Hult Center for the Performing Arts

Transcription

1 Hult Center for the Performing Arts Strategic Benchmarking Report January 2009 Updated March

2 Table of Contents Background & Methodology page 3 General Overview & Comparisons page 13 Management Structure page 20 Earned Revenue & Community Engagement page 25 Fundraising page 36 Alternate Revenue Streams page 43 Observations & Recommendations page 49 2

3 Hult Center for the Performing Arts Background & Methodology 3

4 Background In June 2008, the City of Eugene retained AMS Planning & Research Corp. to conduct a strategic benchmarking exercise to aid the assessment and planning process for the Hult Center of the Performing Arts. In particular, AMS s assignment was to explore answers to the following questions: How do the operations of the Hult Center compare to the industry practice? Why is the Hult Center different? What variances are due to management decisions, rather than environmental factors? What characterizes a financially sustainable model for a publicly operated performing arts center? 4

5 Background Review and Depth Interview Observations AMS reviewed Hult Center background documents, particularly the Cultural Policy Review conducted by WolfBrown; the Cultural Services Division Business Plan for ; the 2007 Library, Recreation and Cultural Services Annual Report; and the Cultural Services Division Strategic Work Plan. AMS Principal Steven Wolff also conducted a series of depth interviews to understand the Hult Center s goals as well as the evolving arts and culture landscape in Eugene. 5 The Hult Center is the cornerstone of Eugene s cultural community, and therefore has a responsibility to be a leading regional arts organization. The Hult Center has insufficient capital to achieve its desired level of activity and related financial performance. In order to focus the benchmarking, AMS was directed to explore the following key areas: Broad Attendance as a Measure of Success Alternate Sources of Revenue Management Structures

6 Broad Attendance as a Measure of Success There are many measures of success for cultural organizations including intrinsic and instrumental benefits. 1 Based on our review of relevant Hult Center materials, it was clear that attendance would be a key measure of success: In the Library, Recreation and Cultural Services Annual Report, increased participation was mentioned in the first paragraph as the most important indicator of the department s success in The vision described in the Cultural Services Department Strategic Work Plan declared that the arts should be available to all, and the mission statement emphasizes that services should be available to all citizens. The challenge for the Hult Center is to increase attendance and engage all facets of the community. In benchmarking, AMS used the following questions as guides: How do comparable performing arts centers engage the community in the broad sense? What strategies have comparable performing arts centers initiated to increase overall attendance? How do comparable performing arts centers support their resident companies and other renters efforts to increase attendance? 1 The different measures of success for arts organizations are vast and center-specific each organization has to determine the most relevant measures based on its mission and vision. For some examples of the most current thinking on performance measures for cultural organizations, see The Urban Institute and The Center for What Works Candidate Outcome Indicators: Performing Arts Program and Alan S. Brown s Assessing the Intrinsic Impacts of a Live Performance. 6

7 Alternate Sources of Revenue The Hult Center must cultivate additional revenue to support long-term and sustainable operations for a variety of reasons. 1. Since the passage of Measure 47 limiting property tax increases, municipal funding for the Hult Center has come mostly from the Transient Room Tax, not from the City s General Fund. 2. Second, there is pride in the Hult Center s free offerings, and while these events benefit the community, they require subsidy. 3. Third, the Cultural Policy Review and our on-site interviews characterized the financial situation of many of the Hult Center s resident companies as precarious, so it is unrealistic for the Hult Center to expect to recover real costs from them. 4. Finally, the Cultural Policy Review also discussed the competitive environment for private sector funding, with potentially few new funding sources available. 7

8 Alternate Sources of Revenue In terms of strategic benchmarking, the key questions for research were: What kinds of municipal support do comparable performing arts centers receive? How do comparable performing arts centers engage in fundraising? Do comparable performing arts centers have endowments? How large? What were the funding sources for these endowments and what were the cases for support? What alternate sources of revenue have comparable performing arts centers developed? 8

9 Management Structures As the Cultural Policy Review noted, the management structure of the Hult Center has essentially not changed since its opening 25 years ago. Yet, performing arts centers have evolved substantially. Our guiding questions when benchmarking comparables were: How do the missions of comparable performing arts centers tie into the overall cultural policies and objectives of their respective municipalities? What is the management structure of comparable performing arts centers? What are the structural relationships to municipal government? Who programs these centers? What are the relationships between comparable performing arts centers and their resident companies? Are there areas in which they share resources? What other strategic relationships have comparable performing arts centers developed to share resources and achieve common goals? Thus, should the operating structure for the Hult Center, or even its mission, be changed? 9

10 Comparable Organization Selection Criteria AMS worked with City of Eugene staff to develop a list of comparable organizations that could serve as instructive benchmarks. While there are no direct analogs, the criteria for selection were: Located in a Core Based Statistical Area (CBSA 1 ) of similar population size to Eugene s CBSA Performance spaces of comparable size to the 2,500 seat Silva Concert Hall and the 500 seat Soreng Theatre. Located within an urban (as opposed to a suburban) setting. Similar variety and frequency of presented activities. Operated in a similar fashion to the Hult Center. An effort was also made to select organizations in the western part of the country though this was not completely practical. 1 The term "Core Based Statistical Area" (CBSA) is a collective term for both metro and micro areas defined by the U.S. Office of Management and Budget. A metro area contains a core urban area of 50,000 or more population, and a micro area contains an urban core of at least 10,000 (but less than 50,000) population. Each metro or micro area consists of one or more counties and includes the counties containing the core urban area, as well as any adjacent counties that have a high degree of social and economic integration (as measured 10 by commuting to work) with the urban core.

