SUPPORTS ITEM NO. 3
CS&B COMMITTEE AGENDA
JULY 20, 1995
POLICY REPORT
FINANCE
Date: June 27, 1995
TO: Standing Committee on City Services and Budgets
FROM: Director of Civic Theatres
SUBJECT: Theatre Rental Rates -
September 1, 1995 to August 31, 1996.
RECOMMENDATION
THAT Council approve the Schedule of Rental Rates and Conditions
for Civic Theatres, as detailed in Appendix A, effective
September 1, 1995.
CITY MANAGER'S COMMENTS
The City Manager RECOMMENDS approval of the foregoing.
COUNCIL POLICY
Council annually approves the Schedule of Rental Rates for the three
civic theatres. Included is a special rate for secondary school
graduations and an administrative adjustment benefitting back-to-back
pairs of school concerts by the Vancouver Symphony Orchestra and the
necessary adjustment to grants in lieu of rent to accommodate the
changes in Rental Rates.
SUMMARY
The report recommends an increase in the rental rates for the Queen
Elizabeth Theatre (QET), Vancouver Playhouse and Orpheum. The rental
increase for the Playhouse is from $1,850 for an evening event to
$1,875, or 1 percent. The recommended increase for the QET and
Orpheum is from $6,500 to $6,800 for an evening event, or 4.6 percent.
The body of the report goes into some detail to explain the increases
in terms of the anticipated impacts on ticket prices, costs to
presenters and the effect on the grants equal to rent programme.
PURPOSE
This report seeks approval of the Schedule of Rental Rates, Appendix
A, for uses of the Queen Elizabeth Theatre (QET), Vancouver Playhouse
and Orpheum for the period September 1, 1995 to August 31, 1996.
BACKGROUND
Rental rates, summarized in Appendix A, are reviewed during
preparation of the annual operating budget and any adjustments are
made effective September 1 of each year, in alignment with the
traditional performing arts season. The rental rates are periodically
reviewed in relation to those of other comparable facilities in other
cities to ensure that Vancouver's rates are correctly placed in
relation to the local, national and international markets. Rate
changes also reflect changes in the costs of operation as affected by
the City's collective agreements and various purchased services (e.g.,
heating, lighting).
A special rate for secondary school graduations was originally
instituted to attract theatre uses at a time of year when the theatres
were generally under-utilized. The number of graduations held at
Civic Theatres has grown from 5 in 1986 to 23 during the 1994/95
season.
The Vancouver Symphony Orchestra (VSO) stimulates the develop-ment of
new audiences by scheduling special back-to-back one-hour concerts for
school audiences at a ticket price of $5.00. For the convenience of
the schools, these concerts are held at 10:30 a.m. and 12:30 p.m.,
spanning the lunch hour. The number of these concerts has grown from
4 (in 2 days) in 1988-89 to 12 (in 6 days) in 1994-95, attesting to
their popularity.
DISCUSSION
Base Rates
The proposed increase for the Vancouver Playhouse this year from
$1,850 to $1,875 for an evening event is equal to 1 percent. In 1994-
95 there was no increase in the Playhouse rental rate. The base rent
for the Playhouse is already high enough to discourage unsubsidized
uses so we are proposing to deliberately keep the increase at a
minimal level.
The proposed increase for the Queen Elizabeth Theatre and the Orpheum
from $6,500 to $6,800 for an evening event is equal to 4.6 percent.
(The rental rate increase for 1994-95 was 4 percent.) We believe this
is the maximum increase the market will bear. It is also the minimum
increase needed to meet the objective of the 1995 operating budget
based on the estimated number of events that will occur after
September 1, 1995.
This increase in the QET and Orpheum rent may cause some of the
presenters a certain amount of stress as they try to balance an
increase in cost of presentation with the ticket buyers' price
resistance. If a presenter holds the line on ticket price increases,
for a ticket priced at $30, a presenter will have to sell 10 more
tickets or forego revenue on 10 more tickets than last season. On a
per-ticket basis, the rent increase would add $0.11 to the price of a
ticket based on a capacity audience. If a presenter is budgeting for
break-even at 50 percent of capacity, the increase in the ticket price
would have to be $0.22.
This increase translates to a rental rate of approximately $2.43 per
seat for events at the QET and Orpheum, up from $2.32. The Playhouse
rate translates to $2.80 per seat. For the sake of comparison the
Ticketmaster handling charge ranges from $2.00 to $4.50 per ticket for
single ticket sales, $0.50 for subscription sales. A $30 ticket, which
costs the ticket buyer $35.10 ($30, plus $2.10 GST, plus $2.00
handling, plus $1.00 Civic Theatres Capital Surcharge), will return
$27.57 to the presenter as compared with $27.68 last year, again based
on a capacity audience.
