Posted: 7/14/23 at 2:55pm
Surprised no one has posted this yet:
https://www.hollywoodreporter.com/lifestyle/arts/new-york-public-theater-lay-offs-1235536371/
Posted: 7/14/23 at 3:01pm
Posted: 7/14/23 at 3:12pm
CoffeeBreak said: "meanwhile...https://www.bloomberg.com/news/articles/2023-06-13/hedge-fund-dollars-pour-in-for-public-theater-as-smoke-clears"
The Public Theatre's financial statements are well..public. In 21/22 they had $63 million in expenses. So it's not like this kind of money is going to really help them keep afloat or save jobs if they truly are struggling.
Posted: 7/14/23 at 3:35pm
I assumed Hamilton money would keep them going forever.
Do you think Alicia Keys musical will be a hit....she is speaking very highly of it.
Posted: 7/14/23 at 4:04pm
BETTY22 said: "I assumed Hamilton money would keep them going forever.
Do you think Alicia Keys musical will be a hit....she is speaking very highly of it."
Interestingly their financial statements also show that just over $17 million in their revenue was from royalties in 21/22. That's a pretty decent income but I can still see how if your expenses are over $60 million (I assume they are even higher now) it can't solve everything.
Posted: 7/14/23 at 4:16pm
BETTY22 said: "I assumed Hamilton money would keep them going forever.
Do you think Alicia Keys musical will be a hit....she is speaking very highly of it."
That's an understatement. In the interview I saw modesty went out the window. But I guess you don't tell Alicia what to say.
Posted: 7/14/23 at 4:38pm
A $60M+ operating budget necessitates funding from a wide range of sources. As we know from the examples cites here, hedge fund money and royalties only comprise about 31% of the budget.
Famously, when A CHORUS LINE hit, Joe Papp shut down the development department and didn't feel he could ask people to donate with ACL doing so well. The difference is The Public was the sole producer of ACL, whereas they just get a small percent from Hamilton and other shows, and most of it goes into their Endowment. And after ACL, it led to some dire years, financially, and messes for his successors to clean up until they reestablished a consistent donor base.
If you talk to anyone who works with The Public (an artist or a staffer), a frequent acknowledgement is that their staff is huge. Perhaps too big. It takes a lot of departments to run that whole operation downtown and in the park, but there may be a level of redundancy & things could run smoother with a smaller team.
Updated On: 7/15/23 at 04:38 PM
Posted: 7/15/23 at 6:38am
Looking a bit more closely at the statement from 14/15 (when Hamilton was produced), a couple interesting things I see (also I'm tired so feel free to scrutinise or correct mistakes - I don't want to pretend to be an expert). There are likely mistakes in the below and it's just for fun so do look critically.
1. They actually had higher $$$ from ticket sales then than they do now, and that was 10 years ago (eek). Although obviously Hamilton probably played a big part in that. If you look at the 13/14 'previous year' column though it was STILL just slightly above 21/22, and of course if you consider inflation the difference is even more striking.
2. Their expenses were about half in 14/15 compared to 21/22 (30 million vs 60 million). Eek.
3. The proportion of revenue gained from ticket sales* has declined quite a bit - 25% in 14/15 revenue was from ticket sales but only about 12% in 21/22. That can't be a good thing because it means they probably need to be trying harder and harder to get more from elsewhere (i.e. donations & grants).
* While I say 'ticket sales' 20% of this in 14/15 technically also includes something called 'Co-Production Fees, Enhancement..' which I'm guessing is money that commercial producers might also put up to help mount some of these shows (e.g. Hamilton). So actually ticket sales are even slightly less a % of revenue than I am suggesting (someone could recalculate this)
4. An obvious point from above (and I know it's common knowledge) but it does not appear that there is a commercially sustainable model of launching these shows off-broadway. In the season of Hamilton, For every $1 you spent on a ticket for their 'Downtown Theatre' season, the theatre is spending $2.25 to give you these shows. In my opinion, it highlights that especially for these off-broadway NFP theatres we should have a mindset that a ticket sale is more like a contribution to the arts rather than an entitled commercial exchange as if you're actually doing much to pay for what you are seeing on stage (cf. Commercial Broadway). Your ticket is just a drop in the bucket.
5. Even though the ticket may be a drop in the bucket, obviously I would double down on a claim I have made before which is NFP does not mean "for loss" either. Particularly when things were a bit more economically sustainable in 14/15, you can easily see a string of NFP show programming flops could still be a problem if they can't make up the losses from other revenue sources, such as donations or royalties. These companies need to be fiscally responsible and can't just mount productions that flop all the time unless they are already planning for it and know how to get the losses from elsewhere.
