Producers Round Table – Monday 9^th July 2018

22 producers, some venue based, some independent, some with larger companies, met to talk about negotiations between producers and venues when producing new musical theatre. With thanks to all who attended, below are some insights and observations shared that we thought might be useful to others:

Strengths

–          Increasing numbers of venues and artistic directors who want to support and stage new musicals. Some following through on a public brand around presenting new musical theatre, for example at The Other Palace, New Wolsey and Royal & Derngate’s plans funded by an Ambition for Excellence grant from Arts Council England. New Wolsey Theatre as an example of the importance of sustained commitment in this area – only through regular programming of new musical theatre has a local audience been developed for new musicals, with the importance of building a relationship of trust with audiences over time emphasised.

–          UK Theatre’s ‘Code of practice for venues and producers’ shared as a useful description of best practice (https://uktheatre.org/theatre-industry/guidance-reports-and-resources/code-of-practice-for-venues-and-producers/ ).

–          The landscape is evolving and success stories have emerged which can be learnt from / approaches which can be followed – examples shared include Mr Bugg Presents’ new musical ‘Miss Nightingale’ which developed from small- to mid-scale touring, working in co-production with various venues, and persistently further developing this one show which has toured nationally for over five consecutive years, building audiences over that period; Afrobeats musical ‘Oliva Tweest’ integrating songs which have brand recognition among listeners of Afrobeats chart music into an original musical with wider original songs, and collaborating with music venues, in order to achieve crossover audiences between music and musical theatre, including a high proportion of young people, individuals of BAME heritage and first-time attendees; ‘Everybody’s Talking About Jamie’ being developed in the subsidised sector, with the support of Sheffield Theatres from early on, with the production’s director Jonathan Butterell leading the creative development process over several years, bringing the writing and creative team together so that when the show opened it was fully developed and polished, attracting strong audience responses and the interest of a commercial producer to transfer it to the West End.

–          Many success stories in terms of new British musicals have involved the artistic team at a producing venue, or an independent producer, buying into the artistic vision and getting involved from early in the artistic development process, so they’re able to help shape the show’s evolution and the creatives that get involved through workshops, allowing an organic development towards a first production with the creative team best suited to the show involved.

–          Regional co-productions – There are various examples where several regional producing theatres have pooled their resources in order to co-produce a new musical for a regional tour between them, thus also sharing some of the financial risk and enabling the extended development needs to be better resourced (eg new British musical ‘The Go-Between’, which toured between co-producing partner venues West Yorkshire Playhouse, Derby Live and Royal & Derngate Theatres). A consortium of producing venues is currently being negotiated with a view to co-producing a new musical annually that would tour to the other venues, with the dynamic/expectations of the consortium established first, prior to a musical being selected. This follows the approach taken by the Ramps on the Moon consortium to collaborate on organisational change and co-productions increasing opportunities for disabled performers and creative teams. The importance of shared clarity of expectations from early in discussions was urged, along with honesty about what resources are available from each partner. It was noted that agreement on the specific musicals to be co-produced was one of the most challenging aspects. Some similar co-producing arrangements around a new musical have also involved an independent/commercial producer as a partner alongside venues, and project funding from Arts Council England (as was the case with ‘I Capture the Castle’, co-produced by Watford Palace and Bolton Octagon Theatres, in association with producer Kevin Wallace, and with an Arts Council grant to Kelmscott Productions).

–          A new generation of independent producers have emerged in recent years, some with an interest specifically in producing new musicals, and fresh entrepreneurial energy towards how to make this happen. Some are pro-actively approaching venues to strike up co-producing deals or with offers of financial enhancement of a musical production in return for first rights on a future transfer.

–          Increasing sector-focused networking opportunities – Events like BEAM, Stiles&Drewe Prize & Mentorship, From Page to Stage and the UK Musical Theatre Conference are valuable opportunities for producers and venues interested in new musical theatre to be in the room together and advance conversations, including being open about what musicals they’re interested in and what their capacity/resources are for developing/supporting new musicals.