11 Benchmark Facts in Brief Alaska Center for the Performing Arts Alberta Bair Theatre for the Performing Arts Broadway Center for the Performing Arts The Clay Center for Arts and Sciences Fox Cities Performing Arts Center Mesa Arts Center Overture Center for the Arts Walton Arts Center Location Anchorage, Alaska Billings, Montana Tacoma, Washington Charleston, West Virginia Appleton, Wisconsin Mesa, Arizona Madison, Wisconsin Fayetteville, Arkansas City Population 360, , , , , , , ,381 4 venues: Evangeline Atwood Concert Main Concert Hall - 1,416 3 venues: Pantages Theater - 1,169 2 venues: Maier Foundation 2 venues: Thrivent Financial Hall - 4 venues: Tom and Janet Ikeda 4 venues: Overture Hall - 2,251 seats Hall - 2,000 seats seats Performance Hall - 1,883 seats 1,200 seats Theater - 1,588 seats Capitol Theatre - 1,000 Discovery Theatre Rialto Theater seats Walker Black Box Theater - Kimberly-Clark Theatre - Virginia G Piper Repertory seats seats Theater on the Square seats Flexible seating Theater seats The Playhouse seats Sydney Lawrence Theatre seats seats The Pantanges Theatre lobby Facility also has a science museum, art gallery, The Founders Room, the lobby, and "Entrance 21," a private Nesbitt/Elliott Playhouse - Promenade Hall - Flexible seating Facilities Elvera Voth Hall seats and the rehearsal hall are planetarium, café and gift shop lounge, are all available for Rotunda Stage seats Also has three lobbies, a available for rent. There are rent. Also has a number of spaces patrons' lounge, and a "sky bridge" which is available for rent also scene and costume shops onsite. available for rental, including the lobby, a lounge, two studios, and a terrace. Operating Structure Facility is owned by the Municipality of Anchorage and managed by a 501(c)3 nonprofit organization Owned by the City of Billings and managed by a 501(c)3 organization City owns facilities and an independent 501(c)3 manages them. 200 seats Farnsworth Studio Theater (Black Box) - Flexible seating Also has 5 art galleries with 5,500 of exhibition space, 14 visual and performing arts studios, and a "shadow walk" consisting of outdoor gardens, sunken courtyards, and informal performance spaces. 501(c)3 organization 501(c)3 organization Owned and managed by the City of Mesa. 3 venues: Baum Walker Hall - 1,200 seats Studio Theatre seats Starr Theatre seats Also has a dance studio / multipurpose room and an outdoor amphitheatre available for rent. Owned by the Overture Facility is jointly owned by the Development Corporation, a City of Fayetteville and the 501(c)3 organization, and University of Arkansas. A managed by the Madison 501(c)3 organization manages Cultural Arts District, a the operations. government entity governed by city, county and state appointees. Operating Budget $2.2 million $1.6 million $3.1 million $7.9 million $15.8 million $4.0 million $11.5 million $7.2 million Presents a variety of offerings Presents a Broadway series, Presents a variety of offerings Presents Broadway, cabaret, Presents Broadway, cabaret, Ballet Etudes including a Broadway series, classical and popular music, Northwest Sifonettia classical music, dance, theater classical music, dance, theater East Valley Children's Theatre classical music, dance, family programming, film, opera, and theater. Alaska Dance Theatre Alaska Junior Theatre Alaska Theatre of Youth dance, opera, theater, and variety programming. Tacoma City Ballet Tacoma Concert Band Tacoma Opera Tacoma Philharmonic Tacoma School of the Arts Tacoma Symphony Orchestra and variety programs. West Virginia Symphony Orchestra is the Center's only resident company. and variety programs. Fox Valley Symphony Laurence University Mesa Encore Theatre Metropolitan Youth Symphony Sonoran Desert Chorale Southwest Shakespeare Company Symphony of the Southwest Programming & Resident Companies Anchorage Concert Association Tacoma Youth Symphony The Christmas Revels Xico, Inc. Alaska Concert Chorus Anchorage Opera Anchorage Symphony Orchestra Whistling Sawn Productions Bach Dancing & Dynamite Society Children's Theater of Madison Kanopy Dance Company Li Chiao-Ping Dance Madison Ballet Madison Museum of Contemporary Art Madison Opera Madison Repertory Theatre Madison Symphony Orchestra Wisconsin Academy's James Watrous Gallery Wisconsin Chamber Orchestra Presents a Broadway series, classical music, dance, jazz, family, and variety programming. No resident companies, but leases space to a professional theatre company and a visual arts educational organization at reduced rates. 11

12 Methodology AMS used publicly available information to conduct many analyses, including Form 990s and municipal budgets. AMS invited all benchmarks to participate in an interview to discuss mission, management structures and community engagement. Five of these organizations participated. Benchmarks self-defined the term resident company. A resident company is typically a producing or presenting organization that has a direct relationship with its performing arts center. The specifics of this relationship vary and could include: first choice of calendar dates; subsidized rental rates; and/or shared services such as box office services, marketing support, or administrative space. In addition to publically available data, AMS invited all benchmarks to provide detailed financial information. Four of eight invited performing arts centers did not wish to participate fully, while one performing arts center provided income information only. The three larger performing arts centers did participate fully, and provided supplementary financial information that provides insight on how the Hult Center might expand its operations. These performing arts centers are referred to as aspirational comps in this report as their operations provide important goal posts on how the Hult Center could generate more revenue or expand its operations, if desired. Aspirational does not refer to artistic or programming goals. For some analyses, AMS used data from its PAC Stats project, which collects financial data from 30 major performing arts centers largely in North America. Looking at this data set helps provide some insight on best practices within the field. 12

