Focus on: Contras

There’s nothing worse than getting an unexpected bill.

Contras are charges made by a theatre which are deducted from (or ‘against’ – hence the latin term ‘contra’, meaning literally ‘against’) the box office income to which the producer is entitled. Contras are, in my experience, the most common cause of disagreement and ill-will between producers and presenting theatres.

The customs and practices of charging contras are diverse and there is no single standard for the nature and scale of charges. Almost every theatre in the UK has a different approach to contras, and these vary greatly between the sort of charges made by a West End theatre right down to the contras charged by a small receiving theatre.

In this post, I’m going to explore the nature of contras in mid-scale regional presenting theatres, consider why and when they’re charged, and make the case for avoiding them altogether as an important element in a theatre’s strategic planning.

In West End theatres, the management may contra for absolutely all running costs associated with the occupancy of the theatre, right down to pest control and toilet roll useage. This position is neatly summarised by Robert Cogo Fawcett in his excellent publication Relationships between subsidised and commercial theatre (Arts Council England, 2003).

‘(…) it is common practice in the West End to contra all staff costs against the box office income. Whereas in touring houses, certain staff will be regarded as part of the theatre’s establishment and only overtime directly incurred by such individuals as a direct result of the producer’s show will be ‘contra’d’. Similarly in the West End the producer will generally be expected to pay for, amongst other items, the theatre’s consumption of gas and electricity, the cost of council tax (and even pest control) for the producer’s period of occupancy. Thus West End houses are often technically provided on a four-walls cost basis where the producer pays for all charges to do with occupancy of the building. “Rent” in these circumstances tends to mean what it says and compensates the owner for the purchase of the building and its ongoing upkeep.’

Contra charges in mid-scale UK regional subsidised presenting theatres – which form the majority of the UK’s regional theatres – are far more variable. A mid-scale presenting theatre may range from 300 – 800 seats, and will commonly present a range of one-performance touring shows (often referred to as ‘one-night-stands’) as well as multiple performance runs for up to one or two weeks, or more for pantomimes.

It is the variation in the scale of contras in such theatres that causes so much confusion. Charges can vary significantly depending on the deal between producer and theatre. Where the producer hires the theatre, it is common for the scale of contras to be greater – but these contras can frequently be misunderstood by producers – particularly in regional areas – and can lead to serious problems. I’ve written about this in an earlier post. On the other hand, where the deal is a box office split or call system, contras are usually fewer in number and scale with many costs being absorbed by the theatre.

Contras are the most common cause of disagreement and ill-will between producers and presenting theatres.

In the earlier part of my career, when I was a producer touring to theatres, I had several bad experiences with contras charged by theatres. I earned my experience and read contracts with ever-increasing care, but was still on several occasions hit with contras that seemed to be unreasonable or on the fringes of what was specified in the contract.

Often it seemed that the enforcement of contras was directly linked to the amount taken at box office. Where the show did well at the box office and the deal was a hire, contras were charged at the highest level possible to recoup more income for the theatre. With more sympathetic managements, poor box office takings on a hire sometimes meant that contras were reduced to avoid ploughing us into the ground. I’m still grateful to a couple of managements who I know didn’t charge the full contra in order to help us out.

On splits, contras were sometimes increased on a poor box office result by theatre managements in order to increase the takings. I found this particularly annoying. Where box office takings were excellent on a split, the contras were sometimes not charged at all, as the theatre was happy with the amount they retained after the split. So sometimes it felt to us that the contras were just a way of the theatre covering their back while leaving us – the producers – in the lurch.

As a programmer at a presenting theatre, negotiating literally hundreds of contracts annually, I inherited a range of contras from my predecessor. The standard deal done with producers was an 80/20% split, which is a poor deal for the theatre but readily agreed to by producers. But the theatre would then charge a wide range of contras to recoup their expenditure, effectively shifting the split towards a 75/25% – more palatable, but still not in fact a brilliant deal for the theatre.