–          The importance of how welcoming staff of a hosting venue is towards visiting producers and creatives makes a huge difference.

Weaknesses

–          Unresponsiveness/lack of transparency – Producers making approaches to venues seeking their interest in co-producing or receiving a new musical express frustrations around a lack of responses to emails – and on the other side of this, venue staff are often experiencing capacity challenges, not having enough time to respond to increasing numbers of emails. The same challenge around communications was reported as experienced between venue staff, with overworked artistic directors sometimes particularly hard to get a response from – this was also experienced when its multiple artistic directors emailing each other. Aside from capacity challenges, there are reports of a lack of transparency around programming decisions and timelines, when producers are negotiating with venues to book a tour or find co-producing partners – including a lack of clarity around whether venue staff have capacity to read a script and during what timeline they will be able to respond. Initial verbal interest is sometimes then followed by extended silence, rather than a ‘no’ response being given, with a plea for more up-front honesty about whether a musical is of any potential interest or not (that a ‘no’ is more constructive than a ‘yes’ followed by silence or backtracking). While this is not specific to musical theatre, the increased costs and development timelines of a new musical could be seen as intensifying the impact of delayed responses on negotiating sufficient partnerships for a new musical’s staging to be viable.

–          Venue contracts can sometimes be challenging to make sense of, with a lack of clarity around some internal charges. There are risks around there not being a shared understanding of some costs, particularly if there is a disconnect between those in the accounts/personnel/marketing and those with whom a producer is negotiating the contract. Individuals stressed the importance of full disclosure in contracts, and of getting second opinions from others, and actively negotiating to get more favourable terms on some clauses rather than just signing the standard contract that’s initially sent to you (it was suggested the more experienced producers often significantly renegotiate the initial terms offered within venue contracts). Sometimes there are challenges around there not being sufficient breakdown on the payout details a venue shares, so a producer can fully trace how some of the internal venue charges are being calculated. The importance of transparency, and coming to a shared understanding, was emphasised – and that this was equally important when negotiating a co-producing agreement, the negotiations around which should be approached with clarity around what you want to get out of them.

–          There are issues with the amount of self-subsidy, by artists including producers, often experienced as necessary for the development and staging of many small-scale productions of musicals. Low and no pay arrangements are still common, and there are a shortage of viable business models for staging musicals with a cast and band of some size at a venue with limited audience capacity, if everyone is to receive industry recommended rates of pay. While entrepreneurial solutions are being found, far more thinking is needed about evolving best practice in this area. There is a key lack of investment/funding for the lengthy development processes which new musicals often require.

–          Even productions of new musicals that seem to be selling well at a small to mid-scale venue will often be running at a significant financial loss on a first production, with the only opportunity for it to make a profit being if the show follows its initial run with a tour or West End transfer. This model can be challenging to sell to commercial investors when only the initial run is definite, so a commercial business model is sometimes not as suited for a new musical as one where public funding subsidy covers what would otherwise be a deficit within the budget. Among mid-scale subsidised venues, a viable deal in terms of a box office split or fee may vary widely depending on the level of marketing support and the work that’s been done by the venue to build up a highly engaged audience (so it’s problematic when a venue seeks the same terms as they have heard a producer has negotiated with another venue). Ticket pricing is challenging within the commercial or independent theatre model, in terms of balancing the need to remain accessible with the reality of the production running at a significant loss even if it sells all its tickets. Many of the received business models for producing a small-scale show are still working for the venues, and occasionally for the producers, but rarely generate income levels that fully cover the costs of all the artists’ contributions (particularly if the development process is taken into consideration), so there’s a need to radically rethink the business model for small scale work.

–          There is a shortage of small- and mid-scale venues dedicated to producing and housing new musical theatre. While more venues are expressing interest in producing new musicals, in many cases the resources for doing this are sporadic and far more limited than the ambition, so it can feel a bit of a lottery as to when a new musical might actually get lucky and be produced, rather than there being an ongoing development pipeline towards ongoing productions. The infrastructure for development and for a new musical not just disappearing after its first staging is still evolving.