13 Hult Center for the Performing Arts General Overview and Comparisons 13

14 In the chart below, the earned and contributed revenues of all comparable organizations are displayed in terms of both dollars and as a percentage of total revenues. The Hult Center s overall revenue is below the average for its benchmarks, suggesting that another $2 million in gross revenue, depending on marketing investment, is a worthy goal post to consider in its planning efforts. Interestingly, the Hult Center is not far behind the median and average dollar amounts for contributed revenue, suggesting that another $450,000 - $600,000 may be reasonable, depending on the Hult s investment in fundraising. Earned and Contributed Revenue Comparison Earned Revenue Contributed Revenue Total in dollars as a % in dollars as a % Revenue Alaska Center for the Performing Arts $383,405 46% $443,081 54% $826,486 Alberta Bair Theatre for the Performing Arts $1,176,166 77% $341,888 23% $1,518,054 Broadway Center for the Performing Arts $1,102,498 35% $2,005,434 65% $3,107,932 Mesa Arts Center $3,804,130 93% $265,000 7% $4,069,130 Hult Center for the Performing Arts $2,726,277 62% $1,668,940 38% $4,395,217 Clay Center for the Arts and Sciences $1,846,829 28% $4,712,749 72% $6,559,578 Walton Arts Center $4,202,224 58% $3,018,604 42% $7,220,828 Overture Center for the Arts $9,315,919 79% $2,404,357 21% $11,720,276 Fox Cities Center for the Performing Arts $13,898,781 86% $2,315,729 14% $16,214,510 Average $4,272,914 63% $1,908,420 37% $6,181,335 Median $2,726,277 62% $2,005,434 38% $4,395,217 14

15 $18,000,000 $16,000,000 $14,000,000 $12,000,000 Earned and Contributed Revenue Comparison Earned Revenue Contributed Revenue Most benchmarks rely more strongly on earned revenue rather than contributed revenue. $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 Alaska Center Alberta Bair Theatre Broadw ay Center Mesa Arts Center Hult Center Clay Center Walton Arts Center Ov erture Center Fox Cities Center Those Centers with the highest contributed revenue also have the largest institutional investment in fundraising. 15

16 Expense Comparisons Expense in $ Expense Ratios Program Services General & Administration Fundraising Internal Services Total Expenses Program Services General & Administration Fundraising Internal Services Alaska Center for the Performing Arts $1,695,512 $519,040 $17,093 $0 $2,231, Alberta Bair Theatre for the Performing Arts $1,414,619 $84,249 $115,015 $0 $1,613, Broadway Center for the Performing Arts $1,484,802 $348,572 $432,278 $0 $2,265, Clay Center for the Arts and Sciences $6,932,710 $490,601 $428,786 $0 $7,852, Fox Cities Center for the Performing Arts $10,962,549 $4,170,934 $688,371 $0 $15,821, Overture Center for the Arts $7,154,390 $4,237,682 $113,643 $0 $11,505, Walton Arts Center $4,271,439 $2,640,634 $294,042 $0 $7,206, Hult Center for the Performing Arts $2,419,708 $1,716,210 $0 $430,000 $4,565, Average $4,541,966 $1,775,990 $261,154 $53,750 $5,895, Median $3,345,574 $1,117,625 $204,529 $0 $4,565,918 Expense ratios show what percentages of an organization s operating budget are devoted to a particular category of expenses. The Hult Center is the only organization among this group that has no fundraising expenses. Please note that these expenses include the $430,000 of internal services that the Hult Center receives from the City of Eugene. Expense Category Comparison Program Services General & Administration Fundraising Internal Services $18,000,000 $16,000,000 $14,000,000 $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 Alberta Bair Theatre Alaska Center Broadway Center Hult Center Walton Arts Center Clay Center Overture Center Fox Cities Center 16

17 100% Program Ratio Comparison Program Services General & Administration Fundraising Internal Services 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Hult Center Walton Arts Ov erture Center Broadw ay Center Fox Cities Center Alaska Center Alberta Bair Clay Center Center Theatre After the Hult Center, the Alaska Center and the Overture Center spend the smallest percentage of their budgets on fundraising. However, they receive the largest government subsidies, reducing the need or incentive for additional private fundraising. Organizations with smaller budgets tend to have a higher percentage of expenses go towards general and administrative costs. 17

18 Aspirational comps spend a significantly higher percentage of their budgets on programming and marketing expenses. All aspirational comps spend some percentage of their expenses on fundraising. The large percentage of the Hult Center s expenses are spent on theatre operations, relative to its support of resident company and rental activity. It is important to note that costs to support additional activity are incremental, not proportional. Therefore, should the Hult Center increase its program offerings, efficiencies of scale would allow the Center to amortize these expenses. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Expense Ratio Comparison - Aspirational PAC's Fox Cities Center Walton Arts Center Overture Center Hult Center IS/IT Communications HR Inst. Marketing Other Education Fundraising Retail Administration Finance Theatre Operations Building Operations Programming 18