The hidden cost of these contras –  which were designed to improve the theatre’s financial return – was the significant amount of ill will these contras caused between the theatre and producers. Many managements who use contras extensively will know what I mean when I write that I became tired of the negative meetings and telephone calls explaining the contras we had charged and why they were reasonable. Producers who were delighted with the 80/20% split quickly became extremely unhappy when they realised the scale of contras we were charging.  Even more ridiculous was the amount of good-will lost over relatively small sums. Frequently, the contras we charged only moved the actual split by a few percentage points – points that could have been happily negotiated and agreed during the deal-making process. But as contras are only added up and charged after the event, these amounts became hotly contested and soured relationships between the theatre and producers.

A policy of contra-ing can be the result of a fear of negotiating properly in the first place.

One of the reasons that we had always operated in this way was effectively because we were afraid of negotiating. It was easier to agree to an 80/20% split on the phone then sneak in the charges later rather than having a robust and honest conversation at the time of the deal. But in the long run, this had a unreservedly negative effect on those key relationships with producers.

And it wasn’t just us. Bands were the worst at attempting to contra us, the theatre, after the deal was done. On the worst occasion I remember, protracted negotiations with a Mercury Prize-winning UK band for a one night stand resulted in a deal that seemed fair to both parties, based on a relatively large guarantee versus a split. But two weeks later we received a demand from the promoter for a wide range of expenditure, ranging from a contribution to the band’s national marketing campaign, accommodation and travel expenses for nine people, a contribution to the hire of equipment for the band’s tour, and a hospitality rider which came to hundreds of pounds in food and alcohol – all on top of the guarantee. The total meant that it would be impossible for the theatre to show a surplus even on a full house. I was furious. Negotations started all over again. At one point we were about to walk away from the whole deal. There were heated telephone calls. Even though we eventually agreed to pay some of these contras, and the show went ahead (successfully), the process was unpleasant.

Deals – and the contras associated with them – are an important part of a theatre’s strategic planning.

Within a short space of time, we scrapped contras. A key point of our contracts became the clause ‘No contras will be charged by either side unless agreed in writing in advance of expenditure’. Instead of charging contras, we changed our deals to ensure they became all inclusive. We prided ourselves on not charging contras that were not agreed at the time of the deal or agreed in writing before expenditure. We offered a range of ‘standard’ marketing services included in the deal, as well as a ‘shopping list’ of additional activities that we would undertake at fixed contra rates.

We never looked back. Eliminating contras had a wide range of beneficial effects, including:

  • improving the financial return on our deals, as the ‘no contra’ policy became an aid to our negotiations and added a couple of percentage points onto our splits by way of compensation
  • improving our relationships with visiting companies and producers who trusted us more and felt a stronger sense of partnership
  • eliminating much of the paperwork involved in settlements with companies, including the extensive internal billing which apportioned units from staff timesheets to different productions etc.
  • avoiding the ‘nasty surprises’ which came from companies contra-ing us post-negotiation and vice versa
  • improving our budgeting as deals contained fewer variables

and on a day-to-day basis, it stopped the unpleasant conversations, calls and meetings where contras were argued backwards and forwards. It made us, as a theatre, take more pride in our work and feel that we were working with producers rather than against them. Not surprisingly, this was appreciated by producers and visiting companies too, who enjoyed working with us and returned again and again.

In an excellent presenting theatre, where programming is guided by artistic ambition, building long-lasting and mutually beneficial relationships with companies is critical. Reducing – or if possible, eliminating entirely – contras is a critical step towards establishing the trusting, honest and open relationships with producers and companies which in turn create the conditions for mid-to-long-term artistic and financial success. In this sense, deals – and the contras associated with them – become an important part of a theatre’s strategic planning.

One of the first steps in this process is to identify the companies with whom the theatre wishes to work, and restructure the deals the theatre does with these companies, away from hires and towards splits and calls. Partnerships are about more than money. There needs to be trust on both sides. It may take more courage to negotiate all-inclusive deals at the start of the relationship, but taking the easy route of accepting a poor deal then sneaking in contras to recoup expenses later only damages the relationship between theatres and producers in the long term. It’s bad business for everyone.

What are your experiences of contras? Have you had some nasty surprises? We welcome your comments and anecdotes below.

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