The ramp-up to the opening of a new performance hall or performing arts center always involves a public discussion of rent. It’s beginning (again) in Madison, Wisconsin, as the new $100-million Overture Center for the Arts approaches its Phase I opening day this September.
Here’s how it usually goes:
- A new cultural construction project is announced and welcomed with great fanfare;
- There’s some discussion of operating costs early on (you hope), which are quickly eclipsed by the fun and intrigue of architectural renderings and design;
- There’s some public story or controversy about halfway through construction, when a major donor or bond issue is needed to fill the gap of rising construction costs, or plug the endowment, or cover some other big-ticket need;
- A year or less before scheduled opening, the contract negotiations with tenant organizations for the facility (symphony, opera, theater, dance) intensify, and a more detailed operating budget comes into focus. The economy has probably shifted in the meantime…hopefully for the better, but usually not;
- The new facility (either because of its larger size, or higher finish quality, or higher expectations, or all of the above) is significantly more expensive to operate than the older building(s) — just as a mansion is more expensive to heat, light, clean, and maintain than a bungalow;
- The implications of that higher operating expense mix in with the tenant negotiations, in the form of higher requested rents for the hall(s), additional surcharges on every ticket, other increases in fees and chargebacks;
- The fun and intrigue of the building itself takes a quick backseat to the sticker shock;
- Media reports begin, usually suggesting that the local arts are in jeopardy against the touring productions, ticket prices will rise, and the community will bear the burden of this number-crunching while the rich catch a week-long run of Cats.
In every city, the process has a different intensity (the pre-opening of the Kimmel Center in Philadelphia was particularly intense). All sides (if there are sides) have a very real and direct concern that affects their ability to do their work: the performing arts center has a bottom line and high expectations from a leery public purse, the local professional arts organizations are always living on the edge anyway and an increase in any cost is trouble, the community is often conflicted between the opulence and status of a new cultural facility and a vague concern about elitism.
The odd thing is, at the end of the day, rent is actually the smallest slice of the pie for almost everyone at the table. For the primary professional arts organizations, rent is usually less than 10 percent of their total annual expenses (often less than 5 percent). For the performing arts center, rental income is about 10 to 15 percent of annual income (and rent from tenant organizations is usually just a fraction of that). Despite these small percentages, rent is the lightening rod and the public debate in almost every case.
The real costs of a new facility are the new level of quality in production it demands (bigger stage, better seats, more technology, more options, higher audience expectations, more rehearsals, etc.). The real economic benefits come from the impact of all those things on the many revenue streams already in place (full houses rather than half full, excited donors — if there’s any money left in town after the capital fund drive, special events, and the like).
And somewhere in there is the true benefit — a new canvas for the creative interaction of audience, artists, and art.
NOTE: The Madison coverage of the rent issue also included discussions with three primary tenants, and how they would address the higher costs: including the Madison Ballet, the Madison Symphony, and the Madison Opera.