19 Two of the aspirational comps provided detailed information about staffing structure. Most notably, both organizations have education staffs, fundraising staffs, and larger marketing staffs than the Hult Center. The inference is that the Hult Center should contemplate an expansion in these areas if it intends to grow its operations. The Hult Center has 82 volunteers that work 4,920 hours. By comparison, Fox Cities and Overture have 577 and 615 volunteers respectively, and both pools work approximately 21,000 hours annually. There may be an opportunity for the Hult Center to expand its volunteer base. Staffing Comparisons Hult Center Fox Cities Performing Arts Center Overture Center F/T P/T Salaries Benefits F/T P/T Salaries Benefits F/T P/T Salaries Benefits Administration 5 1 $220,131 $115,113 3 $318,885 $382, $333,756 $85,073 Building Operations - Custodial 4 4 $201,353 $105, $137,402 $164, $412,030 $105,024 Building Operations - Engineers / Maintenance 0 0 $0 $0 0 0 $0 $0 8 2 $354,903 $90,463 Building Operations - Security 0 0 $0 $0 0 7 $24,999 $29, $59,787 $15,239 Building Operations - Other Building Operations 0 0 $0 $0 0 0 $0 $0 1 0 $41,281 $10,522 Development 0 0 $0 $0 4 1 $235,041 $282, $92,620 $23,608 Education 0 0 $0 $0 2 0 $77,162 $92, $130,946 $33,377 Finance 1 0 $45,821 $23, $181,704 $218, $116,752 $29,759 Information Services 0 0 $0 $0 1 0 $42,010 $50, $0 $0 Marketing 1 0 $83,487 $43, $273,208 $327, $246,067 $62,721 Programming 1 1 $82,061 $42, $106,539 $127, $145,788 $37,161 Retail 0 0 $0 $ $148,351 $178, $0 $0 Theater Operations - Box Office & Ticketing 2 6 $221,726 $115, $264,548 $317, $424,512 $108,206 Theater Operations - Front of House Staff / Ushers 1 70 $72,168 $37, $151,350 $181, $184,585 $47,050 Theater Operations - Other 1 25 $94,895 $49, $133,281 $159, $707,235 $180,270 Theater Operations - Stagehands 2 14 $640,992 $335, $0 $ $543,672 $138,579 TOTALS $1,662,634 $869, $2,094,480 $2,513, $3,793,934 $967,052 19

20 Hult Center for the Performing Arts Management Structure 20

21 Mission Statements The mission statements of the comparable organizations are similarly broad to each other and to the Hult Center s, which is to enrich the cultural life of our region : To engage the community in the arts, we present a broad spectrum of high-quality performing arts programming. The mission of the Clay Center for the Arts & Sciences, West Virginia is to inspire creativity, life-long learning and wonder through experiences in the arts and sciences for all people of West Virginia and the region. The mission of the Broadway Center for the Performing Arts is to provide outstanding venues in which we and others can entertain, educate and enable people of all ages. The mission of the Fox Cities Performing Arts Center is to serve as a gathering place for the community, to engage in educational opportunities and to enhance understanding and enjoyment of life through the creation and presentation of the arts. We will do this by providing a premier venue for performing arts attractions and a dynamic environment for our arts organizations. Our mission is to bring great artists and entertainers from around the world to Northwest Arkansas, connecting and engaging people through inspiring arts experiences. 21

22 Relationship with Municipal Government Of the benchmark organizations interviewed, only the Clay Center did not have a relationship with municipal government. The nature of these relationships varied: Public Sector Support Summary Fox Cities $500,000 Walton Arts Center $0 Broadway Center $500,000 Overture Center $1,700,000 Fox Cities Performing Arts Center: A consortium of local municipalities has a hotel room tax which is used to pay off a construction bond for the performing arts center. Additionally, one city has an additional hotel room tax that generates about $500,000 in operating subsidy. Walton Arts Center: The City of Fayetteville developed the performing arts center in conjunction with the University of Arkansas, and they jointly own the building. The performing arts center is managed by a separate 501(c)3. The City and University do not provide any operating subsidy, but both are rental users. Broadway Center for the Performing Arts: The City of Tacoma owns facilities, and the Broadway Center manages them. The Broadway Center receives $1 million a year from the City half of which is for operational subsidy and half of which is for long-term maintenance. Overture Center for the Arts: Owned by the Overture Development Corporation, a 501(c)3 organization, and managed by the Madison Cultural Arts District, a government entity governed by city, county and state employees. Overture employees are city employees ($4.8M). The City also provides $1.7 million in operating subsidy, but the Overture Center pays back $500,000 to the City, mostly as a payment in lieu of taxes. 22

23 Resident Companies While not always called resident companies, each organization did have some arrangements with local arts producing organizations. Walton Arts Center: Does not have resident companies per se, but it leases space to a new professional theatre company and a visual arts group at reduced rates. It also offers reduced rates to the University s music and drama departments. Fox Cities Performing Arts Center: Has two resident partners the Fox Valley Symphony and Lawrence University. Fox Cities offers these companies subsidized usage fees and premium calendar dates. The Symphony also uses the Center s ticketing system for a small annual setup fee. Broadway Center for the Performing Arts: Resident Arts Organizations receive rental subsidies of approximately 25% off of general market rates. RAO s also have first choice of dates, ahead of the Broadway Center s own programming. The Broadway Center hosts quarterly meetings to discuss calendar, policies, pricing, and fees to build strong relationships. The Clay Center for the Arts and Sciences: Shares most of its back office operations with its resident companies Overture Center for the Arts: Shares front of house services and box office services. 23

24 Successful Strategic Relationships The benchmarks that AMS interviewed did not have many successful strategic partnerships outside of their relationships with resident companies. They discussed some of their more successful marketing partnerships, including: Bookstores Libraries Well-known, local blogs Other arts groups for co-marketing opportunities Organizations such as downtown business improvement districts AMS s work with the Performing Arts Centers nationally has demonstrated the most beneficial strategic relationships are regional marketing consortia, ticketing networks, information networks, local convention and visitors bureau initiatives, and community organizations. 24

