As Judi Dench takes a final bow and the curtain falls on the closing night performance of A Midsummer Night’s Dream, the directors of the Rose Theatre turn to each other with a knowing smile. ‘This is it’ they’re thinking, as the packed audience claps and cheers, ‘the critics love it, we’ve put ourselves on the map and we’re making money – the theatre’s a success.’
That was the mood a year ago. Fast forward 12 months and they’re faced with a very different picture. Unable to recreate the success of A Midsummer Night’s Dream, the theatre has since failed to attract the audience figures it needs, instead lingering uncomfortably around just 45 per cent.
With box office sales generating less than £2m, and the total income hovering around the £3.7m mark, the £3.5m cost of running the theatre is proving to be too expensive. The total profit for 2010 stood at just £131,000 and with a deficit of £645,000 to contend with, it’s little surprise that the theatre’s accountants issued a warning that the company’s financial position is in jeopardy. Throw in a rejection from the Arts Council for England (ACE) and it’s clear the Rose isn’t set to blossom. So where did it all go wrong?
At a start up cost of £8m, the 900 seat theatre was always going to be a risk. “When the Rose Theatre opened its doors in January 2008, it had no funding whatsoever and in the first year only avoided disaster by a mixture of luck, derring-do and acts of huge individual generosity. Launching a new theatre just as the banking crisis kicked in wasn’t clever,” Artistic Direct Stephen Unwin admitted in the London Evening Standard last year.
Other theatres in the area have also struggled to make their venue a success. The nearby New Wimbledon Theatre also found itself in serious financial trouble in 2003. Despite last year announcing a profit of £182,000, the 1,600 seat theatre is still in the process of reducing its sizeable £1.5m deficit. Richmond theatre, which seats 800, is in a similar situation, and in 2010 managed to reduce its £349,000 deficit by £24,000. Both theatres would have fallen into financial ruin had they not been rescued by Ambassador Theatre Group (ATG), the UK’s largest theatre operator.
“It makes a huge difference to a theatre’s success if it’s part of a larger group,” explains Helen Enright, ATG’s Finance and Commercial Director. “Our theatres can make use of our tried and tested methods, our marketing infrastructure and a team of staff who all work in a specific area. As a large company we can buy retail products – something which theatres heavily rely on to make their profit – much more cheaply than a standalone theatre can, so we make a bigger profit margin on things like programmes, ice creams and alcohol.”
The reality is that it’s easy for theatres to get into financial difficulty because of the box office takings – cash flow can appear to be really good so a theatre can trade at a loss for quite some time.
“When we took over the New Wimbledon it was in dire financial straits, so we settled its debts with the creditors and changed the way we ran it. If we hadn’t rescued it, the theatre would have gone bust. Now it’s a stable and solid business with an ever-growing audience.
“Like Wimbledon and Richmond, the Rose has all the competition of the London theatres to contend with, but the difference is a larger company like ATG will be able to book productions more easily than a small one like the Kingston Theatre Trust. It’s more attractive to a producer to book multiple theatres with one company and have a readymade tour, which can include both national and regional theatres.”
Of course many independent theatres do run successfully, but often only with the financial help of organisations such as the National Lottery and the ACE. The ACE has seen its budget cut by £150m to £350mas a result of government cost cutting, which resulted in a significant reduction in the number of venues it can provide funding to.
Theatre venues make up over a quarter of the 695 organisations which still receive funding, but the Rose Theatre was not one of the lucky ones.
“We are working very carefully on our future planning, following the disappointing news from the Arts Council. The process is not yet complete. We are considering a wide range of questions and nothing has been ruled out at this stage,” David Fletcher, Executive Director of the Rose, explained.
Up until now the Rose, whose staff have experienced a pay freeze since it opened, has relied heavily on the support of 215 volunteers as well as significant donations from Kingston University and the local authority, amounting to a collective £900,000 a year. And with the university’s deal set to expire and the council’s contribution now reduced to an annual £500,000, the theatre would need just under £700,000 funding each year to make up the typical 30 per cent contribution to a theatre’s overall profit made by the ACE to its organisations.
“Funding from the ACE would have secured our future,” confessed Stephen. “The fact is that without Arts Council support it’s difficult for any theatre to offer a radical programme of work and develop a clearly defined identity. And without that it’s hard to attract media interest and the private money that often comes in its wake.”
So should the Rose consider a move into a larger company like ATG?
“It’s always going to be harder for individual theatres to succeed because they’re so expensive to run and they can’t offer the benefits of a larger group,” says Helen. “The Rose might have attracted good sponsors and individual donations but ATG has more than 60,000 ‘friends’, many of whom have built up strong relationships with their local theatre over many years.
“There haven’t been any discussions between ATG and the Rose but if we thought it could work and they wanted to sell we’d definitely consider it.”
If the Rose wants to succeed on its own it certainly has an uphill struggle on its hands. The theatre itself is attractive, intimate and community friendly, but with a sizeable deficit, a reduction in funding, and less than half an audience the directors are going to have to find a way to once again pull in the big names.
As Stephen said, “London has an amazing new theatre, and it works … now we just need you all to come and see it.”