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Bailouts fall short for struggling arts sector

Like the many theatres and music venues reeling from the impacts of Covid-19, Birmingham Museums Trust’s director of finance says the shutdown has had a “catastrophic effect” on business.

10th Aug 2020
Sports business reporter
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Birmingham Museum Trust is losing £10,000 a day due to the virus shutdown
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Speaking to AccountingWEB, Richard Paterson said the Trust, which runs nine museums, is losing about £10,000 per day caused by the pandemic closing its sites. Income is down £2m since March, around two-thirds of which was generated from admissions fees, food and beverage, retail and conference banqueting.

After furloughing 165 of its 215 staff, the trust began consultations on Thursday with 117 employees at risk of redundancy. Paterson expects 40-50 to go.

Birmingham Museums was unsuccessful in its application for £900,000 of emergency Arts Council England funding as it wasn’t considered at immediate risk of going under.

Paterson said the organisation, which manages venues including Birmingham Museum and Art Gallery (pictured above) and Thinktank, will apply for a chunk of the £500m being distributed by Arts Council England as part of the £1.57bn Culture Recovery Fund.

Successful applicants for grants will only be informed in October or November.

“If we had a decision on this funding by now we would save more jobs, that is the simple outcome,” said Paterson.

“We will do whatever we can… if we can save more jobs we will do. We are very conscious it will be very competitive [to get Arts Council funding].”

To drive down costs Paterson has looked at contractual holidays and “suspending services where we can” and stopped spending money on routine maintenance and exhibitions.

To help with cashflow Paterson pulled forward some of the £3.2m annual grant Birmingham City Council gives the trust to operate the museums.

The trust’s business model is being adjusted to allow for differing volumes of visitors to its venues. Some of the smaller museums with lower footfall may only open for special ticketed events.

The new approach is about “how we remodel in a post-COVID world so that we can still give access to the sites and collections”, Paterson said. The museums won’t reopen until “we feel comfortable the financial risk is mitigated by opening”.

The trust’s financial challenges are echoed across the arts industry, with theatres, music venues and cultural institutions forced to slash costs find new operating models to survive the pandemic.

Freelance workers left out

Freelances Bectu, the trade union for theatre workers, said this week that in the month since the government unveiled its arts recovery package job losses had rocketed from 3,000 to 5,000 – over half in London and the West End. The union also raised concerns about the theatre industry’s 290,000 freelance workers, who make up 70% of the workforce. Many freelances are employed through a mixture of PAYE contracts and also invoice for work, but have been excluded from the government’s income support schemes.

London’s Southbank Centre, the UK’s largest arts complex, warned this week that it may be closed until April due to the financial fallout from COVID-19. It plans to make around two-thirds of its staff redundant, about 400 people. The centre lost £25m in income this financial year and predicted a £5.1m deficit for 2020-21.

Southbank Centre CEO Elaine Bedell admitted continuing social distancing is one of the biggest barriers to reopening: “Even a reduced 1m rule means we would only be able to sell around 30–40% of tickets. To reopen under these terms would only make our financial situation worse.”

The National Theatre is also facing a financial slump and told its 400 front of house and backstage casual staff that they will lose their jobs.

“We have committed to paying our casual staff until end of August,” a spokesperson told AccountingWEB, adding that the theatre will seek a slice of the government’s £270m repayable finance loans for support as its “emergency financial need” was greater than the £3m maximum grant allocation, “even though this would undoubtedly place a long-term financial burden on the National Theatre”.

Battle for survival

On the south coast, the Brighton Dome lost all of its self-generated revenues from ticket sales and events – 67% of its entire income – due to closure.

A Brighton Dome & Brighton Festival spokesperson said the theatre received £445,000 from the Arts Council’s Emergency Response Fund as a “lifeline” until the end of September. It will apply for either a government grant or repayable loan. The organisation has a £12.5m annual turnover but is unable to reopen its 1,800-capacity venue until social distancing regulations change.

The Dome benefited from the job retention scheme, but the venue is currently planning for various scenarios to keep the organisation secure for as long as possible to prevent staff redundancies once the furlough scheme ends in October.

Dave Crook, a theatre programmer in Greater Manchester, said venues in his region also face a battle for survival, with many making redundancies and job losses. Few are taking bookings before December and lucrative Christmas productions look increasingly unviable unless social distancing rules are relaxed.

Venues relying on Arts Council handouts and other funding streams are better placed to weather the coronavirus storm than more commercial venues that depend on big productions, which require two-thirds or three-quarters capacity to break even, Crook said.

“The government’s one size fits all approach is ridiculous,” he added, arguing that Covid risks in music and comedy venues was not as great, especially if tickets are booked by people in social bubbles. He’d like to see the safety restrictions in place for pubs and restaurants apply to all indoor venues.

Independent venues are suffering most and Crook expected some of those that enter administration to be “snapped up” by big entertainment companies, raising question marks about whether their future programming will be more commercial and less experimental and locally flavoured.

Small music venues at risk

Beverley Whitrick, strategic director of the Music Venue Trust, says it’s working with its 895 members to determine which venues, often set up in different ways, are eligible to apply for government funds. One of the challenges for venues is to put together a persuasive case to access a tranche of the £2.25m in emergency government support for grassroots music venues, which aims to save up to 150 venues at imminent risk of collapse.

With cashflow templates and a year’s accounts to be delivered, Whitrick commented: “A lot of them are quite confused as to what they should be doing… dealing with cultural funding applications is a whole new world. They’re being asked to assimilate new ways of working and language in a short time period. It’s a very stressful time.”

A Grassroots Music Venue Crisis Fund has been established to prevent hundreds of closures. The 7% who own their own buildings and have no commercial rent to pay may be better equipped to survive, she said, adding: “Our ultimate nightmare is the mass closure of music venues.”

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