–          There is also a shortage of available mid-scale venues in London for new musicals which premiere regionally or at subsidised producing venues to transfer to – there was the recent example of new British musical ‘Pieces of String’ which premiered at Mercury Theatre, Colchester to strong reviews and audience responses but hadn’t been able to find an available London venue to which it could transfer and build on its success.

–          The cost of hiring venues is sometimes prohibitively expensive for some musicals to be financially viable, if a producer is seeking a receiving house. Where the numbers might stack up for a play with a small cast, a new musical paying the same hire rates may struggle to find a viable business model, particularly when the risks around building an audience for a new musical, without a known brand, are taken into account.

–          Unsuitable musicals being sent to venues to consider programming in terms of their scale or audience appeal (eg they might clearly not have the sort of audience draw which would enable being programmed in a mid-scale venue for several weeks) – the ambitions of an individual production should be matched with the ambitions of a venue (both artistically and in terms of audience appeal). Those pitching musicals to venues also need to be clear about doing so at the right stage in development – receiving houses often don’t want to be approached with under-developed work, and producers/producing venues often want to be brought on board while ideas are still in development. There are challenges around the need for sustained audience development in relation to new musical theatre, and also within the talent development/new work development pipelines – sometimes it’s felt there is not much quality new musical theatre product available/in development that is of a fitting scale of artistic vision/audience appeal.

–          Complexity of building up industry knowledge – The industry is still quite fragmented geographically, so it takes a long time for an individual producer to build up knowledge of who the right people are to talk to in different venues and locations, and to build up the sort of mutual trust needed for co-producing partnerships. This is further challenged by staff turnover in many venues. Again, a wider challenge throughout the theatre industry, but having more impact due to the longer gestation periods of new musicals.

–          Show cancellation inequalities – When a show is touring performing individual dates or similar, venues are sometimes able to cancel the booking with minimal financial penalty if pre-sales are low, but the financial impact on the producer/touring company is far more significant given most of their costs for the cancelled performance will still stand, and if the visiting company/producer is the one to cancel, the financial penalty is often higher than if the venue cancels.

Opportunities

–          Found spaces – Entrepreneurial producers are reinventing the business model of putting on a musical by staging it in a space not traditionally associated with musical theatre, such as within a pub, church, café or music venue, or outdoors or in a heritage site. While there are often additional costs involved, the actual venue hire fees tend to be much lower and there is sometimes far more flexibility around programming dates and length of run.

–          Negotiating for income to be held on account by host venues – Smaller scale shows being toured/presented at venues by outside producers, which in themselves would have total income below the VAT threshold and thus not be registered for VAT, often have box office income processed by the host venue as if it’s part of the theatre’s overall income which is subject to VAT. It’s equally legal for the venue to process this income as being held on account on behalf of the independent producer/visiting company, from which the producer then pays the proportion owing to the host venue if it’s a box office split, for instance, but the remainder of the income is paid out to the producer without VAT being deducted (providing the producer/company is still below the VAT threshold overall). This can make a significant difference to small scale shows’ income, and just needs to be negotiated in advance as part of the contract with the venue. Some venues already operate in this way with smaller visiting shows. In some cases where a producer is expecting a show’s income to be below the VAT threshold but it goes over slightly, they’ve been able to obtain a VAT exemption from the government, by contacting HMRC in advance.

–          Involving co-producers early in creative development – New musical theatre requires sustained long-term development support due to the longer creative development process for most musicals. Where a producer or venue are getting involved in the development journey, there needs to be a shared understanding in advance (agreement in writing, ideally from the beginning of an involvement) around intellectual property and performance/licensing rights, including first right of refusal on a production. Several expressed the preference to get involved from an early stage of a new musical’s development – that to be brought a ‘finished’ musical seeking production was often a less attractive proposition (although there are other cases, such as a presenting venue, college or licensing house where it’s best not to bring a new musical to their attention before it’s ready).

