ADMINISTRATIVE REPORT

Date: February 17, 1998

Author/Local:R.Ackerman/665-3020

CC File No. 4251

TO: Vancouver City Council

FROM: Director of Civic Theatres

SUBJECT: Civic Theatres Ticket Surcharge Increase

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RECOMMENDATION

THAT Council approve an increase in Civic Theatres’ Ticket Surcharge of $0.25 per ticket, on tickets over $12.00 in face value, effective July 1, 1998 and a further $0.25 per ticket, effective July 1, 1999; revenues to accrue to the Civic Theatres Capital Reserve.

CITY MANAGER’S COMMENTS

The City Manager RECOMMENDS approval of the foregoing.

COUNCIL POLICY

In 1982, Council approved the adding of a surcharge on tickets sold for events at the Orpheum for the purposes of funding a capital improvement project. In 1985, Council approved expanding the surcharge to include tickets sold for events at the Queen Elizabeth Theatre and Vancouver Playhouse. In 1992, Council approved an increase in the surcharge to $0.75 for City-supported performing arts organizations and $1.00 for all other events, subject to an exemption for tickets with a face value of $5.00 or less. The exemption was later increased to tickets of $8.00 face value or less.

PURPOSE

This report seeks Council approval to increase the Civic Theatres ticket surcharge by $0.25 per ticket July 1, 1998 and by an additional $0.25 per ticket July 1, 1999. It is also proposed that the exemption be increased to tickets with a face value over $12.00. This exemption favours children, students and seniors.

BACKGROUND

Revenue from the Civic Theatres ticket surcharge, along with operating surpluses from the QET parkade, accrue to the Civic Theatres Capital Reserve. Although there have been exceptions, the purpose of the Capital Reserve is to fund upgrades and improvements to the Queen Elizabeth Theatre, Vancouver Playhouse and Orpheum. Normal maintenance is funded from the operating budget and major infrastructure renewal is referred to the City Capital Plan.

The present programme of capital upgrades to the three theatres began in 1991. Since then, more than $6 million has been earned and committed to projects at all three theatres. One very important project was the long-range capital planning exercise and feasibility study, completed in 1993, with consultation from all of the major presenters who use the theatres. This plan provides the coordinating framework for all upgrades, renovations and major maintenance, so that any project undertaken has allowances made for adjacent projects that may be initiated in future phases.

The most high profile recent projects funded by the reserve include the acoustic upgrade of the Orpheum auditorium and the addition of public elevators to the QET parkade and lobby. Less visible, but of considerable benefit to presenters were the upgrades to the QET stage lighting system and the Orpheum sound system.

In recent years, the ticket surcharge has earned between $500,000 and $600,000 annually, with the parking revenues adding another $180,000 to $250,000.

DISCUSSION

While Civic Theatres and the Licensees had a virtual monopoly only three years ago, the recent addition of new performance spaces (Ford Centre for the Performing Arts, G.M. Place, the Chan Centre at U.B.C., Evergreen Centre for the Arts in Coquitlam, and the Shadbolt Centre for the Arts in Burnaby) has created new expectations in the audience. This in turn increases the competitive pressure on the presenters. Civic Theatres has a responsibility to support the resident companies and other presenters to the extent possible, in improving the quality of experience, access to amenities and cost effectiveness of operations.

Civic Theatres had hoped for some participation from the Canada/B.C. Infrastructure Works Programme and the recent extension of that programme. No award was made the first time around and there has been no indication of an award from the extension of the programme.

Civic Theatres and the major Licensees believe that public fund raising efforts would dilute the critical fund raising efforts of the resident performing arts companies and therefore be ultimately counterproductive.

In the absence of any apparent funds from outside sources, Civic Theatres seeks to increase the rate of earned revenue to the Capital Reserve in order to accelerate upgrading of the theatres.

Impacts:

As a user-pay system, it earns money from the end-users of the theatres, the audiences, without regard for where they live and pay taxes. This is significant given that, according to our most recent audience survey, 42% of the patrons live in the City of Vancouver and 58% in the surrounding municipalities and beyond.

On the other hand, some Licensees of the theatres (the presenters and producers) are quite sensitive to increases in the surcharge. They tend, with some justification, to see any increase as an increase in the ticket price over which they as the presenter and the risk-taker have no control.

The formula for this proposed increase has been arrived at with the consensus of the major resident performing arts companies; Vancouver Symphony, Vancouver Opera, Vancouver Playhouse Theatre Company and Ballet B.C.

Capital Projects:

When planning a new group of projects, Civic Theatres meets with representatives of the major Licensees to review projects and establish priorities to ensure that we are undertaking upgrades that they can support and which will serve their needs. In addition, when projects are undertaken at the theatres, we take every opportunity to publicize the source of funding so that audiences can see where the money is going.

A companion report will seek approval for funding for a new block of capital upgrades to the three theatres, to be funded from the Capital Reserve, proposed to be completed between June 1998 and September 1999.

Industry Standards:

The proposed increases will bring the surcharge to a level more in line with national industry standards. According to a 1994 survey of Canadian theatres, almost every live theatre in Canada has a ticket surcharge for the purpose of raising money for capital renewal. The surcharges ranged from $0.50 to $5.00 per ticket. The majority were between $1.00 and $2.00. With this increase, Civic Theatres surcharge will be $1.00 per ticket for local, City-supported, not-for-profit performing arts organizations for the 1998-1999 year and $1.25 per ticket beginning in July 1999. For all others it will increase to $1.25 for 1998-1999 and to $1.50 from July 1, 1999. (These amounts are inclusive of GST.)

FINANCIAL IMPLICATIONS

Using 1997 as a model (700,000 paid attendance), an increase of $0.25 will generate an additional $175,000 in 1998-1999 and $0.50 per ticket will generate an additional $350,000 in 1999-2000 for a total estimated annual revenue to the Capital Reserve, from July 1, 1999, of $1 million compared to the 1997 actual of $650,000.

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(c) 1997 City of Vancouver