Agenda Index City of Vancouver

POLICY REPORT
FINANCE

TO:

Vancouver City Council

FROM:

Director of Civic Theatres

SUBJECT:

Theatre Rental Rates for September 1, 2001 to August 31, 2002.

 

RECOMMENDATION

COMMENTS

POLICY

Council annually approves the Schedule of Rental Rates for the three civic theatres as well as the necessary adjustment to the Theatre Rental Grants budget to accommodate the changes in rental rates.

PURPOSE

This report seeks approval of the proposed Schedule of Rental Rates attached as Appendix "A", for uses of the Orpheum, Queen Elizabeth Theatre and Vancouver Playhouse, during the period September 1, 2001 to August 31, 2002. It also requests approval of a matching increase in the theatre rental grants budget for the fall of 2001, should an increase be needed.

BACKGROUND

Rental rates are reviewed each year during the preparation of the annual operating budget and any adjustments are made effective September 1st of each year in alignment with the traditional performing arts season. The rental rates are periodically reviewed in relation to those of comparable facilities to ensure that Vancouver's rates are correctly placed in relation to the local, national and international markets.

In 2000 the increase was equal to 4% for all three theatres.

DISCUSSION

The Performing Arts and Live Entertainment Environment

In the year 2000 VCT experienced an increase of 11% in total events and total audience compared to 1999. Perhaps optimistically, we planned for a comparable increase in 2001 but it has not yet materialized and it is unlikely we will reach our goal by year end.

Popular concert industry statistics for 2000 showed that the total box office gross for North American exceeded the 1994 gross for the first time although the total number of tickets sold remained below that record high. The new record was set due to higher ticket prices, perhaps due in part to reduced competition in the market resulting from the massive consolidation in recent years led by SFX. In 2000, SFX reported total ticket sales and box office gross for North America that were five times their nearest competitor, House of Blues. This trend is represented locally by the SFX/Core Entertainment office at GM Place presenting popular music there and elsewhere, including VCT, and family entertainment, including the upcoming "Blues Clues Live" at the QET in July. House of Blues has been effectively shut out of GM Place by this development while retaining access to the Pacific Coliseum, VCT, the Vogue and of course their own Commodore Ballroom.

The SFX Broadway division based in Toronto has been gradually increasing activity in Vancouver with the recent run of "Rent" and the 2-week run of "Les Miserables" in early September. These are "A" tours out of the US and if audience response is good, we hope to see the trend continue into 2002.

A major issue for these presenters continues to be the value of the Canadian dollar against the US dollar. The difference that supports a high level of US film activity here works against the touring attractions since the ticket price will have the same face value in Canada as in the US but the artists are paid in US dollars, significantly reducing the profitability of these shows and concerts when in Canada. The risks to the promoters are considerable.

The most stable presenters in this volatile and difficult market remain the Prime Performers,the eight resident performing arts companies: Playhouse Theatre Co., Vancouver Symphony Orchestra, Vancouver Opera Association, Ballet B.C., Vancouver Recital Society, Friends of Chamber Music, Vancouver Bach Choir and Vancouver Chamber Choir. While they are comparatively stable and consistent in their seasons, none of us take this apparent stability for granted. A great deal of hard work and risk is entailed in their continued activity.

The Theatre Rental Market - Comparisons

This year, in comparing our rental rates with other theatres on the US west coast and across Canada, we added a few more venues and verified their published rates and the variables in their rental structures directly with them. The results are shown in Appendix "B"(on file in City Clerk's Office).

As noted in previous years, the majority of theatres in North America use a flexible rental structure usually based on a minimum rent roughly equal to $1.00 per seat available against a percentage of the box office (between 5% and 11% in the theatres surveyed). There is usually a maximum although it is often not stated publicly. These theatres also usually add staff costs on top of the rent and some even charge for the use of the theatre's lighting and sound equipment. These flexible rates tend to change little from year to year, apparently relying for their inflationary increases on the fluctuations in the ticket prices and by passing on changes in labour rates..