Grants Equal to Rent
Local non-profit performing arts presenters may receive support in the
form of Category II or Baxter Fund grants equal to rent. Category II
grants are awarded to established non-profit presenters, including:
Vancouver Symphony Society, Vancouver Opera Association, Vancouver
Playhouse Theatre Company, Ballet B.C., Vancouver Chamber Choir,
Vancouver Bach Choir, Festival Concerts Society, Friends of Chamber
Music, Vancouver Recital Society, and others. Baxter Fund grants are
awarded to newly formed performing arts groups or to special
programmes or to organizations who present infrequently. Licensees
who have benefitted include: Early Music Vancouver, Music in the
Morning, Vancouver Youth Symphony Orchestra, Vancouver Professional
Theatre Alliance, and others.
Provided Council approves the usual equivalent increase in the grants
budget, the local, City supported non-profits are insulated from
financial impacts for those uses of the theatres which are covered by
the grant programme (which will be the subject of an upcoming council
report). However there are direct and indirect impacts on some of
these groups. Based on the 1994-95 season, the impacts would be as
follows.
Vancouver Opera Association (VOA) did not receive grants for seven
performances of "The Pearl Fishers" and three recitals. On the basis
of last season, the proposed rental increase would cost the VOA an
additional $3,000 plus GST. Ballet B.C.'s own programme is covered by
grants except for some time used on an hourly basis. The proposed
increase in rent would cost them an additional $1800 based on 1994-95.
Ballet B.C. also present the Dance Alive series of visiting dance
companies whose performances are not covered by grants. The Dance
Alive series is important to Ballet B.C. for cultivating and
developing a dance audience in Vancouver. Ballet B.C. may be
concerned about the impact of this increase on its ability to attract
the touring dance companies. There were a total of 12 performances
presented by 4 visiting dance companies not covered by grants. The
increased cost for these performances would be $3,600, plus GST. In
addition, the Vancouver Recital Society presented one performance of
Cecilia Bartoli without a grant.
Special Rates
Supporting high school graduations with a special afternoon and
evening rate serves the community by providing a safe and suitable
venue when the schools' own facilities are inadequate for one reason
or another. Upwards of 30,000 people attend these graduation
exercises. We feel that, in addition to fulfilling a community need,
attending a graduation exercise in the QET or Orpheum increases the
image of accessibility to Civic Theatres for other events.
The VSO began hosting the mid-day school concerts in 1988. Each pair
of school concerts is attended by approximately 2,700 students. In
1994-95 there were 12 school concerts in 6 days with a total
attendance of approximately 30,000 students. In recent years theatre
staff have been reporting increasing numbers of "younger faces"
attending regular series VSO concerts.
The VSO student concert rental rate is a simple administrative
adjustment to deal with the irregularity of scheduling two back-to-
back one-hour concerts which span two separate rental periods. For
the convenience of the schools, these concerts are scheduled at 10:30
a.m. and 12:30 p.m. Standard policy is to charge 150 percent of base
rental for two back-to-back performances occurring in the same rental
period. This report requests approval to charge 150 percent of base
morning rental foreach pair ofthese concerts during the1995-96 season.
FINANCIAL IMPLICATIONS
While theatre rental revenue is by far the major source of Civic
Theatres revenue at a budgeted $3,280,800 for 1995, the rate increases
only affect the last four months of the current year. This increase
will generate an additional amount of approximately $45,000 in 1995.
The major benefit to the operating budget will occur in 1996.
The basic rental increases recommended in this report are the maximum
we believe the market can bear. The increases are also the minimum
needed to achieve the objective of the 1995 operating budget at the
time the budget was tabled.
The special rates for high school graduations and the VSO's back-to-
back school concerts generate revenue above the incremental costs of
operation and contribute to the operating overhead.
We estimate that this rental rate increase will add $19,120 to the
remaining grants budget of $522,900, for the period September 1 to
December 31, 1995.
IMPLICATIONS FOR CHILDREN AND FAMILIES
The special rates for graduations and student symphony concerts
facilitate access for children and families.
COMMUNICATIONS PLAN
The proposed increased rental rates have been verbally communicated to
Licensees booking dates after September 1, 1995 during the course of
normal business. The proposed increases have also been recently
circulated to Licensees in a News-letter.
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