Sadler’s Wells: an MMM3 case study

www.missionmodelsmoney.org.uk

Sadler’s Wells
a Governance Case Study for

Mission, Models, Money
Catalysing a more sustainable arts and cultural sector Case study focus: TRUSTEE RESPONSIBILITIES IN RELATION TO ARTISTIC RISK How do non-profit arts and cultural organisations effectively balance artistic risk with financial planning? How can the board and the executive team define their respective roles and responsibilities in this process? This case study looks at the recent implementation of a wholly new and potentially risky artistic vision for Sadler’s Wells. It focuses on artistic risk-management in the context of financial forecasting, and outlines how the board were key to enabling this transition to take place safely. MMM would like to thank Chrissy Sharp, General Manager of Sadler’s Wells, and Sara Robinson, freelance arts consultant, for their work in producing this case study.

Background information: Mission Sadler’s Wells is the dance house for London. Its mission is to present a year round programme of UK and international work encompassing all forms of dance and welcoming all audiences. Structure Registered charity / Company limited by guarantee - Arts Trust, overseen by board of Trustees responsible for running the organisation - Foundation, overseen by Governors responsible for protecting the land and the building. The Trust pays rent to the Foundation which builds reserves Age 75 years. While founded as a dance specialist organisation in 1931, Sadler’s Wells has existed as an institution since 1683. Turnover £14,000,000, 86% self-supporting Staff 89 f/t staff, 150 p/t and casual staff The board: the Chair + 7 Directors, aged from 35 to 70 with an average age of 47 headlines There are 6 men, 2 women and comprise 6 British, 1 German & 1 American Lengths of service vary from 1 to 5 years with 6 years the maximum tenure. Board meets 10 times a year. Agenda includes reports given by each department Directors. 1 x additional non-advisory development (fundraising) committee comprised of some board members, the chair along with key donors and funding specialists. This group meet monthly and are serviced directly by the Development staff team. The foundation Chair (also Chair of Arts Trust) + 18 governors, 5 of whom are Directors of governors: the the Arts Trust. Generally aged between 45 - 70. Meet 3 x a year.

Sadler’s Wells: an MMM3 case study

www.missionmodelsmoney.org.uk

composition Positioning By early 2004, following a period of ambitious artistic plans coupled with over estimated audience targets, Sadler’s Wells was losing money. Its internal financial and forecasting systems in relation to its programming policy were not robust enough to allow for the shows which made a deficit, nor was this information effectively shared with the board. A new artistic vision, backed up by strong financial planning In March 2004 Alistair Spalding (previously Director of Programming) was appointed interim Artistic Director and Chrissy Sharp was brought in as interim General Manager, a newly created post. In October 2004, the board appointed Alistair Spalding as Chief Executive and Artistic Director on the basis of his artistic vision which combined risk with financial viability. He believed that by manoeuvring Sadler’s Wells from a presenting house into an instigator of new work representing a much broader range of dance forms, it could develop a more sustainable relationship with audiences and other stakeholders. The 04/05 annual report states: '…it is our audiences that are the key to our financial viability. Our chief aim must be to better understand and better serve our audiences, and to attract and engage a broader base of ticket buyers… In the year ahead Sadler’s Wells will strive to consolidate its position as London’s house for national and international dance performance by presenting an ambitious and innovative programme of work… But Sadler’s Wells must balance artistic risk-taking with cautious and responsible financial planning. Audience targets for innovative work must be realistically – even pessimistically – set, and the harder-to-sell contemporary work must be balanced by shows for which there is a proven audience.' In November 2004 Chrissy Sharp was appointed General Manager. Their respective roles - his focus on the art, her focus on management - have become key to ensuring artistic and financial decision making processes are researched and debated at executive level, before bringing proposals to the board. Chrissy states, 'We have a good working relationship which means we are not afraid to have frank conversations. Under the overall direction of the board, we balance my more pessimistic instincts with Alistair's more optimistic ones, but what underlies all this is more than the fact that we trust one another, it's that I totally believe in Alistair's artistic vision and he shares my desire to make a profit'. Artistic risk Alistair Spalding was clear that in order to attract new audiences, an entrepreneurial, risk taking philosophy had to form the foundations of a new vision for the organisation. His strategy marked the end of Sadler’s Wells as primarily a presenting house, and one with a significant reliance on renting its theatres to visiting companies. Alistair and his team began curating a specialist programme that aims to actively help shape the dance scene by unearthing new dance work through commissioning, coproducing and forming strong alliances with the world's best choreographers and dance companies. His vision redefines Sadler’s Wells as a powerhouse for dance creativity, as in the days of Lilian Baylis and Ninette de Valois:

Sadler’s Wells: an MMM3 case study

www.missionmodelsmoney.org.uk

“My vision is that Sadler’s Wells once again becomes a place for creation and innovation in dance ... a place where choreographers and dancers are given the opportunity to make new work on the large scale.” Their new Associate Artist scheme not only develops long-term relationships for co-commissioning, but also helps create an atmosphere of creativity with 'artists in the engine room', currently housing Jonzi D, Matthew Bourne, George Piper Dances, Sylvie Guillem, Akram Khan and Russell Maliphant alongside Random Dance, the resident company and Rambert, long term associate company. In addition, the new Jerwood Studio offers more artists a 'laboratory where dance can stretch its legs; a place where artists can dream a little about big ideas. Immediate results are not the point. It’s about giving artists the freedom to experiment and the freedom to fail.' Sadler’s Wells new artistic approach was exemplified by the production in May 2004 of Breakin’ Convention, An International Festival of Hip-Hop Dance Theatre - the first time a major UK performing arts centre has showcased this popular urban dance form. The programme featured hip-hop groups from France, Canada, Korea, the USA as well as the UK, and incorporated workshops and master classes which succeeded in connecting young people in London with professional hip-hop performers. With Breakin’ Convention Sadler’s Wells reached a new audience while also appealing to its core supporters: the festival sold out and almost 50% of the audience were first-time visitors. It has now become an annual fixture in Sadler’s Wells’ programme. These events are balanced by populist money makers such as the Flamenco Festival and Matthew Bourne's annual Christmas show, and has required their marketing strategy to undergo a revolution of sorts, developing variable styles and investment in carefully planned pitches to different target groups. Have the risks paid off? By the end of September 2005, Sadler’s Wells had rationalised budgeting processes, created a reserves policy and were not only back in the black but had made an unprecedented modest surplus. A further surplus was made in the following financial year and the reserves have also been greatly improved. Their audience is more diverse, 'we know when the traditional ballet is on because the audience looks different than we have become used to,' their core audience has become more adventurous, and 38% of the 04/05 ticket buyers were first time bookers and of these almost one in three booked again. Change and success have undoubtedly come about rapidly, but Alistair and his team had to test out this new vision in small steps, underpinned by rigorous safeguards to shore up its financial viability. The board played a key role in overseeing this process. Taking artistic risks safely - the role of the board The first commissions were modest in size, if exciting in design. Financial risks could not be taken until this new way of working had proved itself. Every new project was taken to the board for approval, and trustees were highly involved in decisions about their development. By August 2005 after a series of artistically and financially successful projects, the board were satisfied that the new artistic policy was working, and agreed that the executive could replace reporting on individual project proposals with an annual programming forecast. This annual 'landscape' of risk-averse alongside risky projects enables the board to see how the year as a whole is budgeted, the costs, income and predicted % of audiences for each initiative and therefore the level of risk and potential deficit on each show.

Sadler’s Wells: an MMM3 case study

www.missionmodelsmoney.org.uk

The level of risk the board have been prepared to take has partly depended on the organisation's ability to build up reserves as a fallback position and the success of the artistic vision in practice. For example, the 06/07 landscape includes an ambitious and exciting show which can only run on a considerable deficit. If this shortfall is not met from fundraising targets, the board have agreed it will be filled by dipping into expanded reserves. The board do not believe their role is to challenge artistic decisions; Alistair had already built up a tried and tested reputation for programming in the organisation, so the trust in his decision making processes was strong. Instead they choose to focus on interrogating financial planning and forecasting. Monthly management accounts show that the board and staff have become so adept at forecasting, there have been very few projects that have come significantly under predictions. But is the board effectively rubber stamping plans that have been ironed out at executive level? Chrissy states that robust discussions do happen at board level. If this all sounds too good to be true, it's important to consider the processes the board and staff have put in place in order to effectively manage risk. Safeguards: • The executive are required to take a specific project back to the board if it looks like there will be a £50K variance; • Every month (the board meet 10 times a year) the board are given a report outlining current performance against forecast for each individual show; • Individual projects do not carry a fundraising line in their budgets. This is viewed as a dangerous from of double jeopardy because it is too tempting to make a budget balance with putative sponsorship. Instead there is a collective fundraising target in the global budget ensuring that individual initiatives are not penalised for their ability (or lack of) to attract specific funding; • Fundraising has been invested in, with new leadership, more effective operating systems and ultimately, higher targets; • A significant contingency is built into the annual budget; • Populist shows must play a part in the programme; • Balancing artistic risk with financial viability is the subject of regular robust conversations at executive level before further debate at board level; • The executive are as open as possible with the board and vice versa; • The executive team are fixated on following daily Box Office trends and as a result, have become very adept at future forecasting. Challenges: The main challenge Sadler’s Wells currently face is to find the financial underpinning for their artistic ambitions, which are • to commission and co-produce an increasing amount of work from UK choreographers • to be able to co-commission larger-scale work • to initiate and develop more work in-house.

Sadler’s Wells: an MMM3 case study

www.missionmodelsmoney.org.uk

Their ability to build reserves for future commissioning is limited to their ability to deliver surpluses, and that is dependent on maintaining box office returns. For the past two years they have maintained an average 71% audience capacity in the main theatre at Sadler’s Wells (1500 seats). It is not realistic to believe they can do much better than that. Another challenge is that in creating more in-house work they decrease the income stream from corporate hire of their spaces. This will have to be compensated, most likely by increasing fundraising targets. Key learning points: • Sadler’s Wells have been able to focus on attaining artistic excellence by trusting their current and potential audiences; box office income has grown exponentially; • Artistic risk has to sit within an infrastructure of procedural safeguards and strong financial systems and forecasting which are subject to regular and rigorous interrogation; • Well researched, realistic predictions about income and audience percentages have replaced ambitious targets. Utilising intelligent box office data has assisted this process; • Managing risk can only be sustained if it is tackled collectively. Where the CEO / Artistic Director actively listens, open discussion and debate can take place amongst the board and staff, helping to share the load and spot potential hazards (and opportunities) before they arise; • A board cannot operate effectively without access to clear, honest information. They need to be convinced that change is possible by being involved in testing ideas out. Further resources: www.Sadler’swells.com

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