Building a Sustainable Theater: How to Remove Gatekeepers and Take Control of Your Artistic Career

Chapter 24: Project Budgeting

Budgeting for a startup theater is difficult, because you don't have enough information to make choices. You may think something is going to cost $X and instead it ends up costing $2X; you may think your production will sell Y tickets, and instead it sells half-Y. This becomes exponentially more difficult if you are trying to create an annual budget, which is nothing more than a shot in the dark. There has to be a better way, and I'm happy to say that I found one approach that I think is excellent for a new theater.

One of the things I enjoy is adapting ideas from other disciplines to theater. My latest enthusiasm is for the software firm 37signals, whose founders, Jason Fried and David Heinemeier-Hanssen, not only have created a wonderful collaboration app called Basecamp (which I think would be very useful for a theater) and an awesome email app called Hey, but they also write books. They believe in being profitable and sustainable. Love it.

Their newest book, Shape Up, written by Ryan Singer, is available to read free online or download as a pdf, or you can buy the print edition (yes, that’s where I got the idea for how to do this book). Shape Up is a “guide to how we do product development at Basecamp. It’s also a toolbox full of techniques that you can apply in your own way to your own process.”

Starting point: product development at 37 Signals works on a 6-week cycle—in other words, any features they add or tweaks they make are are allotted no more than six weeks start to finish. After the six-week cycle, there is a two-week period in which they go through a process to decide what will happen during the next six weeks. “Six weeks is long enough to build something meaningful start-to-finish and short enough that everyone can feel the deadline looming from the start, so they use the time wisely. The majority of our new features are built and released in one six-week cycle.”

Crucial to this process is a way of budgeting time, which they call “appetite.” You can think of appetite as a “time budget” for a project. In the software world, time is the most important aspect of planning—how much time the designers and programmers will need to write the code and design the user interface.

The usual approach to budgeting is to first describe all the things that you’d love to see on a particular feature, and then estimate how long it will take to make those things. These estimates are inevitably wrong, and the projects stretch on and on. 37signals does it in reverse. They first ask, “how much time are we willing to allot to this project,” and then they “shape” the project to fit the six-week maximum time frame (”small batch” items are allotted fewer than six weeks). If the project isn’t complete by the end of the 6-week cycle, it is abandoned, not extended. This keeps things honest.

I want to apply this idea to production budgeting in theater.

The Usual Way Theater People Think of Budgets

Unlike software development, in theater money is the foundation of the budget. During the recent online discussions of the regional theater crisis, when people (like me) suggested scaling back, someone would inevitably create a sample budget to show that it is impossible to do a production for less than some exorbitant amount of money, and then dismiss the concept of scaling back as “impractical” (ignoring the historical fact that, until the 1960s, theaters always operated in the black, and if they didn’t, they closed). Here’s what these nay-sayers will do--and it is really how most theater people create budgets. They’ll start with the play: we want to do Play X. Play X requires 5 actors, one set, and two costumes for each actor. We want to pay a livable wage.

Now the cascade begins (some of these numbers are estimates, but are more likely to be conservative than exaggerated):

  1. 5 actors X $800/week X 4 weeks of rehearsal and 3 weeks of performance = $28,000
  2. Director = Directors Guild minimum of $7000
  3. Set Designer: $4000
  4. Costume Designer: $4000
  5. Lighting Designer: $4000
  6. Technical Director: $4000
  7. 3 weeks of theater rental @ $2000/week = $6000
  8. Rehearsal space: $1000
  9. Cost of a full set and 10 costumes: $8000
  10. Royalties: $3600
  11. Publicity and Marketing: $5000
  12. Box Office staff: $6400

GRAND TOTAL: $81,000

Now we take that amount and divide it by the capacity of the theater (say, 99 seats) multiplied by the number of performances (12) = 1188. Divide the Grand Total by the number of available tickets: ~$68.00/ticket selling at capacity.

But of course, as a new theater, we're not going to sell at capacity, and there’s no way we can charge that much for a ticket in our market. So we reduce the ticket price to our normal $40 (still too high, somebody grumbles), and we reduce the attendance expectation to 70% (a bit optimistic, but not crazy): $33,264. So now we have a deficit of $47,736, which is well over half of the production budget. How do we fill the gap? Grants and contributions, of course, but most foundations won’t give grants for operating expenses, so it will have to come from donations from your supporters. But to fundraise, we’ll need to hire someone to write those grants and run that annual giving campaign, and someone to track them once we get them, and we’ll really need a full-time Executive Director to help us stay financially on track…which means we need to pay those staff members an annual salary, so we’ll need more unearned income to cover salaries. And the spiral continues.

See? It’s impossible, they say.

Creating a Budget Using "Appetite"

So how would using the “appetite” approach change this?

Well, we’d start the same, but with an attitude change: we’re considering doing Play X. We’ve not committed yet.

Instead of laying out production cost estimates, we start with the audience: How many people do we think will want to see this play? Is it a play that’s right up our audience’s alley, or do we think it will be more of a stretch? Maybe it’s a stretch, but it’s a play that really interests our company members and that we think our audience needs to see. So we agree that attendance will likely be less — let’s say 50% of our 99-seat capacity, or about 600 tickets. We look around and talk about this: do we think we have a good chance of selling that many tickets? Yes? OK.

