TCG Annual Research Report: Nonprofit Theatres Report Recovery Since Recession
(Press release, Oct. 27, 2014) — Not-for-profit theatres contributed over $2 billion to the U.S. economy and attracted 34.9 million attendees, according to Theatre Facts 2013, released by Theatre Communications Group (TCG). Based on the annual TCG Fiscal Survey, Theatre Facts is the only in-depth report that examines the attendance, performance and overall fiscal state of the not-for-profit professional theatre industry.
"Theatre Facts 2013 reveals the ingenuity of the theatre field in adapting to the challenges of the recession," said Teresa Eyring, executive director of TCG. "Through strengthening diverse earned income streams, deepening relationships with trustees and individual donors, and benefiting from the recovery of the stock market, theatres have emerged from the worst of the recession. However, working capital remains a significant financial challenge for theatres, and is therefore a focus of our upcoming 2014 Fall Forum on Governance: Cash & Culture."
Theatre Facts 2013 reflects data from the fiscal year that theatres completed between October 31, 2012, and September 30, 2013. Following an Executive Summary, the report presents data in three ways:
- The Universe: a broad overview of the estimated 1,773 U.S. not-for-profit professional theatres;
- Trend Theatres: a longitudinal analysis of the 115 theatres that completed the TCG Fiscal Survey each year since 2009; and
- Profiled Theatres: a detailed examination of all 176 theatres that participated in the TCG Fiscal Survey 2013, broken out into six budget categories.
Theatre Facts 2013 is available at: http://www.tcg.org/tools/facts/.
On average, the Trend Theatres reported that total earned income supported 15.9 percent more of total expenses in 2013 than 2009, contributing to a shift from negative average Changes in Unrestricted Net Assets (CUNA) in 2009 to just above breakeven in 2013. CUNA, defined as the balance that remains after subtracting total expenses from total unrestricted income, increased 111.5 percent over the five-year period. All of the financial changes reported in this press release reflect inflation-adjusted figures for the five-year period.
Led by the recovery of the stock market, theatres posted a 40.8 percent growth in total earned income. This increase reflects the impact of the recession on 2009 numbers, and the growth across multiple earned revenue streams, including:
- On average, single ticket income grew by 7.8 percent since 2009 and remains the greatest source of earned income annually. While subscription income decreased 9.3 percent over the five-year period, it has risen annually since 2010, and remains the second largest source of earned income. Total ticket income increased 0.5 percent and total attendance rose 0.4 percent over the five-year period.
- Earned income from education/outreach programs (workshops, classes, etc.) was up for the fourth straight year, reaching a five-year high in 2013. On average, theatres offered 8 different types of programs in 2013, which served 18,033 people.
- Over the five-year period, rental income grew 33.4 percent, booked-in events brought in 32.9 percent more income and concessions income rose 33.9 percent. Overall, earned income from sources other than tickets and investments increased 18.3 percent from 2009.
- A recovering stock market helped endowment earnings/transfers bring in 334 percent more in earned income after the losses of 2009. Capital gains earnings also saw significant growth in 2013, in part because of a few outlier theatres. While fluctuations in the stock market played a large role in the 40.8 percent increase in total earned income, with investment income excluded, total earned income still grew by 4.5 percent over the five years.
Theatres strengthened contributed income from trustees (13.3 percent), other individuals (13.8 percent) and fundraising events (18.8 percent) over the five-year period. This helped off-set decreases in all other contributed income streams, including significant declines in: federal (-49.5 percent), state (-17.4 percent), city/county (-38 percent) and foundations (-20.4 percent). Overall contributed income dropped 4.3 percent from 2009.
This shift in earned versus contributed income is further illustrated when looking at the percentage of expenses that they covered in 2009 versus 2013. (Total unrestricted income as a percentage of expenses exceeds 100 percent when CUNA is positive and is less than 100 percent when CUNA is negative):
- In 2013: On average, 101.3 percent of total expenses were covered by total unrestricted income — 59.6 percent by earned income and 41.7 percent by contributed income.
- In 2009: On average, 88.6 percent of total expenses were covered by total unrestricted income — 43.7 percent by earned income and 44.9 percent by contributed income.
- Overall, total income growth (both earned and contributed) over the five-year period surpassed inflation by 17.9 percent and supported 12.6 percent more of expenses.
Finally, working capital still remains a challenge for theatres:
- Working capital — the unrestricted resources available to meet day-to-day obligations and cash needs — was negative in each of the five years. Working capital improved from 2010 to 2011 (i.e., became less negative) then returned to its 2010 level in 2012 and improved slightly in 2013.
- The working capital ratio — an indication of how long a theatre could pay its short-term obligations based on its current unrestricted resources — was negative annually, suggesting that theatres are regularly experiencing cash flow crunches, with 2013 ending 1 — lower than the 2009 level and the most severe crunch taking place in 2010.
- Many theatres held capital campaigns to raise funds to build and renovate facilities, purchase new equipment or technology, develop their endowment, or secure artistic or programming funds. Thirty-nine percent of Trend Theatres were in a capital campaign in 2013, the highest level of the 5 years.
For the full report, including further information on CUNA, subscription ticket sales, overall attendance, expenses and more, visit: http://www.tcg.org/tools/facts/.