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Home My WebLink AboutCAO-15-020 - Agreement Between Centre in the Square and KW Symphony Staff Report K jT(HF,-Ni., CA0 Office www.kitchener ca REPORT TO: Finance and Corporate Services DATE OF MEETING: June 15, 2015 SUBMITTED BY: Rod Regier, Executive Director, Economic Dev., 519-741-2200 x 7506 PREPARED BY: Rod Regier, Executive Director, Economic Dev., 519-741-2200 x 7506 WARD (S) INVOLVED: n/a DATE OF REPORT: June 3, 2015 REPORT NO.: CAO-15-020 SUBJECT: Agreement between Centre In The Square and KW Symphony RECOMMENDATION: For Information BACKGROUND: On April 13, 2015, Council approved a new mandate for Centre in the Square as discussed in staff report CAO-15-007 which affirmed its role in the community "as a place for citizens to engage, experience and participate in: • Arts and culture that originates from within, and is reflective of, the community. As such, CITS is a home for the best that the area has to offer in terms of the live and visual arts. • Some of the best and most popular arts and cultural entertainments available, wherever they originate. A Steering Committee consisting of representatives of Centre In The Square, the Kitchener Waterloo Symphony, the Kitchener Waterloo Art Gallery and The City of Kitchener Economic Development, Facilities Management and Finance was established to oversee the 12 month action plan and report back to Council regarding negotiations around dates and financial implications. The Steering Committee has met intensively since April 13tH REPORT: CITS and KWS have reached an agreement to redistribute the existing pattern of dates throughout the season in a manner that does not in any way take away from the KWS current schedule, but does provide CITS to rent and/or program the venue for at least one weekend during each calendar month from September to May. This new arrangement will begin in the 2016/2017 season and will provide access to 6 prime dates for CITS across October, ***This information is available in accessible formats upon request. *** Please call 519-741-2345 or TTY 1-866-969-9994 for assistance. 4 - 1 December and May. This improved distribution of dates for The Centre is delivered with no risk to the Symphony. CITS and KWS are also engaged in a discussion of additional, more significant opportunities to balance the distribution of dates between KWS, CITS and other user groups in the 2017/18 season and beyond. Through these discussions, key considerations include the need to enhance the viability of both organizations, and support the implementation of CITS's new mandate. There is a clear advantage to all organizations in testing year over year experience in new date distributions. Both organizations seek to adjust an additional 14 prime dates in the calendar, providing new revenue opportunities for The Centre in the range of $211,000 to $457,000 annually. Financial risks associated with this adjustment will be mitigated through a variety of measures, including resources previously allocated by the City of Kitchener. Risk Management The first stage of date transfer to CITS involves no risk on behalf of either organization. As they assess opportunities for balancing the distribution of dates, risks increase on the part of both organizations, but particularly with the Symphony. CITS Risk Management Challenges 1. Occupancy Levels: Year-to-year fluctuations for commercial and/or touring product can result in challenges to attain increases in revenue and/or consistency. 2. Capacity Levels: Low attendance levels by paid ticketholders can result in insufficient finances to meet operational expenses. 3. Governance: Calendar is jointly managed which may lead to potential conflicts or reoccurring issues when there are conflicting priorities. 4. Financial: Financial vulnerability of facility users expose CITS to losses and/or liabilities to ticketholders and vendors. 5. Programming: CITS programming has a high-level of exposure to financial losses. 6. Professional Risks: Recruitment and succession of qualified and skilled staff to deliver on community priorities. 7. Property: Managing short-term maintenance and repair requirements to avoid any disruptions. KWS Risk Management Challenges 1. Loss of Subscriber Base — Some subscribers may be unwilling to adjust to a new calendar 2. Reduced revenue — If subscribers and single ticket purchases decline, revenues will be reduced 3. Increased cost — A new pattern of program dates may increase the cost structure of performances It is clear that the transition process will be challenging. CITS projected a deficit in 2015 based on the transitional year but it will adjust the business model in light of the new mandate to be in a balanced position for 2016. KWS is working to come into a balanced position in 2016. The 4 - 2 Symphony will bear significant risk in the adjustment of its calendar, which will need to be considered in the design of the negotiated solution in 2017/18 and beyond. The productivity of the discussions reflects a new spirit of cooperation, and a commitment to collectively solve problems and develop solutions in a manner that strengthens both organizations. Both organizations develop their artistic calendar up to 30 months in advance. That far out, both KWS and CITS have considerable flexibility in adjusting their calendars to allow each other to optimize revenue opportunities and create new compelling entertainment offerings for the public of the Waterloo Region. At later stages in the planning process, there is less scope for flexibility, but both organizations commit to communicate in order to optimize opportunities that may arise. There is a recognition that the audience development and creative ambition of both organizations involves investment and inherent risk. Collaboration is a powerful tool to mitigate risk and achieve sustainability. ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN: Quality of Life: The decisions and consultation for this mandate project supports a "community that invests in...amenities such as...theatres." The Strategic Plan acknowledges that art and culture is an economic driver and central to a healthy community. Centre in the Square, internationally recognized for its acoustic excellence and cultural expression, contributes to community vitality by offering superb performing arts facility programming. It is a primary cultural asset for the City of Kitchener, a home for the renowned Kitchener Waterloo Art Gallery and the stage for the renowned Kitchener-Waterloo Symphony. Development: Creative people live in creative communities, and the Centre in the Square, as a pillar of the performing arts community with an international reputation, is an important economic contributor and a significant `magnet' for economic and community development. Kitchener Economic Development Strategy: Performing arts inspire, provide meaningful ways to bring people together, contribute to well-being, and help develop an innovative creative economy. The Kitchener Economic Development Strategy also outlines cultural vitality as a significant factor for innovation in a diverse creative local economy. FINANCIAL IMPLICATIONS: It was anticipated that Centre In The Square would incur an operating deficit in 2015 and that budget was agreed upon between the City and The Centre. CITS will enter FY2016 under a new operating model reflective of the mandate applied to the organization and the financial parameters set by the City. Both organizations are working to quantify the level of financial risk associated with future program adjustments. The City of Kitchener has committed an additional $350,000 on an ongoing basis starting in 2016, recognizing that additional transitional funds may be required. 4 - 3 COMMUNITY ENGAGEMENT: INFORM — This report has been posted to the City's website with the agenda in advance of the council / committee meeting. CONSULT — STAKEHOLDERS The Centre in the Square, Kitchener Waterloo Symphony and Kitchener Waterloo Art Gallery have each been engaged with City of Kitchener staff in the Steering Committee. CONSULT — PUBLIC From Fall 2014 to Spring 2015, stakeholders were in engaged in an extensive public consultation. Over 8,000 individuals responded directly to an on-line and paper survey conducted by Arts Build Ontario. ACKNOWLEDGED BY: Michael May, DCAO 4 - 4