25 Hult Center for the Performing Arts Earned Revenue and Community Engagement 25

26 Venue Utilization and Attendance Comparison Seating Capacity Total Performances Total Rehearsal Days Total Paid Attendance Total Attendance Attendance per Performance Walton Arts Center - Walker Hall 1, , , Fox Cities - Thrivent Financial Hall 2, , ,203 1,219 Overture Center - Overture Hall 2, , ,804 1,469 Hult Center - Silva Hall 2, , ,306 1,603 Average , ,161 1,273 Median , ,055 1,344 Walton Arts Center - Starr Theatre ,072 5, Hult Center - Soreng Theatre ,802 19, Overture Center - Playhouse ,783 34, Fox Cities - Kimberly Clark Theatre Flexible seating Not available Average ,056 15, Median ,937 12, Silva Hall has the highest attendance per performance of this group. Silva Hall has lower total attendance than the average and median for these aspirational comps due to the fact that Silva Hall has fewer performances than the other venues. In expanding its operations, the Hult Center may wish to consider increasing the number of performances in Silva Hall (and perhaps these performances should be self-presented, as other data will suggest). Compared to this group, the Soreng Theatre is successful in terms of overall activity and attendance. 26

27 Events and Attendance by Programming Source Fox Cities - Thrivent Financial Hall Overture Center - Overture Hall Walton Arts Center - Walker Hall Hult Center - Silva Hall Average Center Presentations # of events Paid attendance 172,939 92,379 81,418 10,452 89,297 86,899 % of paid capacity 65.4% 59.5% 61.7% 52.3% 59.7% 60.6% Commercial Rental # of events Paid attendance 9,363 8,508 10,918 57,277 21,517 10,141 % of paid capacity 40.5% 54.0% 33.7% 57.3% 46.4% 47.3% Non-Profit Rental # of events Paid attendance 8,867 4,226 7,734 2,844 5,918 5,980 % of paid capacity 35.2% 62.6% 35.8% 56.9% 47.6% 46.3% Resident Company # of events Paid attendance 8,218 62, ,849 33,970 35,516 % of paid capacity 65.2% 63.4% 0.0% 44.7% 43.3% 54.1% Median Other performing arts centers present a considerable amount of programming at their own risk. The Hult Center hosts more commercial rentals than the aspirational comps. Given these two points, it is recommended that the Hult Center conduct a costbenefit analysis of commercial rentals versus its own presentations to determine whether more net revenue could be possible with more self-presenting. More selfpresentations have the potential to generate additional revenue for the Hult Center through increased fundraising or marketing sponsorships. 27

28 The Hult Center and its resident companies compare favorably in terms of paid attendance for classical music, opera and variety programming. Aspirational comps have had substantial success in presenting Broadway, so the Hult Center may wish to consider more of this type of programming, should it expand its total offerings. Events and Attendance by Activity Type Fox Cities - Thrivent Financial Hall Overture Center - Overture Hall Walton Arts Center - Walker Hall Hult Center - Silva Hall Average Broadway # of events Paid attendance 133,668 54,450 41,357 23,476 63,238 47,904 % of paid capacity 74.0% 75.6% 60.5% 62.6% 68.2% 68.3% Classical Music # of events Paid attendance 21,631 48,313 9,835 34,900 28,670 28,266 % of paid capacity 51.5% 61.3% 25.6% 58.2% 49.2% 54.8% Dance # of events Paid attendance 5,242 15,993 8,774 18,950 12,240 12,384 % of paid capacity 49.9% 71.0% 66.5% 42.1% 57.4% 58.2% Educational / Family # of events Paid attendance 20,177 3,423 22,651 9,119 13,843 14,648 % of paid capacity 45.8% 50.7% 57.2% 17.4% 42.8% 48.2% Opera # of events Paid attendance 0 7, ,594 3,658 3,558 % of paid capacity 0.0% 83.5% 21.8% 87.9% 48.3% 52.6% Theater # of events Paid attendance 3,885 1,332 1,389 6,973 3,395 2,637 % of paid capacity 61.7% 59.2% 28.9% 39.8% 47.4% 49.5% Variety # of events Paid attendance 14,784 36,898 15,542 35,410 25,659 25,476 % of paid capacity 35.2% 52.9% 80.9% 70.8% 60.0% 61.8% Median 28

29 Events as a % of Total Activity 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% Fox Cities - Thrivent Financial Hall Walton Arts Center - Walker Hall Overture Center - Overture Hall Hult Center - Silva Hall Attendance as a % of Total Attendance Variety Theater Opera Educational / Family Dance Classical Music Broadway Variety Theater Opera Educational / Family Dance Classical Music Broadway These charts illustrate the amount of particular types of activity and attendance at different offerings. Aspirational comps present more Broadway offerings than the Hult Center, and the percentage of audiences for Broadway is higher than the proportion of Broadway events. The proportion of classical music audiences is lower than the proportion of classical music events. 0% Fox Cities - Thrivent Financial Hall Overture Center - Overture Hall Walton Arts Center - Walker Hall Hult Center - Silva Hall 29

