This is the inaugural edition of Managing Expectations, a new monthly column about the world of theatre management, administration, and producing.
I’m writing in late August. If you live in Wisconsin, and perhaps if are a fan of “Game of Thrones,” it is also known as “Winter is Coming.” Soon our temperatures will fall into the 50s and the Green Bay Packers will start playing, signaling that it’s time for two important milestones at my theatre: the launch of our fall productions and the beginning of budget season.
We’ve been diligently preparing all summer for both. But as we start to put pen to paper on our 65th anniversary season at Milwaukee Repertory Theater, I’ve been wrestling with how we as a field define risk in the American theatre, particularly in relation to mission fulfillment.
As 501(c)3 nonprofit organizations, regional theatres have the responsibility and privilege to represent our communities, and in many cases our communities have changed or are changing rapidly, which should beg the question: Are our theatres keeping pace? Or maybe even leading? If not, what role does fear play in our decision-making?
During the last global economic crisis, several theatres exhausted their cash reserves and dipped into their endowments, while earned revenue became much more of a driving factor to offset plummeting sources of contributed revenue. For some theatres to remain alive, box office revenue had to become king, and that is heavily driven by show selection. In an attempt to adapt to the worsening economic environment, some began to program “safer” seasons, while others increased ticket prices to drive more revenue and adopted business models that looked far more similar to Broadway than regional theatres just a few years prior.
I had a small consultancy practice at the time, and I noticed that many of my clients were selecting their seasons from a place of fear: What shows, they wondered, were “guaranteed” to bring in the money? In a time of growing uncertainty, the one variable that could be controlled were operating expenses. Shows got smaller, cheaper, and less “risky,” although as I’ve previously discussed, trying to determine what is “safe” in the theatre could be considered a fool’s errand. For many of these theatres, one wrong move was the difference between life and death. While perhaps necessary at the time, the adjustments they made were not part of a forward-thinking strategy.
Almost a decade later, the stock market is hitting all-time highs, but the field hasn’t yet fully recovered. The most recent TCG Theater Facts report shows that total attendance has decreased and subscription tickets sold are at a five-year low, while every category of expenditure was higher in inflation-adjusted dollars over time, working capital was negative in every year from 2011 to 2015, and growth in cash reserves lagged inflation by 26 percent. It’s not surprising that many theatres remain as risk-adverse today as they were during the height of the recession, because there is no safety net. But perhaps the greatest risk today is to wait until sunnier forecasts arrive to make vital programmatic adjustments that are desperately needed to serve mission and communities.
Two years ago I was lucky enough to participate in Harvard Business School’s Strategic Perspectives in Non-Profit Management as part of their Social Enterprise Initiative. In all honesty, I anticipated that this would be another program where business executives try to tell nonprofit leaders how we need to operate like for-profits. To my complete surprise, Prof. Dutch Leonard opened the program by saying that unlike our for-profit counterparts, nonprofit leaders have a much more complex landscape to maneuver, as our measures of success don’t come as easily. Rather, while for-profits measure themselves in part on the x- and y-axes of profits and losses, we must also weigh a z-axis: mission fulfillment.
Being theatre managers, many of us remain more comfortable working on the x- and y-axes, much like our for-profit counterparts. But it is critical for us to lead on mission. Strengthening the financial position of a theatre is useless unless it is in service of what we endeavor to accomplish. In the dual leadership structure of many regional theatres, it is often expected that the artistic director will take the lead on mission and vision, and that artistic directors will fight hard for the programmatic future they’d like to see.
But managing directors are equally responsible for ensuring that future, and, I’d argue, have a greater responsibility to advocate. Why? Boards of directors can gravitate toward managing directors. As corporate leaders fill spots on nonprofit boards, there’s a natural affinity: Managing directors speak their language. We often have fancy graphs and sophisticated data analysis. When given the preference between talking financials and discussing mission, some trustees may feel more comfortable with the former rather than the latter. That’s why boards need to hear it from managers too: Playing it “safe” is no longer safe, if it ever was.
I don’t mean to advocate that prudent financial management is uncalled for—only that we need to recalibrate how we measure and discuss risk. We can also prepare our theatres to reasonably take on additional perceived risk. In joining Milwaukee Rep, I didn’t anticipate that after 60 years in business it would want to redefine the mission of the company. But in taking a hard look at how to best serve our community, we recognized that what worked previously does not work now. Together with our visionary artistic director, Mark Clements, an engaged board, and dedicated community leaders, staff, and artists, we boldly stated a new vision for the future and developed a strategic plan to support it.
From this work, expertly guided by Greg Kandel of Management Consultants for the Arts, came an amazing opportunity: a community galvanized around a stretch goal for how a theatre could lead in a post-industrial Midwest city with plenty of opportunity. For this goal to be achieved, we needed significantly more investment, and launched a $10-million capital campaign to support programs, not brick and mortar. The campaign built our endowment, increased our cash reserve, and gave us seed money for important new-play and community engagement programs.
But most importantly, it gave us the ability to risk. In raising money as part of this campaign, we found that many donors understood that risk capital was the only way to look beyond today to address tomorrow.
Change is hard. I’ll admit it sometimes scares me. There are no guarantees. But how is that different from anything else in the theatre? It does surprise me when theatres elect to stick with a failing business model that is most certainly destined to lead to disastrous results over the long term rather than risking throwing it out the window for a shot at success. Why rearrange the chairs on the Titanic? Better to build the best life raft you can, take a leap, and paddle in the direction you want to go.
Adopting temporary tactics to weather a storm is perfectly understandable in most cases. But we can’t adopt long-term strategic plans with the primary goal of simply staying alive. If we aren’t fulfilling our missions, what is the point? We have the privilege to produce art that reflects of the diverse communities we serve; to employ artists who push us beyond our comfort zone; to engage, develop, and nurture a heterogeneous talent pool that challenges us to examine the issues our communities grapple with from multiple perspectives. If the fear of the unknown is so overwhelmingly daunting, consider what it would be like if your theatre becomes entirely irrelevant.
This is not meant to imply that we, or any of us, have it all figured out. Far from it. Only that I’m beginning to look at risk a little differently.
Chad Bauman is the managing director of Milwaukee Repertory Theater.
