Let's Be Real About Money

The Woods Are Burning

Andy Horwitz at Culturbot recently wrote an essay entitled “The Theater(s) We Need Now” that in many ways is wonderful, and so is being passed around in my feed. But I was barely into his tl;dr summary when I encountered this bullet point:

Be real about money: Unless you are willing to charge exorbitant ticket prices (Broadway, commercial touring houses), then the performing arts are not a “sustainable” business, much less profitable, and they’re not supposed to be. (learn about Baumol’s Cost Disease, read Lewis Hyde’s The Gift). Embrace the idea that non-profit theater is a money-losing proposition that we must subsidize as a public good, for the public benefit, and plan accordingly, change the ways in which you ask for support, who you ask for support and what you ask them to support.

And I just couldn’t. I had to stop.

As far as I’m concerned, all of his other recommendations, as admirable as they are, are negated by this point. If the only way you can create art is by dreaming of the day when money falls from the sky, then you should just give up now. I’ve been hearing this song for almost 50 years now, and I even sang a few verses myself when I was younger, but by 2023 I find it beyond embarrassing. It’s like basing your finances on asking people to applaud for Tinkerbell. And it certainly isn’t being “real about money.”

Here’s what’s real about money: If the amount of money Congress originally budgeted for the NEA in 1965 had kept up with inflation—not even increases, just kept up with inflation—the current annual budget would be about $559 million dollars. What is it really? $180 million. You want to be real about money, that’s real. Congress would have to triple the budget to even approach that amount. How likely do you think that is? And the fact is that money contributed to the arts by foundations and individuals has taken the same downward turn.

We can’t wander around pining for our allowances to be raised. We need to figure out a way to make things work without having to rely on rich people and the government. And if we can’t figure out a way, then we ought to just close up shop.

The idea of the Baumol “Cost Disease” is almost sixty years old now. The most famous argument from the book he wrote with William G. Bowen in 1965 is that it takes the same number of musicians to play a Beethoven string quartet today as was needed in the 19th century. Meanwhile, the wages of the musicians has increased substantially over time. In other words, unlike other industries, there has not been an ability to increase productivity in the arts, and so the cost of making the product far outstrips the ability of people to pay for it. There are many ways to undermine this argument—for instance, one might argue that the ability to record music is the way music is able to “increase effeiciency”—but what I will argue is that it isn’t the salaries of artists that are the problem, especially in theater, it’s the salaries of staff members and the cost of building and maintaining enormous buildings that are at the root of the problem.

During the past few weeks, we’ve seen several flagship theaters cut costs as a way of addressing massive shortfalls. Brooklyn Academy of Music (BAM) cut their staff 13%, Center Theatre Group cut their staff by 10% and closed one of its theaters, and the Oregon Shakespeare Festival cut its staff by almost 50% and they’re still in danger of collapse! And everybody feels bad at the personal toll these cuts take, but nobody does the math. If you added up the full-time staff positions at those three theaters prior to the cuts, you have 950 full-time positions. Is that a lot?

Well, if you take those 950 positions and multiple them by 52 weeks you come up with 49,400 work weeks. Now open the most recent annual report from Actors Equity Association for the 2021-2022 season. According to their own figures, the total number of work weeks for the entire membership of AEA amounts to 196,388. In other words, the work weeks of the full-time staff of THREE theaters amounted to over 25% of the amount of work that the entire nation’s professional actors and stage managers had during that year. Don’t talk to me about the salary of artists.

(And I have no idea WTF Lewis Hyde’s The Gift has to do with being “real about money.” Hyde’s “gift economy” isn’t about money at all. It is about the difference between a transactional economy (I give you money, you give me a thing) and a gift economy (I give you a thing, and you pass it on to someone else, and there is no expectation of anything except that the gift keep moving from hand to hand). I admire Hyde’s book a lot, but it has little to say about Baumol’s “cost disease” or unpaid orchestral musicians.)

A book that does discuss the effect of the “cost disease” was published in 1973 by Joseph Wesley Ziegler, who later went on to head the Theatre Communication Group. In Regional Theatre: The Revolutionary Stage, Ziegler tells the stories of the burgeoning regional theater movement. Early on, he address Baumol and Bowen’s report, as well as the Twentieth Century Fund’s report The Performing Arts, The Economic Dilemma: A Study of Problems Common to Theater, Opera, Music, and Dance. First, Ziegler noted (remember, this is 1973), “the 'cultural explosion' had already proved to be largely a myth: the natural increase in population and per capita income had given the appearance in the early 1960s of increased interest in the arts, but the percentage of people interested in the arts had not grown significantly." This inconvenient truth, however, was largely ignored in favor of a truth that was more useful to the growth of the regional arts—the "cost disease." How did this change things?

In 1962, Ziegler says he went to work at the Arena Stage as an "administrative intern" to improve his management skills. He provides this startling perspective on how things went down thereafter (I’ve added italics to draw your attention to important points):

By the time I arrived, the Fichlanders [Zelda and Thomas] had mastered running their theatre to the point where they could do the job without a budget. They simply never spent more than the box office and grants brought into their coffers. Each year there was either a breakeven situation or a surplus....Since that time, however, the picture has changed. During recent years, Arena Stage has always incurred an "income gap"—commitments to creditors over and above funds brought in as earned income. It is characteristic, I think, that after moving into its new building Arena Stage did not have income gaps until they became acceptable. Income gaps in the performing arts became acceptable with the publication of the Twentieth Century Fund's The Performing Arts: The Economic Dilemma, which proved their inevitability and opened up the possibility of deficit funding for theatres. The other justification for income gaps came from the establishment, at the same time, of the National Endowment for the Arts, the federal government's first step in accepting support of the arts as a proper function. Arena Stage, with its extraordinary administrative savvy, saw the income gaps could be funded; from then on Zelda instituted additional programs which could be judged suitable for foundation assistance and which assured the Arena Stage would need help.

So it was possible for theaters to live within their means and do excellent work…until the economists told them it was OK if they didn’t. And the nonprofit theater has been running in the red ever since.

So what should be done? Well, I’m afraid that we’re too far along for these massive institutions to change, and I predict that the closings we’ve started seeing are just the beginning of a much larger trend that will seriously affect the flagships first. Anyway, it’s too late for them; they’re already hooked on the meth of subsidy and charity.

I think If we want to get “real” about money when it comes to theater (leaders of orchestras, you’re on your own), we could do a helluva lot worse than starting over using Peter Brook’s oft-quoted but rarely followed opening sentences of The Empty Space (written, by the way, just a few years after Baumol and Bowen’s report was published):

“I can take any empty space and call it a bare stage. A man walks across this empty space whilst someone else is watching him, and this is all that is needed for an act of theatre to be engaged.”

Start there, and then don’t add another element until you know how you’re going to pay for it without resorting to unearned income. Stop when you’re about to become unsustainable. It will be hard, and it will require that you forget all of the indoctrination you’ve received about all the “stuff” it takes for an “act of theater to be engaged,” but I also believe you will find that the freedom that comes with this conscious act of economic self-control will increase your imagination and your sense of agency.

Regardless, “the woods are burning,” as Willy Loman proclaimed long ago in Death of a Salesman, and we can’t keep on waiting for the fire brigade to come and save us.