30 Compared to the aspirational comps, the Hult Center generates almost an average or median number of single tickets in both quantity and dollars. The Hult Center s per subscription and per single ticket prices are both lower than the group average, suggesting that it could increase its prices. Ticket Revenue Comparison (in $) $12,000,000 Subscriptions Single Tickets $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 $0 Walton Arts Center Hult Center Overture Center Fox Cities Center Subscription and Single Ticket Comparison Subscriptions Single Tickets Number Revenue $ per sub Number Revenue $ per ticket Fox Cities Performing Arts Center 35,380 $1,794,023 $51 163,227 $8,242,521 $50 Overture Center for the Arts 94,675 $4,206,874 $44 125,259 $5,598,937 $45 Walton Arts Center 21,922 $822,268 $38 48,060 $1,834,148 $38 Hult Center for the Performing Arts 27,239 $881,365 $32 128,756 $4,066,740 $32 Average 44,804 $1,926,133 $41 116,326 $4,935,587 $41 Median 31,310 $1,337,694 $41 127,008 $4,832,839 $41 30

31 Marketing Efficiency Ratio Comparison Total Ticket Revenue Marketing Expense Marketing Efficiency Ratio Fox Cities Performing Arts Center $9,940,618 $1,063,371 $9.35 Overture Center for the Arts $4,441,536 $933,297 $4.76 Walton Arts Center $2,824,954 $542,319 $5.21 Hult Center for the Performing Arts $320,610 $289,632 $1.11 Average $4,381,930 $707,155 $5.11 Median $3,633,245 $737,808 $ The marketing efficiency ratio examines how many dollars are earned in ticket sales for each dollar of marketing expense. In other words, for every $1 that the Overture Center spends, it generates $4.76 in ticket sales. For comparison, participants in our PAC Stats project have an average marketing ratio of $5.38. Interestingly, the smallest participants (those with $11 million budgets or less) have the least efficient marketing ratios, with an average ratio of $2.72. This disparity suggest that there are efficiencies gained as organizations increase investment in their marketing initiatives. The Fox Cities marketing efficiency ratio is clearly an outlier. There are several possible explanations for this seemingly high ratio: it could have marketing expenses embedded in other expense lines like fundraising, it could require producers to market its own productions, or they could have submitted their data incorrectly. Because of the impact that this ratio has on the average, the median figure is the best benchmark for this analysis. The Hult Center s marketing efficiency ratio is low for two reasons. First, the Hult Center does not have as many self-presentations as this group, so its ticket revenue is substantially lower. Second, the Hult Center primarily invests in institutional marketing, which is intended to promote the resident companies as well. Therefore, a large portion of the return of marketing dollars helps the ticket sales of the resident companies.

32 Successful Marketing Strategies The benchmarks that we interviewed had a number of strategies that have been yielding satisfying results: Flexible subscriptions Placing shows on sale for longer periods Demand pricing increasing prices as seating inventory is purchased for popular shows blasts (Fox Cities has had particular success with its e-marketing efforts) Fan pages on MySpace, Facebook and Twitter Audience segmentation by visitation habits Broadway Center has two different marketing strategies a grassroots strategy and a brand name strategy. They make a concerted effort to push grassroots programming when people visit the website for the brand name programming Consistent focus groups and surveys of audience members 32

33 Co-Marketing with Resident Companies The benchmarks reported some cross promotions with resident companies such as: Promotion in annual brochures Website listings Marquee rotations The Broadway Center noted that its resident companies do not like to comingle their brands in shared marketing efforts. The Overture Center provides marketing support upon request for its resident companies. 33

34 Community Engagement Programs As part of its charge, AMS asked PAC s how they engage their community. PAC s listed the following activities: Pre- and post-lectures and events Artist meet and greets with the local community Community residencies including master classes with artists In-school classes Advisory committees for special events and projects Events and packages for targeted groups (e.g., young professionals, families) Facility spaces used for community events Free performances Free music lessons in community centers in 6 counties Musical Memories program for seniors 34

35 Community Engagement Programs The Broadway Center has a particularly robust list of community engagement programs: 27,000-30,000 students served through school-time matinees On-campus performances (25-30 per year) After school theatre classes at 7 satellite locations 4-6 teacher training workshops per year Kennedy Center partnerships with four school districts Arts Impact training session with 40 teachers each summer Community Dialogues: 4-5 four hour dialogues each year with demographically specific community groups Adult Lifelong Learning classes 35

36 Hult Center for the Performing Arts Fundraising 36

37 Contributed Revenue Corporate Foundation Government Individuals Special Events (net) Total Alaska Center for the Performing Arts $6,255 $833 $382,833 $49,500 $0 $439,421 Fox Cities Center for the Performing Arts $881,435 $165,908 $536,695 $405,269 $189,371 $2,178,678 Mesa Arts Center $0 $0 $0 $265,000 $0 $265,000 Overture Center for the Arts $81,790 $360,771 $1,771,934 $189,862 $0 $2,404,357 Walton Arts Center $1,101,368 $1,057,690 $39,483 $585,864 $57,742 $2,842,147 Hult Center for the Performing Arts $0 $0 $2,098,940 $0 $0 $2,098,940 Average $414,170 $317,040 $546,189 $299,099 $49,423 $1,625,921 Median $81,790 $165,908 $382,833 $265,000 $0 $2,178,678 Government revenues refer to discretionary government support, such as an arts agency grant or budget line item in the general fund. Tax revenues are nondiscretionary allocations from dedicated public revenue streams. All benchmarks have internal fundraising departments. Hult Center s government contributions include tax revenues and additional services from municipal government. Only two of the organizations engage in special events, and for these organizations special events appear to comprise only a small percentage of contributed revenue. This is contrary to industry best practices, in which successful performing arts centers have a number of revenue generating special events. The City of Mesa s contribution to the Mesa Arts Center s operations was not provided. 37

