Budgeting a Season at OLT – An Open Letter from Our President

Friends,

At our November Monthly Meeting, I facilitated a discussion about how the executive board approaches planning and budgeting a season at OLT. For those not able to join us in person, here’s what you missed!

When first elected president, I encouraged the organization to conduct an open assessment – asking patrons and members to provide feedback on their experiences with, and perceptions, of OLT. The results of this 2013 community satisfaction survey gave us many valuable insights, from which we enacted a few substantive changes.

A leading piece of feedback received indicated that, though the talent on-stage and off was of a high caliber, OLT was not investing financially in them (production teams and musicians), nor in the visual components patrons looked most forward to enjoying – namely set and costume design. As a result, we began a years-long process of reallocating resources, fundraising and other initiatives that would allow us to provide our productions with additional funding for those production aspects. We increased stipends for members of the production team, added a set designer to all main stage productions, and increased budgets for sets, props and costumes.

At this same time, we began collecting and logging data – a must for any business. It’s important for us to understand who our patrons and performers are, what shows they want to see and participate in, and how our productions perform over time. We’ve used data from the past four seasons to help us plan season selection and budget productions selected. This has allowed us both to raise the quality and quantity of our productions. In fact, it’s that very relationship – quality and quantity – and the public confusion about how each relies on the other, that prompted me to discuss our internal planning at our November meeting. It’s important to me and all members of the board that our performers, production teams and members have a full understanding of how, and why, we operate as we do.

First, let’s start with some numbers that will be important to keep in mind:

– We perform in a space that has a maximum capacity of 170. For each performance, that’s the maximum number of tickets that can be sold.
– We have a staggered ticket pricing structure, which at our patrons’ urging we have not changed. We remain committed to not raising ticket prices – which currently are $20 (Adults), $18 (Students/Seniors), $15 (Groups), $10 (Children Under 12/Members) and $5 (House Staff). Over the past four seasons, our average ticket price has been $17.87.
– Over the past four seasons, our average ticket sales across all productions is 91 seats per performance. That’s an overall sales percentage of 53.89%.
– As part of our relationship with the Borough of Fair Lawn – we’re the resident theater company! – we give 20% of all ticket sales to them, following each production.

OLT productions run for one or two weekends, for a total of 3, 4 or 6 performances. Six performance runs are given to main stage musicals, four performance runs are given to one-weekend special event musicals, and three performance runs are given to plays. These performance numbers are based on projected ticket sales balanced against the cost to produce and license each specific show. Plays are much cheaper to produce than musicals – both because they don’t require musicians and because licensing fees are much lower.

For a main stage musical, the maximum ticket sales intake for a sold-out six performance run (170 seats x 6 performances x $17.87) would be $18,227.40. Twenty percent of that would go to the Borough, leaving a maximum net profit of $14,581.92.

As previously noted, we sell an average of 53.89% of tickets. So, likely ticket sales intake for a main stage musical (91 seats x 6 performances x $17.87) would be $9,757,02. With twenty percent going to the Borough, that would leave us a maximum profit of $7805.62 — approximately $3000 below the typical budget currently set for a main stage musical.

In 2016, OLT set a season operating budget of $52,206.65, split across eight productions. As a self-funded, not-for-profit theater, we do not start with that money in the coffers; rather, we set our season operating budget based on what we believe we can make back through our revenue streams. There’s an argument that OLT should return to offering only its constitutionally-mandated four performances each season – one main stage play and three main stage musicals – as doing so would give more money to those productions and benefit the organization overall. But here’s why we don’t–

Let’s assume OLT presents four productions, each running for six performances, and were to maintain the same operating budget ($52,206.62). Given the funding needs of plays and musicals, in a four production season with the same overall operating budget, the starting budgets in this case would be:

– Play – $6425.83
– Musicals – $15,226.94 each

If each of these shows sold at our likely sales rate of 53.89%, the net loss for six performance runs of each would be as follows:

– Play – -$435.73
– Musicals – -$7421.31 each, or -$22,263.96 total

Over the course of one four-show season, this would cost OLT nearly $23,000. As we’re self-funded, not-for-profit and don’t operate from a donor base, this isn’t feasible.

Let’s then say that OLT presents four productions, each running for six performances, but decreased the season’s operating budget – keeping each production’s budget consistent with what was given to each 2016 production, but only for four shows instead of eight. In this case, the budgets would be:

– Play – $5084.28 (adjusted up $500 from 2016 budgets for 6 performance run)
– Musicals – $10,818 each

Under this scenario, if all shows sold at our likely sales rate of 53.89%, the net profit/loss for six performance runs of each would be as follows:

– Play – $1005.82
– Musicals – -$3012.38 each, or -$9037.14 total

Over the course of one four-show season, this would cost OLT more than $8,000.

In order for OLT to project a four-show season that would not lose money overall, production budgets would need to be cut by more than 20% across the board. Rather than increase the budgets for productions, less shows actually ends up meaning less money available for all.

In order to fund more lavish main-stage musicals, it’s proven vital that we also offer smaller, less expensive plays and musicals to help balance out the season financially. Despite all the data detailed above, theater isn’t always a science and what an audience does or does not respond to can’t always be predicted. Through additional offerings like youth productions, play festivals, concerts, original plays and musicals, OLT is able to offer a full season to capture audience’s imaginations – and to fund the bigger shows people want to see and perform in.

Our overall goal is to provide a diverse slate of performance and production opportunities that showcase talented folks in all forms. By offering more productions annually, not only do we ensure we remain fiscally viable, we also present performers and backstage talent with multiple opportunities to become involved. Not a singer? Audition for our plays! Not an adult? Audition for our youth productions! Not free during the school year? Audition for our summer productions! We plan seasons in hopes that everyone will find something that piques their interest – as performer, production team member or patron.

I’m proud of OLT’s growth these past four years and am excited to help shepherd the group into its milestone 50th season. But our growth isn’t about me – it’s about you! It is the community that you all bring to our community theater that has helped it thrive for fifty seasons and counting. As I always say to the cast and crew of each production: Thank you for sharing your time and talents with us. The world is our stage, and we’re very glad you’ve chosen to join us in telling the stories that both reflect, and change, our lives.

Craig M. Tiede
President, Old Library Theatre

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