Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

Director of Civic Theatres

SUBJECT:

Theatre Rental Rates: September 1, 1999 to August 31, 2000

 

RECOMMENDATION

CITY MANAGER'S COMMENTS

COUNCIL POLICY

Council annually approves the Schedule of Rental Rates for the three civic theatres, as well as the necessary adjustment to the grants equal to rent 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, 1999 to August 31, 2000. It also requests approval of a matching increase in the grants equal to rent budget for the fall of 1999 in the amount of approximately $34,000.

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 1997, there was no increase in the rental rates. In 1998 the increase was 4.28% for the QET/Orpheum and 3.95% for the Playhouse.

In 1998 the increase in the fall rental grants budgets was $26,575.

DISCUSSION

The Performing Arts and Live Entertainment Environment

1998 was another year of change in our market. Livent Inc. ceased programming in the Ford Centre and underwent a corporate restructuring that included closing a number of touring shows. That caused gaps and re-routing in the American touring circuit reducing the supply of Broadway shows for Canada. We should see musicals returning to the QET in the fall.

The relatively low Canadian dollar increases the risk on shows being imported. Their fees or running costs are paid in US dollars but tickets are sold in Canadian dollars at essentially the same face value as in the US. Also, ticket sales have been "soft" on shows that one would have expected to sell faster and in greater total numbers. Profit margins are very slim and promoters are understandably being very cautious.

In our 1998 report, we commented on the sudden increase in the number of venues in Vancouver:

"The three civic theatres are now part of a range of choices, not the only choices. Since each of the venues now available has unique features and, most importantly, a different number of seats, attractions are able to choose a venue that is most appropriate to their individual character, appeal and box office potential."

The number of venues has led to a redistribution of events. Some high school graduations and music recitals went to the Chan Centre which is more appropriately sized for some of those events . "Rent" and some pop/rock concerts went to the Vogue, which is also a more appropriate venue for both its size and ambience. GM Place hasbecome Sarah McLachlan's venue of choice in Vancouver.

The resident performing arts organizations who use the civic theatres have been relatively stable, although neither we nor they take that stability for granted. This is the group we know as the "Prime Performers at the Centre of Vancouver's Entertainment District" and with whom we partner in a variety of marketing and publicity efforts.

The Theatre Rental Market - Comparisons

Exactly equivalent comparisons are difficult to make since the majority of theatres in our study area have different rental rate structures from each other and from Civic Theatres. For last year's analysis we used the published rates for 16 theatres from Oregon, Washington, BC, Calgary, Thunder Bay, Toronto and Ottawa. Including the QET and Orpheum, only 5 of these theatres post "flat rate" rentals. All others use a formula involving a base rent, roughly equal to $1.00 per seat, plus a percentage of the ticket sales. For a simple comparison, we ignored the manner in which different theatres charge labour and equipment usage, box office fees, merchandising commissions, and seat surcharges. Many add on some or all of these costs, increasing the differential. Appendix B shows the results of last year's survey, reduced to a cost per seat basis, with the proposed new rates for Civic Theatres inserted. The other theatres' rates for 1999-2000 are not yet available.

The proposed increase for the Orpheum/QET is $300 per evening to $7,600, or 4%. The survey shows that the proposed new rental rates are still low in comparison to the majority of theatres. The market should have no trouble absorbing an increase in the QET/Orpheum evening rent to $7,600.

The Proposed increase for the Vancouver Playhouse is $75 per evening to $2,050, or 3.8%, equal to $3.07 per seat. The Playhouse at 668 seats is comparable to the newly opened Stanley at 650 seats, which is currently renting for $1900 for 8 hours and $200/hour after. The Playhouse is available for 10 hours, so equivalent rent for the Stanley would be $2,300 or $3.54 per seat.

Grants Equal to Rent

Local non-profit performing arts organizations may receive support from the City in the form of Grants Equal to Theatre Rent or Baxter Fund Grants. Grants equal to rent are awarded to established non-profit presenters, including: Vancouver Symphony Society, Vancouver Opera Association, Playhouse Theatre Company, Ballet B.C., Vancouver Chamber Choir, Vancouver Bach Choir, Friends of Chamber Music, Vancouver Recital Society. The Vancouver Foundation's Baxter Fund grants are awarded to smaller, developing performing arts groups or to special programmes. Licensees who have benefited include: Early Music Vancouver, Vancouver Youth Symphony Orchestra, Music in the Morning and others.

Provided Council approves the customary equivalent increase in the grants budget, approximately $34,000 this year, the local City-supported non-profit presenters participating in the grants programme are insulated from financial impacts for those uses covered by a grant. Not all of the resident companies' uses are covered by grants.

The Office of Cultural Affairs will be bringing a report to Council in the near future, for allocation of the fall theatre use grants.

Graduations

High School Graduations were provided with a special rental rate to encourage their use of the theatres at a time when bookings are traditionally low. The reduced rental rate also facilitated the schools access to the theatres at a time when their own facilities were often inadequate for one reason or another. 30,800 people attended graduation ceremonies in the QET and Orpheum in 1998, down from 40,800 the year before.

The number of graduations is down from 30 in 1997 to 21 in 1998 and 20 this year. In some cases, they have found a smaller venue, e.g., the Chan Centre, to be more suitable for their audience size. In another case, Burnaby school district is "staying home", holding all of their graduations in a local arena, as far as we know.

FINANCIAL IMPLICATIONS

The rental increases described here are the minimum necessary increases in the cost of service to meet the objectives of the 1999 operating budget.

Provided Council approves an increase of approximately $34,000 in the fall 1999 grants equal to rent budget to accommodate these increases, the local City-supported non-profit performing arts presenters will be insulated from impacts of this increase for uses of the theatres which are covered by the grants program. As noted earlier, not all theatre uses are covered by grants.

The reduced rate for high school graduations still generates a small income above the incremental costs of operation and contributes to the operating overhead.

As this rental rate increase only applies to the last four months of 1999, it actually establishes the revenue potential for most of the year 2000. Civic Theatres last year developed budget estimates through to the year 2001, including rental rate increases and booking estimates that forecast a period of no growth. These budget models foresee several years during which rental rates may accelerate more rapidly than in the past to more closely resemble the rental rates in the broader market.

COMMUNICATIONS PLAN

The proposed new rental rates have been communicated to Licensees of the theatres in a recent Newsletter. Copies of this report are being sent to a selected list of major users.

* * * * *

Link to APPENDIX A.

Link to APPENDIX B.

ag990601.htm

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

(c) 1998 City of Vancouver