What does that make the budget? (12 performances) X (99 seats) X (50% capacity)  X  ($40 per ticket) = about $24,000. That’s our appetite.

Remember, we have still not committed to doing Play X.

So next we have to figure out whether we can do that project for that amount. We have to fit the project to the appetite. Obviously, we can’t use the numbers in the first budget, since the actor pay alone ($28,000) would be higher than our established appetite. And since we are a company, company members aren't drawing a salary but instead are receiving a portion of the profit. Nevertheless, a sustainable theater means that the owners need to eat and pay rent, so there needs to be money left over.

Now comes the hard part: can we create a production within our appetite? We have to start looking at trade-offs.

Somebody suggests that maybe we could only do two weekends of performances to save $2000 theater rental. Could we sell 600 seats in 8 performances? That would be 75% capacity. How could we make sure that the first weekend will sell enough tickets, since word of mouth won’t have kicked in yet? Maybe ticket prices are lower the first weekend, and higher the second? Somebody else suggests that maybe we could reduce the amount we spend on costumes, since it is a modern play, and maybe a costume change for two of the characters isn’t necessary—that could save another $1000. Someone else says that it’s a fairly short play, so maybe we could get it rehearsed in 3 weeks. And so forth.

What you are doing is making trade-offs in order to adjust the scale of the production to match the appetite, which requires difficult decisions about production values, time demands, and so forth. And if you can’t do it—if you can’t create a production budget that matches the appetite and that has a production quality that you can live with—well, then you say “no” to this project and look for something else. Maybe a play with a smaller cast, or lower royalties, or you decide your productions will have more spartan design elements. Maybe you look for a cheaper performance space, or find someone willing to donate a place to rehearse. 

If such a discussion just blows your mind, well, I’m not surprised. We’re all taught to think the other way—to plan the ideal production first, and then raise money to meet the budget. We get committed to our “artistic vision,” and what constitutes a valid production. Which is how staffs at regional nonprofits grow, and fundraising is a continuous process.

Using the appetite approach isn’t easy, but it is more likely to lead to sustainability, which is the goal.

The 6-Week Season

Let's go further and consider how the appetite approach to production budgeting might be adapted to scheduling a season. 

The Norm

The usual way that theaters (or university theater departments) schedule a season is pretty straightforward:

  1. There are a certain number of “slots” in a season with a set number of performances for each slot.
  2. Each production is rehearsed over a set number of weeks.
  3. Each production runs for a pre-determined number of performances.
  4. When you figure out which plays go in each slot and in what order they will be performed, you:
    • write up a press release announcing the season, and
    • create a brochure that can be used to sell season tickets in advance.

Rinse and repeat.

Sound familiar?

Spinning the 6-week structure

“Allow me to entertain a challenging idea for a moment just to spin it around and see it from another side.”
                                                                 --David Heinemeier-Hanssen, co-founder of #7 Signals

I love David’s image of spinning ideas around to see them from another side, and for me, spinning ideas from outside of theater generates the most glee. (I was going to say it gives me the most pleasure, but glee is really the right word. In my head, I’m sometimes squealing with delight as ideas appear. But that’s just me.)

A couple foundational ideas at 37 Signals:

  1. There are “small batch” and “large batch” projects. Large batch projects are those in which the appetite requires that the entire six weeks be given to finishing it; small batch projects are projects in which there is for a shorter time frame, say, two weeks or three weeks. Whatever. So one team might be assigned a large batch project, and another team might get two 3-week small batch projects.
  2. You don’t plan beyond the 6-week cycle. In other words, you’re not “an thenning” — “the first six weeks we’ll do X, and then the next 6 weeks we’ll do Y, and then…” Why not plan out the entire season in advance? Because it allows the company to respond quickly to new circumstances, new ideas, new developments. It makes the company more nimble.

Let's Spin These Ideas

Small Batch and Large Batch

Have you ever wondered why every play, no matter how long or short, no matter how simple or complex, almost always is given about the same number of weeks to be built and rehearsed? I once made the mistake of directing two plays simultaneously, Sondheim’s massive Into the Woods and Cormac McCarthy’s two-actor, one-set 70-minute The Sunset Limited. Each play had the same rehearsal schedule.

What if there were small batch and large batch productions? What if, say, there was a production of a Beckett one-act—Rockaby, for instance, which has a playing time of 20 minutes—and it was rehearsed over the course of two weeks?

Your brain just exploded, right? It’s almost impossible to even suggest that such a thing is possible, because who in the heck would bother to come see a 20-minute show? You can’t devote an entire slot to a 20-minute show. But suspend that impulse for a moment and spin the idea around to look at it from another angle.

If you have an ongoing company (you do), you might consider creating a repertory of plays, any of which could be pulled out of “storage” at a moment’s notice, performed for a particular occasion (what if you took Rockaby to perform for, say, an Alzheimer’s support group at one of their monthly meetings?), or, alternatively, combined with other short plays to form a complete evening? What if you didn’t rehearse it for public  performance, but for an invited audience as a way of stretching artistic muscles for some members of your company? Or maybe it would be performed for a special group of adventurous patrons, or streamed online!