6. I'm guessing Hamilton REALLY has helped this theatre a lot. In 14/15 they received just $300,000 of revenue from royalties, whereas in 21/22 it's $17 million! This does probably highlight the importance of Hamilton and other shows (I assume mainly Hamilton) providing them from long-term royalties. If they didn't have Hamilton right now, I'm guessing the theatre could be on the edge of collapse or actually collapse (if it isn't already). That said, given this revenue stream they probably also have been able to make more investment and risky decisions into their programming than they did before Hamilton. I don't know if that's true or not because I don't really follow their programming, though if someone is a regular theatre goer there I'm curious to see if you feel a strong difference in what you see now/over the years vs Pre-Hamilton
7. I'm not sure I understand why, but 'occupancy' expenses have risen dramatically from 14/15 to 21/22. From $600k to $4.8 million in 21/22. Can anyone explain this?
8. They seem to pay quite a bit just in travel expenses $2.4 million in 21/22 (and $1.2 million in 14/15). Not sure exactly what this might be for (e.g. flying creatives around for meetings, meeting with donors etc.?). To save money and the environment, can this be reduced?
9. They have written-off assets a lot more in 21/22 ($2.2 million) vs $800k in 14/15. Not sure what this is for, but this means their expenses are not just because costs are increasing but subtly because the value of things they own is decreasing too. Which is often hard to control.
10. Insurance is not as big as an expense as I would have thought - just $137k in 14/15 although now $400k in 21/22
11. In 13/14 they had about $12 million in public stocks etc. whereas in 21/22 this figure is almost $45 million!! With the economy as it is, could this be setting themselves up for more financial risk in the future if they don't get returns on this or even make significant losses?
12. The price of real estate must be increasing quite a lot. In 14/15 The land and buildings were valued at $18 million whereas they're now at $41 million.
13. There are details of what incentives The Public might have provided to people who provide grants, including "First Class or charter travel" (wonder if this is the travel expenses)
14. It looks like they are paying the Artistic Director handsomely (Paul J Eustis). In 14/15 he had a base salary of about $300k (which was very similar to the Executive Director), whereas in 21/22 it's almost $900k and substantially above the Executive Director now and all other executives. While this seems like a lot of money it could be fair if Paul is the person that, for example, is responsible for Hamilton and any other artistic successes that have helped the Public get to where it is today. Because without Hamilton, the public might be in serious trouble.
WHAT I WOULD DO TO SAVE THIS BUSINESS AS AN ARMCHAIR CEO WITH NO INSIDER CONTEXT LOL (and probably obvious points especially to them who are literally doing this, the challenge is really the execution not the goals I'm guessing):
Revenue
1. Double down on finding programming that is likely to have commercial success outside The Public in future so they can collect Royalties, like Hamilton. The Alicia Keys musical could be a promising example of this.
2. Be careful about big bet investments in this economy and where you have invested your money...I hope whoever is making these decisions know what they're doing so you don't cause more problems.
3. Keep doing what you are doing and double down on the focus of grants and donations, because it's clearly your most important source of income. I'm guessing this is a very hard job especially if they try to control the programming, which might effect your ability to achieve the goals in 1.
Costs
1. Making the right decisions to reduce the workforce if it can be done sustainably because clearly salaries are one of your biggest expenses and easy to control. Perhaps continue to find ways to do this
2. Your 'other expenses' have increased from 14/15 to 21/22 from $12.8 million to $25 million. That is a lot. Can you find ways to reduce expenses in the below categories?
- I must admit, optically it looks a bit weird that 'management' in 14/15 was $170k and now it's $2 million. I assume there is more complexity here than meets the eye though.
- Your IT costs were $200k in 13/14 now $1 million in 21/22. Not sure what this includes and maybe you're getting much more value from your technology now than in 14/15 that will show up in reduced costs elsewhere or new revenue, but it feels like a large increase. You are a small company not a multinational corporation. Did someone convince you to migrate to Cloud services and you're footing the bill? Get people to scrutinise these costs. It's common for organisations to migrate to the cloud without good financial management
- No idea what's going on with those occupancy costs. Again I'm sure meets the eye but it's a striking difference
- Encourage people not to travel unless absolutely necessary both for cost and environmental reasons
- Overall, I can see that there is no one easy answer to reduce your costs. It needs to be an organisation-wide to find small savings in every corner that will add up.
-------------------
I don't look at these statements and think in any way the company is being poorly run and everything is a lot harder than someone looking at a public statement and trying to find opportunities, but for the sake of NYC arts we need you!
