and operating plans we have to hold at the same time. New people to create, implement and monitor COVID protocols. New people to build relationships with donors and audiences who aren’t “out and about” with natural points of connection like they used to be. New people to navigate becoming an online theatre capable of filming and distributing content and workshopping musicals online. We have had to hire 4 additional people compared to pre-COVID, without whom, we could not produce any of the work we have done.

• Our budget this year has over $100,000 in COVID costs. Safety officers in rehearsal rooms, PPE, extra time in every process in case of illness, etc. These overhead costs to create the conditions for art to be made add up quickly.

• Each time we produce, we must lower our revenue projections significantly, even before taking shutdowns into account. For example, our UNCOVERED concert – in the pre-COVID days – used to cover 100% of its costs from ticket sales. This year, the combined in-person (at 30% capacity) and digital (at $30/ticket) production cost $238,000 to produce and brought in $84,000 in total ticket sale revenue across the in-person and digital run (and I think that the sales for both runs would be considered a big success in this current climate). This means finding an extra $150,000 to produce this one production prior to any considerations of extra losses due to seating restrictions, illness or cancellations.

So… as you can see… that $413,000 of bonus COVID money is long gone just to arrive at the point where art can start to be made. And that means, there is no contingency if extraordinary circumstances beyond your control arise (which have – unfortunately – been happening regularly).

What do you do if the government shuts down 50% of your seats? What happens if they shut you down completely for an indefinite period of time? What happens if you lose a week of performances due to illness? There is no safety net for that risk. No government programs. No insurance policies (they used to cover this, but that coverage disappeared after the first round of pandemic cancellations).

On a large scale production like CAROLINE, OR CHANGE we incurred $500,000 in non-recoupable costs before the first audience member showed up. Had we spent that money and then been shut down, that loss would have been enough to immediately bankrupt the company. How do you take that sort of risk in a climate where the rules change on you daily?

And yet we are taking that risk. And our colleagues are taking that risk. People in this industry care so much about the theatre that they are trying to do anything they can – greenlighting large indoor productions when the conditions look favourable, producing shows outdoors to minimize health risk (while adding weather risk), creating digital productions – that barely drive any revenue. All because we love the theatre. And because we believe it is essential. And because we know that without our artists we don’t have a vibrant society.

Keeping arts organizations alive (through the same kind of funding that other hard-hit sectors are receiving) is amazing. I am so grateful to our governments for taking care of our institutions with wage subsidies, rent subsidies, and other one-time boosts that cover the overhead costs in a difficult time.

But keeping art alive is not the same as keeping arts organizations alive. A different set of programs would be needed to help organizations and individuals resume performance before things are 100% stable (which may be a very long time), knowing that if there are delays or bumps along the way, you can pivot, pause or adjust with some safety net.

What might this look like?

• Some colleagues have wisely suggested that being able to include artist fees as part of the federal wage subsidy would do the trick. (Because artists are independent contractors, arts organizations cannot get support for their fees in the way they can for their employees.) That way, if an arts organization experienced a revenue loss in a period, they could claim up to 75% of the artist fees, the same way a hotel or restaurant, or amusement park could claim up to 75% of the fees of all of their employees needed to operate.

• Programs like the $10M per production “Shuttered Venue Operators Grant” in the United States offers contingency funding if you reopen, recognizing that there will be unexpected costs to take that enormous risk.

• Perhaps we need to think even more outside the box. For example, given how much artists could be doing for society during these lockdowns (street murals, online programming for kids stuck in Zoom school, outdoor concerts for seniors, etc.), could there be some sort of program where 100% of costs are covered during a government-mandated hiatus as long as the company and artists use the hiatus time to provide safe, publically accessible creative experiences until reopening can occur? Could you imagine if somehow the entire cast of COME FROM AWAY could now be visiting Zoom schools across the country to tell the story of Gander on 9/11, until the time that they could reopen at 100% capacity?

Theatre in Canada will undoubtedly survive and thrive. But I hope somehow, after this second round of delays and closures – that our leaders will recognize that we are missing a great opportunity to mobilize a precious Canadian resource; our creative capital. This is the time to think outside the box and imagine ways to make it possible for artists and the public to connect each time it is safe to do so. We need inspiration in our lives now more than ever. And I know a very remarkable 1% of the Canadian labour force who specialize in seeing possibilities where others do not and creating remarkable moments of hope and joy. Let’s get them back to work.

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Photo by Felix Mooneeram, courtesy of Unsplash