–          There is room for further clarifying industry codes of best practice around venue programming decision times, so that producers are not left hanging for as long (in some instances). While acknowledging the intense workload and time pressures on venue staff, particularly artistic directors, it was felt that some kind of agreed turnaround for a programming decision would be fairer – particularly in circumstances where initial interest in the project has been expressed. Most would rather hear a ‘no’ after 30 days so they can then move on to other options, rather than get no response to several chasing emails over a period of more than a year.

–          Increasing productions of new musicals in subsidised theatre venues – Currently it feels more viable (and more frequent) that new British musicals are developed within publically subsidised producing theatres than in the commercial sector. (This is particularly the case while we’re at a stage of needing to develop audiences for new musicals, meaning they sometimes only attract around 40% audiences.) There is an opportunity to increase the pressure on these venues around how often they produce a new musical, and some wondered if the appetite around doing so is influenced by how a new musical is positioned – that in the subsidised sector it may be easier to justify supporting the development of a clearly artistically-led or audience development related musical, whereas one with more of a ‘commercial product’ identity may feel less suited in some cases. It was suggested a production of a new play in the subsidised sector might often cost around a third less than a new musical, so the justification for a programming choice might be under more pressure.

–          It’s still hugely cheaper to develop and produce a new musical in the UK than it is in the USA, so there are opportunities for working with American producers to develop new musicals here that might have future American productions after being trialled more cheaply here – as quality of UK musical theatre writing has been improving, the chance of attracting US co-producers for new British musicals is increasing.

–          Some musical theatre producers are finding that setting up a new company within the Seed Enterprise Investment Scheme (www.seis.co.uk) helps to build relationships with investors due to the tax efficient benefits that can be offered (only eligible for first two years of a company’s existence).

–          Audience development for new musical theatre is an area that’s currently challenging but has huge potential. Currently there isn’t much of an existing audience following that go to new musicals because they’re new musicals, and this contributes to venues’ nervousness about programming new musicals (whereas known musical theatre revivals often achieve the strongest audience responses, but are perceived entirely differently by most booking whose expectations are for more of an ‘event’). Audiences seem more often to go to a new musical based on the word of mouth or its specific subject or brand or a cast member of a show, so an entirely original and unknown musical can be a difficult sell even when of high quality. Best practice seems to be around longterm strategies of audience development, where trust is nurtured in the venue’s programming or the artistic choices of a producer or artistic director, so the audience are open to taking a risk on something new. This ideally involves programming of new musical theatre on a regular basis, which will be attended as part of that wider trust relationship by the audience in its local theatre – where this has happened at venues such as New Wolsey and Theatre Royal Stratford East, attendance of new musicals has grown. Learning from America would mean investing in new musical theatre as a brand in itself; building audiences at venues for new writing of musicals generally – and specifically for new British musicals, where audiences are excited to discover new voices in this form. Currently the feeling is that audiences make a distinction between a new musical and a revival of an already known musical (the latter being significantly easier to sell, generally), but don’t make much distinction between a new British musical and a new musical from overseas.

–          Sharing more information about marketing campaigns – While venues are restricted around how much information they can share with outside producers in terms of audience data, some producers’ experiences suggest there is far more information around marketing campaigns which could be shared once processed/anonymised. The challenge is around staff capacity to do this, but sharing more information about audiences’ behaviour could help build collective understanding of how to market new musicals to audiences. More investment in the box office systems in some cases would enable the sharing of more information.

–          In London, some producers have found that developing their own API integrated box office system has enabled them to access massively increased audiences through discount ticket agencies and other online platforms. The effectiveness of the ticketing system which a venue is tied into can make a huge difference to ticket sales and the marketing budget needed.

–          To engage more commercial producers with the need to ‘pay it forward’ when a commercial musical goes into profit; that we all need more investment into the development pipeline of new musicals for there to be quality new product in the future. If commercial musicals were to have a 1% tariff (like a theatre restoration fee) on tickets, once a show had gone into profit, that was reinvested in the development of new musicals, this would make a massive difference.