Updated On: 7/15/23 at 06:38 AM
Posted: 7/15/23 at 7:39am
Seeing as he’s making almost a $1m and the staff is making… a lot less… I think he could stand to take a pay cut to really help the struggling theater.
Posted: 7/15/23 at 8:55am
Quite a deep dive above! Thanks for the highlights.
offering a few random tidbits as someone who works in nonprofit NYC theater.
1. That IT budget is big, but absolutely standard now. And there is no way to reduce it. It’s not that someone “convinced” them to migrate to cloud based payment processors and data storage, it’s that it is now required. Non profit theaters no longer have the infrastructure to host private servers on site. Hacking has become an organized, global operation, and they now target small companies who don’t have robust security measures for their data. If you host your own servers/data, you are liable for anything that might happen to your customer data. My company had to make this jump to the cloud, with the ticketing company we utilize now storing our patron/payment data. Because we simply cannot afford the proper PCI Compliant security features on site. One data breach, and the legal fallout of said breach, would completely sink the company. So we must go for the more expensive route of having the data cloud hosted elsewhere. This is a new major expense for all theaters in the past several years.
2. Sorry but $900k is far too much for Eustis’ salary. I acknowledge that the Public is a positively enormous entity. So it’s difficult to make an apples to apples comparison to many other NYC theater orgs. But other folks in his position at other companies fall within the $300-$600k range on average. The insane jump in his salary you found supports that he was previously being paid more in line with industry standard not too long ago. I’m not saying that his contributions are not meaningful or not deserving of adequate compensation…but he runs a non profit. Most boards implement a type of “cap” on payment for the execs. I don’t understand how he jumped up this much in pay. I realize it’s not the most expensive line item here by any margin, but Shaving off a couple hundred thousand from that one salary would still afford him an incredibly wealthy lifestyle while saving several key job positions.
3. Thank you for illuminating the fact that ticket prices at non profits don’t cover squat. YES we should all be thinking of our ticket purchases here as a contribution to the arts! My theater is purposefully priced at an insanely low rate, as part of our mission to make art affordable and accessible. Yet audiences still act unbelievably entitled and get indignant at certain price points. And I just want to be able to shout at them: Do you realize that your ticket covers NOTHING?! ABSOLUTELY NOTHING!
sigh. It’s hard out here for the non profits yall
Updated On: 7/15/23 at 08:55 AM
Posted: 7/15/23 at 9:20am
Eustis says in the statement he's taking a salary cut and will be the only person who "would or should" be asked to. Also, 600k ain't the problem here.
Overall, great analysis binau!
It's also notable they are reducing the season from 11 productions in 18-19 to 5 productions this seasons. That's a seriously dramatic reduction in expenses. But also, less shows means less ability to make earned revenue. So, a gamble.
Posted: 7/15/23 at 9:50am
RippedMan said: "Seeing as he’s making almost a $1m and the staff is making… a lot less… I think he could stand to take a pay cut to really help the struggling theater."
Eustis states in the article that he is taking a salary reduction, but his salary is not at all out of line for the CEO of an organization with The Public's budget and scope. In fact, it is probably low, particularly for NYC.
I'm just a focus group of one, but I attend shows at The Public less than I did 5-10 years ago when I found more of their programming to be "can't miss."
Posted: 7/15/23 at 11:12am
It's tough when a theatre company becomes this big, it kind of prevents an Artistic Director from being involved with any micro-elements. The actual running of the artistic side comes down to the three AADs and their underlings –– which makes the producing feel more committee-like. (Which some might view as a plus for diversity.) I think there's a element lost when the Artistic Director can ONLY be big-picture.
Also have to wonder why places like the Public and LCT have continued to have so many services in-house. With the Public, that includes Press/Ad/Marketing, Casting, and Production, some of which might be done more efficiently by contracting outside agencies.
Should also be noted that they're about to break ground on the massive Delacorte renovation. That's a Capital Campaign project so it's mostly funded separately, but it's still something that takes up time and resources from the existing team.
Posted: 7/15/23 at 4:13pm
binau said: "Looking a bit more closely at the statement from 14/15 (when Hamilton was produced), a couple interesting things I see (also I'm tired so feel free to scrutinise or correct mistakes - I don't want to pretend to be an expert). There are likely mistakes in the below and it's just for fun so do look critically.
7. I'm not sure I understand why, but 'occupancy' expenses have risen dramatically from 14/15 to 21/22. From $600k to $4.8 million in 21/22. Can anyone explain this?
12. The price of real estate must be increasing quite a lot. In 14/15 The land and buildings were valued at $18 million whereas they're now at $41 million.
