BIS Theatre Case Study

The Lambourne Performing Arts Centre case study

CASE STUDY

Lambourne Performing Arts Centre

The information based upon this invented business organisation is purely fictitious and has been prepared solely for an academic case study. Any resemblance of structures,

roles, events, persons or information included is purely coincidental.

Background

Lambourne is a large town situated about 70 miles from London. It has a population of about 250,000 people, and is home to one of the newer universities. The main sources of employment are in the commercial business sector, including the headquarters of a large power engineering company, and in the computing industry. There are also a significant number of commuters who travel daily to work in London.

The Arts Centre is reasonably modern, built in the early 1980’s, and is located in the centre of town, having a seating capacity of 380.

The Centre has a restaurant and lounge bar which is open throughout the day. However these facilities are not well supported and only ever busy for pre-theatre meals and drinks in the evening. There is also a studio theatre which is adjacent to the main theatre, and is used mainly for the delivery of training courses and minor productions.

Janet Chilcott has just been appointed as Commercial Director of the Lambourne Performing Arts Centre. LPAC has just completed a very disappointing year, culminating in a loss of £220,000. This is worrying because losses in previous years have taken away LPAC’s financial reserves. If the situation does not improve LPAC will close.

Details of the precarious financial position are given in Table 1. The current Artistic Director had, until now, been responsible for both the commercial and creative activities of the Arts Centre. Now Chilcott has been brought in specifically to improve the financial health of the theatre. Her previous experience has been in the financial function within the manufacturing industry, and more recently as a finance manager at the town's university.

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LPAC Organisation Structure

The LPAC management team

Chief Executive: George Simms

George is approaching retirement with a record of more than 30 years service in the employment of the Arts Centre. He is concerned about the current state of the Centre’s finances, has little idea of how to stop the losses accumulating and the last thing he wants is to preside over the closure of the Centre. He is relying on Janet Chilcott to inject some new initiatives and discipline into the Centre.

Artistic Director: Sebastian Foulkes

With 25 years in the theatre business as an actor, director and producer Sebastian has a wealth of professional experience to draw on. He is responsible for the schedule of productions delivered by the theatre. He regards himself as a highly creative and innovative theatre director and has little interest in whether his productions are viable financially. He normally resists initiatives to attract touring companies as they tend to take the limelight from his own in-house productions.

Director of Studies: Rt Hon. Margaret Gibbons

Like Sebastian, Margaret has a passionate streak which she has channelled into the design and delivery of a varied programme of training courses and modules. However student numbers are poor and the training operation struggles to break even. Margaret is also engaged by the university to deliver some drama modules, and usually spends at least two days a week at the university. This is effectively private work as she has a separate

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Chief Executive

Artistic Director Director of Studies

Commercial Director

Bookings Manager

Catering Manager

Finance Manager

Residentactors

Course team

Stage crew

Personnel Supervisor


contract with the university in payment for these services but she defends the situation by pointing out the healthy relationship fostered between the Centre and the university.

Bookings Manager: Pam Hopkins

Pam has worked with the Centre in the same role for more than 20 years and prides herself that the bookings functions operate efficiently. A paper-based system is used with a new seating plan annotated for each performance. Squares denoting seats are colour-coded – white (available), yellow (reserved but not paid) and green (reserved and paid). When a reservation is accepted and paid for, tickets are written out by hand and handed out (or mailed) to the customer. This manual system generally functions adequately although double-booking happens occasionally, reservations can only be made up to one month in advance, and Pam will have nothing to do with credit or debit cards – often causing frustration to potential customers. She regards her position as having nothing to do with marketing, and in the past occasional promotional initiatives such as mailshots have generally been organised by Sebastian Foulkes.

Day to day ticket sales and administration are handled by two part-time employees under the supervision of Pam Hopkins.

Catering Manager: Frank Bryson

The Catering operations are run by Frank Bryson, the catering manager, together with Amanda Fuller, the head chef and deputy manager. It is well known around the centre that Frank and Amanda have a dreadful working relationship, and they are barely on speaking terms. Morale within the catering department has been poor for more than a year.

Finance Manager: Tom Hadley

Like his very good friend George, Tom is 65, rapidly approaching his retirement and spends much of his time at the golf course. He still enjoys working at LPAC as his job involves little more than over-seeing the basic book-keeping and payroll functions. He supervises one deputy, Mark Jones, who is a part-qualified accountant and carries out all the essential day to day finance operations.

Personnel Supervisor: Wendy Graham

Wendy holds a half-post which suits her well, as she has a young family of four to look after. She is generally competent, reliable and executes all aspects of the LPAC Personnel function reasonably efficiently.

Information Systems in LPAC

After her arrival, Chilcott was astonished at the lack of modern IT facilities within LPAC. None of the staff – with the exception of Mark Jones in Finance - are at all familiar with

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computers or information technology, and the use of computers in any business process was resisted by all the senior managers, especially Pam Hopkins.

LPAC owns a collection of six old standalone Windows XP PCs – assigned to Foulkes (rarely used), Gibbons (used for training admin and course materials), Hadley (rarely used), Jones, Graham (in Personnel) and the Bookings department. Most have an old inkjet printer attached. Mark Jones uses his constantly to run a financial management package and reports, and the Bookings department PC is reasonably busy producing business letters, occasional mailshots and other material. Foulkes owns a personal iMac which he much prefers to the old desktop PC.

