Another of my governance case studies - this time on the arts sector

SUBURBAN NEW AGE THEATRE INC.

Suburban New Age Theatre Inc (“SNAT”) is an association incorporated 20 years ago with the objects of staging contemporary theatrical performances and encouraging production of new works.

SNAT has attracted government funding from the arts portfolios of both state and federal governments over the last 10 years of its existence. It has also been successful in receiving a small amount of local government grants from the Council in the area in which its facility is located.

For reasons that have been historically lost, the Board of SNAT consists of 10 people under its Constitution, with the following makeup:

• 5 members appointed by the State Government Arts Minister
• 3 members elected by the members of the company
• 2 members elected by those actors employed by the company during the month preceding the Annual General Meeting

The Chairperson is to be elected by the Board at its first meeting following the Board election. Board members are appointed to 2-year terms, and may not serve more than 2 such 2-year terms. There are no fees payable to Board members.

SNAT has a management structure similar to many performing arts companies ie an Artistic Director and a General Manager. Both of these individuals report to the Board directly, with one responsible for the artistic aspects of the organisation, and the other the business and administration aspects. Both are half-way through their existing employment contracts with SNAT. 

Over the last three years there has been a noticeable decline in the number of paying attendances at SNAT’s productions. The Chairperson of the Board Finance Committee has recently brought it to the attention of the Board as a whole that the total $subsidy per seat sold indicator (ie total grants divided by total tickets sold for the year) has increased from $25 to more than $45. This has reflected a small increase in the costs of running the organisation (around $1 million pa), and in particular a decline in the overall level of paying audiences. This has also now started to see a small decline in sponsorship receipts as the usual sponsors have become aware of declining attendances, and increasingly have other opportunities to sponsor other organisations. 

The company has also “churned” a number of Marketing Managers over the last 2 years, with the Artistic Director blaming “poor marketing” for the decline in patronage of the company’s performance seasons. At present no Marketing Manager is in place, as the Board decided as a cost-saving measure to not replace the last person in the role, with marketing responsibilities now resting with the General Manager.

The Finance Committee Chairperson is an accountant with a small firm of Chartered accountants. The other Ministerial appointments are a lawyer from a small firm of family law practitioners (this person is Chair of the Board), a retired politician from the same political party of the current Minister (this person had expressed an interest in theatre to the Minister, at the last party conference), the spouse of a leading local company which is a known major philanthropic sponsoring company, and an acting teacher from the local school.

The 3 elected by the members of the company currently are the partner of one of the actors currently employed by the firm, a local playwright who regularly submits new plays to SNAT’s Artistic Director for consideration for production by the company, and a parent of an aspiring actor who is seeking work with the company.

SNAT has a “Funding and Performance Agreement” with the State Government arts department (which is the biggest grant-maker to the organisation). This agreement is fairly broad in its specification of what constitutes acceptable performance by the company – one measure is that of $subsidy/seat sold and it is supposed to be < $30.

Board meetings are held once every 3 months.

The Board has decided it ought to have a “strategy workshop” to consider some of the issues currently facing the company. That this is about to happen has become “public knowledge”. This has resulted in the following:

• The State Arts Minister has contacted the retired politician on the Board to express the Government’s concern about the declining patronage and consequent increasing $subsidy/seat. The message is to “do something!”

• The Federal arts department officer with responsibility for SNAT’s federal grant (a former television actor) has made it known to the Chairperson of the Board that their view is that the company has poor business management and marketing

• The actor-elected Board members (all actors themselves) have started lobbying other Board members to pump more funds into marketing and promotions, in order to “save the company”

• The representative of an existing and long-standing sponsor of SNAT has called the Chair of the Finance Committee (a long-standing friend) and put the position that “if the artistic direction of the company doesn’t rapidly change to something more accessible and commercial, our sponsorship will have to cease”

• Stories have begun to appear in the local “arts media” to the effect that the company is in deep trouble, and that there is division at Board and management levels

What do you think probably happened?

If you were Chairperson, how would you have handled this situation?