–          Ongoing investments from Arts Council England – while some are finding project funding increasingly competitive, meaning multiple applications are needed, the investment is still happening, and the sizeable Ambition for Excellence grant to the consortium led by Royal & Derngate is enabling the development of several new musicals and industry events responding to the need for more new musicals suited to mid-scale touring.

–          Co-producing consortia – Many feel co-producing partnerships and consortia are the way to respond to rising costs and the high financial risks of producing a new musical, so the challenges around negotiating these partnerships need to be addressed – these include increased levels of trust and transparency, and finding ways for key decision makers like artistic directors to have the time together to negotiate and co-ordinate plans. To optimise the time investment required, these negotiations can best be used as an opportunity to build a wider ongoing relationship between venues and producers – collaborating with a view to ongoing partnership and shared audience development, rather than just focusing on the current production. There’s a need for organisations to prioritise collaborative outcomes for the benefit of the sector as a whole, over individual agendas.

–          Understanding the specific needs of musicals – Increased understanding by venues and producers of how the specific needs of a musical differ to those of a non-musical play; sometimes the approach taken is the same, which often underestimates the increased resources needed or undervalues the increased collaborative complexity of a musical. This is also in financial terms – the need for a venue hosting a mid-scale musical to be understanding of the cashflow challenges to producers, accommodating their needs with flexibility where possible, such as a weekly box office payout in arrears, rather than monthly.

Threats

–          Prohibitive costs – Alongside generally rising costs, the cost of producing a musical is felt to be increasing (although it’s generally considered significantly cheaper in the UK than in America), and sources of funding and investment were anecdotally felt to be getting harder to access (by some but not all attendees). Certainly subsidised venues on standstill levels of Arts Council funding are often experiencing a squeeze on their budgets and resources. While this can prompt increased collaboration on co-productions that also suggests potentially fewer new musicals being produced (if one show is being toured between co-producing partners, rather than them all producing their own). Challenges around gaining the firm interest of co-producing partners in a specific new musical were reported, in relation to any one partner often having a particular new musical of their own that they are interested in developing (perceived risks often leading to a reluctance to commit to more than one new musical in development at any one time, so an either/or perception of whether to stage a new musical already in development or co-produce one brought forward by another partner).

–          As venues’ costs rise, they usually have to pass on these increased costs to external hire productions, sometimes leading to prohibitively expensive venue hire costs that shape the kind of productions which seem financially viable for a producer to bring to those venues. With the often increased costs of musicals compared to non-musical plays, the financial squeeze is felt more intensely in this area, increasing pressure towards low rates of pay or selecting non-musical productions instead.

–          Reduced risk in programming – Increasing costs for venues to remain operational are often reducing their ability/appetite for taking artistic risks – if an existing artistic product is bringing audiences in, it’s harder to risk alienating them by replacing it with something new. For an artform like musical theatre which shows signs of artistic renewal after decades of limited artistic development, this is a challenging climate for supporting that artform development.

–          That rising costs lead to increased ticket prices and make musicals less accessible to new audiences; affordable ticket prices must be protected in the interest of audience development. In relation to this, the trend over recent decades towards audiences saving up to buy an expensive ticket to a West End mega-musical seems to make these audience members less rather than more likely to attend cheaper smaller scale musicals that don’t offer the same ‘big event night out’ experience, so some musical theatre audiences have got out of the habit of more regular theatre attendance and see it instead as an infrequent (expensive) special occasion pursuit. Smaller productions of new musicals can’t compete with the marketing budgets and resulting coverage of larger commercial musicals, so aren’t on the radars of most musical theatre audience members.

–          The turnover of artistic leadership in producing theatres has particular impact on the development of new musicals, given they often take five years or more to develop, they may well not be ready for production before the artistic director supporting the project moves on. Producers and writing teams on new musicals need to develop longterm partnerships and trust with venues that will hopefully withstand a change in leadership, or move with the artistic director to a new venue.