- Your IT costs were $200k in 13/14 now $1 million in 21/22. Not sure what this includes and maybe you're getting much more value from your technology now than in 14/15 that will show up in reduced costs elsewhere or new revenue, but it feels like a large increase. You are a small company not a multinational corporation. Did someone convince you to migrate to Cloud services and you're footing the bill? Get people to scrutinise these costs. It's common for organisations to migrate to the cloud without good financial management
- No idea what's going on with those occupancy costs. Again I'm sure meets the eye but it's a striking difference"
Really great analysis. I appreciate you chatting about this.
For the real estate and IT points:
Besides the old Astor Library building and the Delacorte, the Public occupies rehearsal studios across the street as well as additional office space close by. I heard that those two spaces were bought or leased back in 2018 or 2019 due to the growth of their staff not all fitting in their space at the theater and because with all the shows they were doing, they were spending more money booking other rental space for rehearsals than just owning their own.
And with IT, like with many other businesses and whatnot post-pandemic shutdown, they have more staff working remotely and they need all the equipment and the connections to enable that to work. Pretty sure they still aren't required staff to come back into the office in-person.
The Public is just adding to the list of other "major institutions" that are going difficult times, post-pandemic. Who know who will be next? LCT? Roundabout? Kennedy Center? We'll see how these non-profits fare in five, 10 years from now.
Posted: 7/15/23 at 4:36pm
This has been one of my favourite discussions in a while because we have real data to work from and people here that can provide inside context and seem to know so much. Thank you all!!!
Posted: 7/16/23 at 9:48am
For anyone more in the know, if we consider then that by far (at least for the public) it's donors/grants that seem to be the most important source of revenue (with Hamilton's royalties lol), can anyone shed light on how much of this might vary between entities such as:
1. Private individual donors that are 'normal' people (i.e. just fans who want to give a few dollars to more here and there)
2. Ultra rich people that donate significant amounts of money
3. Corporations
4. Government
And in the case of very significant donations or grants, can these/do these actually influence programming decisions? E.g. if I was a billionaire and I said to the Public I'll give them 10 million $ but I want to make sure that the programming has at least one LGBT-related show or new artist or POC theme or musical or whatever it may be, would I ever actually be able to have influence over this? The reason I ask is I'm curious what kind of political game the Public or other NFP have to play with very important donors and if it starts to create additional challenges for them (e.g. if the donors are steering them to produce shows that will have no long-term commercial value* that would be at odds with finding a hit to transfer to Broadway)...is that something they might realistically face?
* I recognise this sounds like it should be the purpose of a NFP theatre anyway, but it wouldn't be sustainable for the Public to only do this unless they can find a way to significantly increase their donor base or reduce their costs.
Posted: 7/16/23 at 2:23pm
I work in the non-profit world and it's VERY common to have donations that fund specific programs or come with stipulations, especially for larger donations. I doubt that donors would ever get specific control over programming to the level of "here's $10 mil, do King Lear for Shakespeare in the Park next year." At that point, just work with them as a co-producer providing enhancement. But, you could definitely have a donor who donates to the Public to support the development of works created by and featuring Asian-American artists. If the Public doesn't develop and stage anything that fits this criteria, that money will just sit there until they do. Or they could donate to Shakespeare in the Park and if, let's say, the Public ends up deciding not to do it next year while the Delacorte is being renovated, that money won't be available for other purposes.
Posted: 7/16/23 at 2:33pm
I'm on several nonprofit boards and restricted gifts are not uncommon. With the groups I'm affiliated with, staff and the fundraising committee will not accept a restricted gift if it does not align with our overall mission and current goals and objectives. In some cases, they will also negotiate a bit about the scope and terms of the gift so that it is not too restrictive.
Posted: 7/16/23 at 7:13pm
I’m guessing the board approved Eustis’s salary and he earned and deserve it.
I did notice he turns 65 later this month. Do you think he will choose to retire soon?
Posted: 7/16/23 at 9:23pm
ErmengardeStopSniveling said: "It's tough when a theatre company becomes this big, it kind of prevents an Artistic Director from being involved with any micro-elements. The actual running of the artistic side comes down to the three AADs and their underlings –– which makes the producing feel more committee-like. (Which some might view as a plus for diversity.) I think there's a element lost when the Artistic Director can ONLY be big-picture.
Also have to wonder why places like the Public and LCT have continued to have so many services in-house. With the Public, that includes Press/Ad/Marketing, Casting, and Production, some of which mightbe done more efficiently by contracting outside agencies.