Once we break out of the idea of “slots” that are stitched together one show after another over the course of an entire “season,” suddenly options appear that couldn’t even be considered before.

Any projects would, of course, have to be “shaped” and “pitched” at the “betting table” (all Shape Up terms) and evaluated for appetite.

You Don’t Plan Beyond the 6-week Cycle

In other words, there is no season announcement, no season brochure. After every 6-week cycle and 2-week cool down period, you decide and announce what the next production(s) will be.

The advantage of this would be flexibility and an ability to respond to new opportunities or challenges quickly.

For instance, let’s say that you badly over-estimated the popularity of your last production and box office income fell short of your appetite budget. Now you need to make up some income to stay sustainable. Because you’re not locked in to a year-long season, you can choose your next project with that situation in mind. Maybe you revive a past production that you know to be popular and that requires no new design expenditures (you still have the costumes and set in storage) and schedule it long enough to make up the difference. Maybe you decide to do a small, simple play that won’t tax the budget while being likely to play to reasonably decent houses—say, A. R. Gurney’s Love Letters, which requires two actors and a table.

Maybe an unexpected opportunity arises. Who could possibly have anticipated the popularity of the Oppenheimer film this summer? But here we are. If you had already announced your season, you couldn’t respond. But using a 6-week cycle, you could. Maybe you’d decide to do a production of Heiner Klippart’s 1968 docudrama In the Matter of J. Robert Oppenheimer. Or you decide to do a reader’s theater adaptation of John Hersey’s book Hiroshima, or Colin Thomas’s 1989 play Thousand Cranes.

Instead of “turning the battleship,” you’re a nimble little tugboat!

All of this begs certain other questions, including the concept of rotating repertory.

On the Usefulness of Rotating Rep

You may have noticed how questioning one thing can lead to a cascade of additional questions. This is why many are reluctant to do anything new—it’s just one damn thing after another, and pretty soon you have a whole new model! Better to simply follow the well-beaten path. Unfortunately, as we have seen recently, the well-beaten path leads over a cliff. It’s time to bushwhack a new one, and the journey begins by questioning assumptions.

The Cascade

A few days ago, we started by examining a different way of budgeting a production based on 37 Signal’s concept of “appetite” as described by Ryan Singer in the book Shape Up. Using “appetite” in theater reverses the order of the budget process in order to have a better chance of financial sustainability. This led to the associated concept of scheduling in 6-week cycles, where we encountered the concept of “small batch” and “large batch” projects. This helped us escape the constraints of scheduling an entire season of “slots” six months in advance. And the idea of small batch projects led us to a reconsideration of a concept that has a long tradition in theater, but that has been largely abandoned over the last few decades: rotating rep.

???? Appetite —> 6-week cycles —> small and large batch projects —> rotating rep

Rotating Rep

For those unacquainted with the term, rotating rep is the performance of multiple productions during a set time period, often a different production every night, or even two productions in a single day! Productions can be revived and inserted into a performance week as needed. You’re most likely to encounter rotating rep in “destination” theaters, usually Shakespeare festivals, which use rotating rep to allow visiting tourists to see multiple productions during the course of their visit. (In this case, the number of productions is limited to those being done that season.) In its early days, the Guthrie Theatre in Minneapolis operated in rotating rep; in the previous chapter, you encountered rotating rep in Peter Hall's description of his work at the Young Vic, which involved a very simple, spare design approach; Asolo Rep in Saratoga Springs, FL seems to do this on a massive scale

The Advantages of Rotating Rep


Predictably, rotating rep naturally leads to the reconsideration of several other aspects of standard operating procedure. It requires:

Historically, rotating rep was the norm. The University of Washington Library has a wonderful online resource for theater history, and in the section on 19th century American theater, I found the following:

Actors would often rehearse as many as three plays during a day and then would have to prepare for the night's performance. By the Civil War, the season was varied and demanding. A season could consist of 40 to 130 plays, changing nightly. Utility actors in a company might be expected to know over 100 parts. The famous actress Charlotte Cushman would offer 200 different lead roles. Actors were usually expected to learn a new part within two days, sometimes overnight.

Of course, this was not only true of 19th century America, but was also of most theaters throughout history. Elizabethan theaters such as the Lord Chamberlain’s Men performed over 40 different plays during the course of a season, which usually changed nightly just like the 19th century American theater.

Imagine how today’s theater crisis might have benefitted by being able to schedule a season of “greatest hits” from past seasons—plays that could be cheaply revived to tide over the company during a financial crunch. Instead of cancelling productions or entire seasons, theaters might have kept the company gainfully employed while the situation was evaluated.

In addition, why should a great performance disappear after it's initial performances? Why not give new audiences who missed the original production the opportunity to see your best work?

More importantly, imagine how rotating rep would provide flexibility, agility, and stability to a theater company trying to create a sustainable business model.

Just something to "spin around."

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