38 The Alaska Center, Overture Center, and the Hult Center receive a very large percentage of their contributed revenue from government sources. Walton Arts Center and Fox Cities have diversified revenue streams from individuals, government, foundations, and corporations. In this benchmark group, individual contributions make up only 10-20% of total contributed revenue. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Mesa Arts Center Comparison of Contributed Revenue Sources (in %) Alaska Center Hult Center Fox Cities Center Overture Center Walton Arts Center Comparison of Contributed Revenue Sources (in $) Special Events (net) Government Foundation Corporate Individuals Two of the aspirational comps have their largest sources of revenue come from corporate support, suggesting that growth in the Hult Center s operations may require a strategy to obtain corporate giving. $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 Special Events (net) Government Foundation Corporate Individuals 38 $0 Mesa Arts Center Alaska Center Hult Center Fox Cities Center Overture Center Walton Arts Center

39 100% Distribution of Contributed Revenue % Government Support % Individual Contributions/Memberships % Sponsorships % Foundation Support % Specials Events (gross) % Corporate Support (Philanthropy) % In-Kind Gifts % Tax Revenue % Other 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% All PAC Stats Participants All Group 4 Pac Stats Participants Data from the PAC Stats participants illustrates a typical fundraising breakdown. All PAC Stats participants and the Group 4 (<$11 million budgets) participants have the largest portion of contributed revenue from government sources. As with the Hult s aspirational comps, approximately 10-20% of contributed revenue comes from individuals, which suggests that performing arts centers are atypical of other non-profits and rely less heavily on individual donations. Group 4 participants also have a large percentage (11%) of contributed revenue come from tax revenues, which is in addition to other government support (39%). 39

40 The fundraising efficiency ratio examines how many dollars are contributed for each dollar of fundraising expense. In other words, for every $1 that the Alaska Center spends, it generates $3.52 in contributed revenue. Because of the proportion of government support in relation to other contributed revenue sources, the Alaska, Overture and Hult Centers skew the average and median efficiency ratios; therefore, the efficiency analysis excludes government contributions. Participants in the PAC Stats project have an average efficiency ratio of $5.37. Given this information, a fundraising efficiency ratio of approximately $3.00 would be a conservative estimate for the Hult Center. Fundraising Efficiency Ratio Comparisons Total Contributed Revenue Total Fundraising Expense Fundraising Efficiency Ratio Alaska Center for the Performing Arts $443,081 $17, Alberta Bair Theatre for the Performing Arts $341,888 $115, Broadway Center for the Performing Arts $2,005,434 $432, Clay Center for the Arts and Sciences $265,000 $428, Fox Cities Center for the Performing Arts $1,668,940 $442, Mesa Arts Center $4,712,749 $50, Overture Center for the Arts $3,018,604 $113, Walton Arts Center $2,404,357 $294, Average $1,857,507 $236, Median $1,837,187 $204, Average w/o Overture & Alaska $1,899,728 $293, Median w/ot Overture & Alaska $1,837,187 $361,

41 Comparison of Fundraising Efficiency Ratios Alberta Bair Theatre Fox Cities Center Broadw ay Center Mesa Arts Center Walton Arts Center Clay Center Ov erture Center Comparison of Fundraising Efficiency Ratios excluding Alaska, Overture and Hult Alaska Center Because some of the other performing arts centers have large government subsidies, their fundraising ratios skew the comparison. Removing Alaska and Overture from the comparison demonstrates more typical fundraising efficiency ratios Alberta Bair Theatre Fox Cities Center Broadw ay Center Mesa Arts Center Walton Arts Center Clay Center 41

42 Comparison of Director of Development Salaries Salary Salary Adjusted for Eugene COLI % of Total Expenses Alaska Center for the Performing Arts $50,692 $45, % Broadway Center for the Performing Arts $47,629 $50, % Fox Cities Performing Arts Center $84,975 $98, % Walton Arts Center $72,949 $91, % Average $64,061 $71, % Median $61,821 $70, % The average annual fundraising expenditure for all of the comps was $364,000. AMS analyzed the Director of Development salaries at benchmark organizations to determine what kind of staffing investment might be necessary. Using the ACCRA Cost of Living Index (COLI), AMS adjusted the salaries at benchmark performing arts centers for Eugene s cost of living. Based on this analysis, $70,000 is a reasonable and competitive annual salary for a Director of Development. 42

43 Hult Center for the Performing Arts Alternate Revenue Streams 43

44 Endowment Comparison Endowment Value Alaska Center for the Performing Arts $0 Alberta Bair Theatre for the Performing Arts $1,211,304 Broadway Center for the Performing Arts $4,329 Clay Center for the Arts and Sciences $15,378,939 Fox Cities Center for the Performing Arts $6,000,000 Mesa Arts Center $0 Overture Center for the Arts $3,100,000 Walton Arts Center $14,756,726 Average $5,056,412 Median $2,155,652 Most of the benchmark performing arts centers have endowments. While the Broadway Center does not have a significant endowment, it considers its $500,000 in operating subsidy from the City of Tacoma like (dedicated revenue from) an endowment. Fox Cities is currently in the middle of an endowment campaign. It has raised $6 million of a $25 million goal. It is worth noting that only the Walton Arts Center has an endowment that meets the National Arts Strategies recommendation of 200% - 500% of the organization s operating budget. 44