None of the PCs are networked in any way. If any of the staff need internet access then they either log on at home, use their personal smartphones or walk across town to Lambourne library which has public internet facilities.

The LPAC office layout

The first floor office suite within the theatre premises is currently laid out as follows:

A – receptionist/typist

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B – ChilcottC – GibbonsD – SimmsE – HadleyF – JonesG – FoulkesH – empty, possible IT roomI – Graham, Bryson and two spare workstations

The box office is at ground level and has three workstations, two of which are at a high level and are service points for dealing with customers. Pam Hopkins currently occupies the third workstation in the box office. No computers or electronic technology are used within the box office (except for two telephones).

Other LPAC staff

Much of the customer-facing work done during the actual performances is carried out by a small group of active volunteers, many of whom are over 70. They collect tickets, show people to their seats, and sell ice cream and confectionery to the audience at the interval.

LPAC currently employs 12 full-time actors and actresses and a stage crew of 6 which includes set designers and builders, a carpenter, electrician and painter.

The actors and actresses are usually divided into two separate groups (‘A’ and ‘B’), each performing a production for a number of weeks. Whilst one group is performing, the other group is rehearsing for its next commitment.

Occasionally when a larger cast is required, such as for a performance of Shakespeare, members of one group will supplement the other. Occasionally when requirements are for a large number of actors they are assisted by students actors from the drama department of the university.

The theatre also uses visiting touring companies (‘V’) for shows such as opera, ballet and musicals.

The funding of the theatre is typical of many regional theatres. The Arts Council provides an annual grant of £180,000, subject to the programme being artistically acceptable. The Arts Council aims to encourage both artistic and cultural development. The town council in Lambourne provides another direct grant of £130,000 each year. They believe that the existence of a Theatre and Arts Centre in the centre of Lambourne is valuable for a number of reasons. It provides both culture and entertainment for the population and enhances the overall reputation of the town. This is thought to be particularly important in attracting students and visitors to the town.

With increasing competition for Performing Arts students across the country Lambourne does not want to lose a potential attraction. In addition the university has a drama department and the theatre provides both resources and professional support to this

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department. Although the theatre only makes a nominal charge to the university for this service (about £5,000 a year) the theatre does receive help from the graphics and advertising department of the university in the form of occasional posters and publicity material, as well as tapes for local radio advertising. The rest of the income has to be generated by the centre itself primarily through ticket sales.

Ticket sales

Box office receipts at LPAC have been falling steadily over the past three years and in the financial year just completed (2014) amounted to only £310,000. Until last year ticket prices had been standardised at £7.50 for weekday performances (Monday – Thursday) and £10 for weekends (Fridays and Saturdays). Children and OAPs were half price.

In order to cut the deficit the standard pricing strategy was abandoned during 2014 and the prices of tickets varied according to the performance. Prices were decided by Sebastian Foulkes. In most cases, significant increases were made in the hope of increasing overall revenues.

Attendances on Mondays and Tuesdays were generally known to be particularly poor (rarely above 20% of seating capacity) and a decision was taken to no longer open on these days. LPAC would continue to offer performances on Wednesdays and Thursdays but with discounted ticket prices.

Unfortunately the strategy does not appear to have worked as increased ticket prices suppressed demand in most cases, and the overall income of the theatre has continued to fall.

Chilcott has reviewed the productions over the past year and has discovered that on average attendances were very disappointing. The seating capacity of the theatre is exactly 380.

It appeared that there were very few shows which could be considered to be financially successful. In general the Shakespeare productions are always popular because the management wisely choose to perform the plays which are being used as the GCSE examination texts by the local schools. Encouraged by schools, the local students usually take the opportunity to see these plays.

The Christmas show is also generally popular but only for about two or three weeks.

Some of the high profile touring groups are also fairly well supported but the cost of attracting these companies is high and the ticket revenue does not always cover the fees paid to the visiting groups (together with operating costs).

The main problem appears to be with the two resident theatre groups. Their costs are escalating but they do not appear to be attracting the public to their productions in sufficient numbers.

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Financial performance

After a while, Chilcott was able to assemble the following financial summary for analysis. All figures are in £000’s.

2012 2013 2014 Income Ticket sales 410 390 355 Restaurant/bar 31 36 21 Arts Council 180 180 180 Local Authority 130 130 130 University 5 5 5 Hire to local choral groups 3.5 3.5 2 Total Income 877.5 864.5 793 Expenditure Wages and Salaries 500 520 567 Materials and Other Costs 100 103 120 Restaurant (food etc.) 28.5 30 35 Fixed Costs (light, heat etc) 30 33 46 Cost of Touring Companies 110 115 145 Total Expenditure 768.5 801 905

Surplus/Deficit -9 -56.5 -220Table 1 – Financial summary

Additional information

After looking through the personnel records, Chilcott isolated the 2014 costs for wages and salaries as follows:

Theatre management team (including stage crew etc): £239,000Actors ('A crew'): £172,000Actors ('B crew'): £156,000

Finally Chilcott researched all the fees and other expenses paid to the four touring companies that had visited the theatre during 2014. The total costs in each case were:

National Ballet company of Moscow (Swan Lake) £44,500New York Ballet Consortia (The Nutcracker) £31,000Stratford Shakespeare Company (The Merchant of Venice) £42,000Montefiore School of Ballet (The Magic Flute) £27,500

End of case

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BIS Theatre Case Study

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