Should also be noted that they're about to break ground on the massive Delacorte renovation. That's a Capital Campaign project so it's mostly funded separately, but it's still something that takes up time and resources from the existing team."
I do think this is an interesting issue only because I work for a company that very much does this model. We have a core staff and then job out the other duties to other companies, which keeps our overhead very low - we're all full time with benefits, etc - but it keeps from having to pay too many people, etc. So that could be an interesting model.
I don't think their programming is the issue though. I mean they just had Fat Ham which went to Broadway, so the appeal is still there. Maybe they should branch into other avenues as well. Have bands in their spaces, have comedians, etc.
Posted: 7/16/23 at 10:03pm
Wick3 said: "I’m guessing the board approved Eustis’s salary and he earned and deserve it.
I did notice he turns 65 later this month. Do you think he will choose to retire soon?"
I think he'll leave once his current contract is up. He knows that his time is coming up and will hopefully set up a non-cis white man as his predecessor
RippedMan said: "I don't think their programming is the issue though. I mean they just had Fat Ham which went to Broadway, so the appeal is still there. Maybe they should branch into other avenues as well. Have bands in their spaces, have comedians, etc."
They have Joe's Pub.
Posted: 7/16/23 at 11:36pm
binau said: "1. Private individual donors that are 'normal' people (i.e. just fans who want to give a few dollars to more here and there)
2. Ultra rich people that donate significant amounts of money
3. Corporations
4. Government"
Categories 2 and 3 will comprise the vast majority of contributed income for a nonprofit of this size.
Donors listed here on their website, though there's a lack of specificity as to when those gifts were made and how they're being categorized.
Regarding government funding, those amounts are minuscule in America compared to places like the UK. The Public website currently lists (1) $500K+ from NYC Dept. of Cultural Affairs (but I don't know if any of that is in-kind related to Shakespeare in the Park), and (2) $500K+ from FEMA (that's not happening again obviously). They also received $74,500 from the NEA towards Public Works in 2023.
Posted: 7/17/23 at 7:56am
ErmengardeStopSniveling said: "binau said: "1. Private individual donors that are 'normal' people (i.e. just fans who want to give a few dollars to more here and there)
2. Ultra rich people that donate significant amounts of money
3. Corporations
4. Government"
Categories 2 and 3 will comprise the vast majority of contributed income for a nonprofit of this size.
Donors listed here on their website, though there's a lack of specificity as to when those gifts were made and how they're being categorized.
Regarding government funding, those amounts are minuscule in America compared to places like the UK. The Public website currently lists (1)$500K+ from NYC Dept. of Cultural Affairs (but I don't know if any of that is in-kind related to Shakespeare in the Park), and (2) $500K+ from FEMA (that's not happening again obviously). They also received $74,500 from the NEA towardsPublic Works in 2023."
The Blavatnik Foundation is a long term donor to The Public. Blavatnik claims he's not one of Putin's oligarchs but others have pointed out, correctly I think, that he's the most successful of Putin's oligarchs in that he has successfully laundered his money in US and UK business and philanthropy.
The other name in the over the 500K line is Stephen Schwarzman, the owner of The Blackstone Group, a big Trump supporter and the owner (sorry, manager) of basically every company in America. Blackstone probably owns (sorry, manages) a part of where you work, sleep and go to get medical care.
Posted: 7/17/23 at 8:26am
I work in the nonprofit sector where donors continually comment in the salaries of executive officers. It’s up to the board of directors to establish the pay range and if they are financially qualified, will base the salary using revenue and expenses in mind. A successful executive who runs an organization is not going to work for peanuts as they can make a higher salary elsewhere. You get what you pay for. With a huge staff, that’s the place where cuts will take place just like in the corporate world. It’s harsh for sure but theaters and shows have not rebounded from pre Covid numbers and revenue sources have also been impacted. It has more to do with inflation than anything else.
Updated On: 7/17/23 at 08:26 AM
Posted: 7/17/23 at 10:20am
One thing to take into account (and its been hinted at here) is that most donations are made for a particular program or use. The thing that most non-profits need are unrestricted funds to help with the day-to-day running of the business. General operating grants are hard to come by and competitive to secure. It's along the lines of what MCW1227 just said about the salaries of executive officers. People want to donate money that they can see - money toward specific programs or productions. People bristle at the thought of their money going directly into another person's pocket. But general operating grants are essential to helping non-profit arts organizations through this remarkably challenging time. We're starting to see a small shift toward these kind of donations as more people become aware of how important unrestricted money can be to an organization. Had we a functioning and well-funded NEA, the government could help with these types of funds while donors could still 'see' their donations. Alas...