45 The analysis below examines rental revenue, i.e., how much rental income is derived from third-party renters, including resident companies and commercial entities. Excluding the two largest Centers, despite differences in budget size, the majority do not have a large variance in actual rental revenue. The Hult Center, which is in the middle of this group in terms of operating budget, has rental revenue that is approximately the average and median of this group. This information suggests that increased rental revenue may not be the growth strategy with the greatest revenue potential. Instead, as mentioned earlier, selfpresented programming has greater potential for net income. Comparison of Total Rental Revenue Total Rental Revenue % of Total Revenue Alaska Center for the Performing Arts $359, % Alberta Bair Theatre for the Performing Arts $509, % Broadway Center for the Performing Arts $494, % Fox Cities Center for the Performing Arts $1,162, % Mesa Arts Center $344, % Overture Center for the Arts $2,807, % Walton Arts Center $418, % Hult Center for the Performing Arts $1,959, % Average $1,007, % Median $501, % 45

46 Comparison of Rental Revenue Ancillary Space Rental Performance Hall Rental Box Office Service Fees Recoverable Charges and and Surcharges Fees Total Alaska Center for the Performing Arts $16,175 $153,616 $151,388 $38,336 $359,515 Fox Cities Center for the Performing Arts $23,432 $504,357 $572,457 $62,459 $1,162,705 Overture Center for the Arts $286,569 $510,529 $1,178,136 $831,979 $2,807,213 Walton Arts Center $98,202 $254,983 $65,738 $0 $418,923 Hult Center for the Performing Arts $0 $412,646 $720,003 $827,111 $1,959,760 Average $106,095 $355,871 $491,930 $233,194 $1,187,089 Median $60,817 $379,670 $361,923 $50,398 $790,814 The Hult Center has been particularly successful in generating hall rental income, as its revenues are above the average and median for the aspirational comps. The Hult Center is the only organization of this group that does not have any rental income from ancillary spaces. It may want to evaluate its current spaces and see if any of them could be rented as an additional source of income. 46

47 Comparison of Rental Revenue Sources 100% Performance Hall Rental Ancillary Space Rental Box Office Fees Recoverable Charges and Fees The Hult Center appears to have the highest percentage of rental revenues from recoverable charges & fees and one of the lowest percentage of rental revenues from actual performance hall rental. This information suggests that the Hult Center reevaluate its rental pricing structure and perhaps increase its base rental rates. 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% $3,000,000 $2,500,000 $2,000,000 $1,500,000 Alaska Center Walton Arts Center Fox Cities Center Hult Center Overture Center Comparison of Rental Revenue Sources Performance Hall Rental Ancillary Space Rental Box Office Fees Recoverable Charges and Fees $1,000,000 $500,000 $0 Alaska Center Walton Arts Center Fox Cities Center Hult Center Ov erture Center 47

48 The Hult Center is currently losing money on its concession operations. The Hult Center should restructure the operation so that it at least breaks-even and possibly generates a modest revenue stream. On average, aspirational comps net $0.27 for each patron, while the median for this group is $0.16 for each patron. Concession Revenue Comparison Net Concession Revenue Concession Revenue Per Patron Fox Cities Center for the Performing Arts $228,676 $1.10 Overture Center for the Arts $31,920 $0.15 Walton Arts Center $20,936 $0.18 Hult Center for the Performing Arts ($61,797) ($0.36) Average $54,934 $0.27 Median $26,428 $

49 Hult Center for the Performing Arts Observations and Recommendations 49

50 Programming, Attendance and Utilization Overall, the Hult Center has been successful in drawing people to the performing arts center. The Soreng Theatre, in particular, stands out when compared to the benchmarks comparable venues. The Hult Center and its resident companies have been successful, relative to the comparables, in scheduling classical music, opera and variety programming. To increase earned revenue, the Hult Center should consider strategies to increase the amount of programming at Silva Hall. The aspirational comps have had particular success with presenting Broadway. Revisiting the nature of the Broadway programming in the market and the Hult Center s role might be explored. When compared to the aspirational comps, the Hult Center has a much higher number of commercial rentals and a much lower number of self-presentations. A cost-benefit of these would be a helpful planning tool to see if one can generate more net revenue than the other. 50

51 Programming, Attendance and Utilization In terms of further engaging with its community, the Hult Center could consider creating an education department and developing low-cost/high-impact programs, as many of the most successful performing arts centers have done. In terms of increasing earned revenue, the Hult Center would need to present more of its own programming and re-examine pricing for ticketed events. The Hult Center may consider increasing its investment in its marketing efforts on behalf of all programs at the Center, especially to increase paid attendance at dance, family programming and theater presentations. Each of these investigations should be supported by market research, which comparable Centers have found very useful. Additionally, market research can help gauge operating benchmarks to measure success in the Eugene marketplace. We note that while increasing earned revenue is important, donations and alternate revenue streams will also be needed to fuel any future growth for the Hult Center. 51

52 Fundraising The Hult Center is the only performing arts center of this group that does not engage in any fundraising activity. Best practice (based on both the benchmarking group and AMS s supplemental information) is that diversified sources of contributed revenue (government, individual, corporate, and foundation) are optimal to maintain and grow operations. The analysis of the benchmarks indicates that the Hult Center is likely to develop a good return on a relatively modest investment on fundraising personnel, with a conservative estimate of $3.00 raised for each dollar expended. Most of the benchmarks do not use special events for fundraising, and those that do, receive relatively modest net returns. This benchmark group s experience with special events is contrary to the industry best practices, which use fundraising events for meaningful donor cultivation, stewardship and financial returns. These best practices should be used as models, should the Hult Center pursue this strategy. All of the aspirational comps have both individual and corporate giving programs as important parts of their contributed revenue, suggesting that the Hult Center should develop a fundraising effort. 52