Commercial rental rate

Last September, Council approved a three-year trial of a similar rental rate structure, agreed to by the commercial presenters. In place of the flat rate, we charged commercial concerts a minimum rent of $5,000, including labour costs, against 8% of the box office receipts to a maximum of $10,000. We introduced this new rate in September, 2000 applying it only to a group of presenters who are competitive with each other in the same market niche so that no one had an advantage over any other.

Negotiations are ongoing with the major presenters in this group about how to revise the flexible rates for 2001-2002 and will be the subject of a separate report in the near future.

Proposed Increases

The proposed increase in the flat rental rate for the QET and Orpheum is $400 per evening to $8,300 from $7,900, equal to an increase of 5%. The propose increase for the Playhouse is $90 per evening from $2,130 to $$2,220, equal to an increase of 4%.

These increases attempt to address the increased labour costs resulting from last year's settlements of collective agreements and the increase in energy costs to the theatres whichwas nearly $200,000.

Theatre Rental Grants

Local non-profit performing arts organizations may receive support from the City in the form of Theatre Rental Grants or Baxter Fund Grants. Theatre Rental Grants are awarded to the established non-profit presenters: Vancouver Symphony Orchestra, Vancouver Opera Association, Ballet B.C., Playhouse Theatre Company, Vancouver Bach Choir, Vancouver Chamber Choir, Vancouver Recital Society, Friends of Chamber Music, Vancouver Academy of Music, Coastal Jazz and Blues Society, and Vancouver Youth Symphony. Cantata Singers. The Vancouver Foundation's Baxter Fund Grants, administered by the City of Vancouver, are awarded to smaller, developing performing arts organizations or to special programmes. Licensees who have benefited in the past year include: Pandit Jasraj School of Music, BC Chamber Orchestra, Vancouver Lesbian & Gay Choir, Vancouver New Music Society, Goh Ballet, BC Choral Federation, Chor Leoni Men's Choir, Dancing on the Edge Festival, Seniors Research Group of Chinese Opera, Modern Baroque Opera, Early Music Vancouver.

The Director of Cultural Affairs advises that the Baxter Fund has a declining balance and will run out of funds in 2004. The Director of Cultural Affairs also advises that rental increases accelerate the depletion of the fund.

Grant recipients are insulated from increases in rental rates for those uses covered by grants, however it must be noted that not all of these licensee's uses are covered by grants, so there are financial impacts. Ballet BC, for example, receives grants for their own presentations but does not receive support for the touring companies presented in the Dance Alive! series; Royal Winnipeg Ballet, National Ballet etc. In these instances, the rental increases directly affect the visiting companies and can be seen to create a hardship. There are also other regular, non-profit users, such as the Coastal Jazz and Blues Society and the Cantata Singers, who do not receive grants for some of their uses.

Graduations

High school graduations have been provided a special rental rate for many years. The rate encourages their use of the theatres at a time when other bookings usually are low, and it facilitates their access when their own venues are often inadequate for one reason or another. This special rate pays for the incremental costs of operating and still makes a contribution to operating overhead.

This year there are 17 grads scheduled.

FINANCIAL IMPLICATIONS

This rental rate increase impacts on the last four months of 2001 and the first 8 months of 2002.

The 5% increase in rental rates addresses the increase in labour costs and the increase in energy costs.

The City-supported non-profit performing arts organizations are insulated from impacts of this increase for uses of the theatres that are covered by the grants programs. As noted earlier, not all uses are covered by grants.

The rental rate increase will add $36,000 to the budget required to cover theatre rental grant uses for the last 4 months of 2001.

COMMUNICATIONS PLAN

The proposed new rates have been provided to Licensees for several months when making bookings for dates after September 1, 2001. A notice was also sent to most Licensees on April 13 advising them of the proposed rental rate increases, inviting their comments and advising of the date of the Council meeting.

To date, only 2 users have responded with comments. Discussions are ongoing with the commercial presenters.

CONCLUSION

This annual report on Theatre Rental Rates proposes an increase of 5% for the Queen Elizabeth Theatre and Orpheum and an increase of 4% for the Vancouver Playhouse, effective September 1, 2001.

* * * * *

ag010710.htm

Comments or questions? You can send us email.
[City Homepage] [Get In Touch]

(c) 1998 City of Vancouver