In this series we’re taking a look at some of the more common types of deal done between venues and visiting companies. Have a look here for more general information about deals.
Example: “The company will pay the theatre a basic hire charge of £1500 + VAT per performance”
A hire is a straightforward contract, where the company pays a fee to the theatre for the use of the space for a set period, and the theatre hands all box office receipts for the performance over to the company.
Hires are probably most common at either end of the spectrum – in West End theatres and village halls.
In a ‘village hall’ or volunteer-run theatre situation – and in some West End theatres, the hirer will be expected to do almost everything, from arranging equipment to providing technical staff, even ushers. Hirers need to be extremely careful to clarify what services the theatre will provide – marketing, box office support, technical support, rehearsal space, dressing rooms – it all needs to be in writing.
Because the hirer takes all risk, they need to ensure the show is well marketed. Some theatres, since their income from the event is guaranteed, will sometimes not do everything they could to market the show. Hirers need to assume the theatre will do nothing in terms of marketing, as there’s no use the hirer complaining to the theatre after the show that there weren’t enough tickets sold. The hire fee is still payable.
Many companies that wish to hire a theatre are filled with excitement and enthusiasm. They have done their budgets on a high occupancy percentage – 50% or more. They’re on a high! The future is bright! The show’s going to sell out! Why should they agree to calls, or guarantees or splits? They want the oodles of money that will flow from their sold out show. After all, the hire fee is fixed, so any income above this will be all theirs! But as we shall see below, hires are rarely that simple or successful. In fact, they’re a poor deal for hirers and they don’t help the hirer develop a lasting or happy relationship with the theatre.
Presenting theatres which present a wide range of live performance from many different companies every season have mixed views on hires. On the one hand they represent guaranteed income – a welcome element in the budget – but on the other hand they are not attractive to theatres which are seeking to develop their relationship with audiences and companies.
There are three main reasons why hires are unattractive to presenting theatres.
1. The theatre will struggle to make the hirer accept that any ticket discounts the theatre usually offers should be offered on the hirer’s event. If the theatre has a ‘friends’ or season ticket scheme, or offers discounted tickets to young people or to attract new audiences, the hirer is under no obligation to agree that these discounts should apply to their event. And why should they? The hirer is not concerned with building the theatre’s audiences. They have no need to take the long view. Discounts of this nature simply look like lost revenue.
2. Hires may not be a good fit with the theatre’s programme or its artistic aspirations. Sometimes, that’s why the theatre will accept the hire but not include it in their marketing unless paid to do so. The theatre doesn’t really want the event to take place but the money talks… So for example if the theatre is trying to develop a reputation for new writing, and they are offered a fat fee to present a commercial talent contest, they’ll do it for the money but be reluctant to promote it too heavily. In fact, they may even be a bit embarrassed about it… but the money talks…
3. Theatre hires are frequently associated with signficant contras. A contra is a charge made by one party to the other for services or products provided. Most theatres will contra some costs back to all companies on any kind of deal. But hires frequently attract the most contras. Some theatres will contra hirers for technical time, the cost of paying ushers, front of house staff, put a percentage on tickets sold as a box office services charge, contra back marketing design support, a contra for inclusion in the theatre’s seasonal brochure and on their website, even the cost of printing tickets, electricity and water used, internet usage, the cost of dressing room cleaning, theatre cleaning, and right down to the cost of replacing any lightbulbs that go during the run.
And contras rarely help in building a relationship with a company. So even if the hire in question is an excellent fit with the theatre’s programme, and the hirer insists on hiring the theatre rather than doing another kind of deal, the end result of the relationship is frequently soured by the contras – regardless of whether the run has been successful or not. Here’s more about contras – and why for mid-scale presenting theatres they’re a bad thing.
Depending on your point of view and the theatre’s custom and practice, these contra charges will either seem entirely reasonable and logical, or greedy and unhelpful.
If the run has been successful, the theatre will seek to contra back as much as possible to increase the amount of money it retains. After all, the theatre has suffered increased wear and tear due to the high volume of attendance, as well as increasing the energy and staffing bills considerably. They’ve had to print and process more tickets, hire extra staff etc. No wonder they want to offset some of these costs by contraing back to the company. But the company will see this as greed on the part of the theatre. Result: sourness.
If the run has been unsuccessful, the theatre will still seek to offset their costs with a minimum level of contras. And this can often lead to the company owing the theatre money where the company expected to make a small surplus.
Imagine that the run’s over, and ticket sales haven’t been great. But the visiting company is still imagining the deal looking like it did at the start:
Hire Charge: £2000
Box Office income: £4,500
So far, so good, right? The company will be aware of the hire charge, and the box office receipts, and think they’re about to take home £2000, which isn’t great perhaps, but will cover their costs. Sure there will be some contras as per the contract, but they shouldn’t amount to too much should they? Phew!
But then when the actual box office statement is passed to the company it looks like this:
Hire charge: £2000 + VAT = £2,400
Box Office income: £4,500
Less booking fees: 200 tickets at £1 per ticket = £200
Adjusted Box Office income: £4300 – VAT
With VAT deducted: £3,583
(If the visiting company isn’t VAT registered, they’re on a loser here… And it’s important to be clear with the theatre whether VAT is included in the ticket price or not. VAT can be a minefield and a sensible company will have a good VAT accountant on the board who can check through the box office statement and make sure the VAT is charged appropriately)
Less Marketing costs of £600 + VAT – inclusion in seasonal brochure, on website and design support.
Adjusted Box Office income: £2863
Less Ticket printing costs for 200 tickets at £0.05 per ticket = £10
Less technical services costs of two technicians for 15 hrs at £15 per hour: £450 + VAT
Less energy contra charge of £100 per day for two days: £200
Adjusted Box Office income: £2113
Total payment due/(owing): (287.00)
So the company now owes the theatre £287.00. They’ve made a loss of around £2290, and no matter how well informed they were and how scrupulously the contras have been calculated and communicated, it feels unjust that the £4500 they took at box office has all ended up in the hands of the theatre.
No wonder contras leave such a bad taste in the mouth.
I’m going to cover contras in another post, but the contras on hires are probably the most unattractive aspect of this kind of deal. But they’re a necessary evil in a hire, so they go with the territory.
On a final point, it can be difficult for hirers and theatres to work out the appropriate hire rate for a theatre. The rule of thumb I was taught as a young producer was that the cost of one week’s hire of a theatre should be the equivalent of the receipts for a full house at the average ticket yield.
So if you’re hiring a 600 seat theatre for one week, and the average ticket price for this kind of theatre is £15, then the basic hire fee for the week should in the region of 600 * £15 = £9000. For a one night hire, it should be 1/7th of this price = £1300. Of course, this is just a rule of thumb; it is only loosely applicable to the West End where a different economic system is in place, and it doesn’t necessarily include any get in or get out time, rehearsal time etc. However, it’s a useful measure. Just don’t forget to clarify the contras!
As ever comments and anecdotes welcome.