When I became director of Nuffield Southampton Theatres four years ago, the first production I had to programme at very short notice was our Christmas show. It was a baptism of fire and I was instantly struck by how this particular slot married two important but potentially conflicting roles.
Being the moment in the year with the greatest potential attendance, usually in the shape of excitable nine-year-olds, the Christmas slot was clearly a chance to make money. But while the commercial driver might encourage a producer to drive costs down, I was also struck by what a defining moment a Christmas show can be in the cultural development of a young person – potentially, you hold an entire lifetime’s relationship with theatre in your hands.
It became clear very quickly that I wasn’t interested in scrimping on the budget – if anything, I wanted to increase production budgets to ensure the requisite level of design, wonder and spectacle.
However, we had limited resources compared with the regional and London theatres that we now regularly partner: our government funding was increasingly precarious and audience levels were fast-growing, but not yet high enough. So, I had to look at finding innovative producing models to achieve our aim of becoming a regional company with a national impact.
Having founded and run the HighTide Festival for its first five years, and then having spent two years running the Criterion Theatre in the West End, I believe as much in working with and within the commercial sector as in producing new work.
My plan for NST was always to work more closely with the commercial sector and to develop work in Southampton that would go on to have a commercial life both on tour in the UK and beyond.
Over the past three years, we have developed a slate of projects with commercial potential, including our current, world-premiere adaptation of Roald Dahl’s Fantastic Mr Fox. The first step in creating models like this has to be focusing on the material itself. We commissioned a superbly talented writing team in Sam Holcroft (book), Arthur Darvill (music) and Al Muriel (lyrics). The Dahl Estate has also been hugely supportive – both creatively and by investing in the show financially, such was its belief.
This ambition became possible with the support of Stage One in 2015, when we were selected as a regional host venue for producer Aidan Grounds. He focused on boosting our links with the commercial sector – initially helping to secure more commercial visiting productions than we previously received, including The Woman in Black. He also began looking at ways to develop a commercial model for Fantastic Mr Fox.
Even with NST and our co-producer Curve subsidising the production by £60,000 each – ending our runs at each venue with £60,000 yet to recover – we still needed to raise several hundred thousand pounds to capitalise the production.
At the time, I was faced with three options:
1. Partner with an established commercial producer (a few were interested), who would produce the tour and aim to recoup their share of the capitalisation by raising investment and returning a profit to their investors. We felt this was not the best model because NST and Curve would only receive a producers’ royalty (between 1% and 3% of gross box office) – as opposed to the commercial producer’s standard 40% share of all profits raised through commercial investment. This would mean that it would take a long time to recover any of the money we had each contributed to subsidise the show. Our Christmas productions are normally modelled on at least breaking even, so we couldn’t justify not recouping the £60,000 subsidy.
2. Try to raise commercial enhancement – this tends to be a sum of money in exchange for ‘first dibs’ on producing in the West End, should such an opportunity arise. This would have the advantage of increasing the budget, but not handing over any immediate commercial advantage. Our problem here was partly that enhancement levels on a show this size wouldn’t be sufficient for our ambitions and that NST had no commercial track record with which to raise enhancement.
3. Find a new way for NST and Curve to both recover our subsidy and raise investment ourselves. We had secured the rights to a popular title and, having been inspired by larger companies such as the National Theatre and Royal Shakespeare Company producing commercially successful productions including Matilda and War Horse, my instinct was that getting a commercial producer on board at this early stage didn’t feel like the right creative route after three years spent developing the show. So, I asked Aidan and our finance director Jan Willis to develop a model that could be right for both Nuffield and Curve, and more importantly our production.
Without having the resources to set up a dedicated commercial arm, we needed to find a hybrid model between the commercial and subsidised sectors. After months of experimenting and countless invaluable meetings with producers including Emma Brunjes, Iain Gillie and Jeremy Meadow (NST trustee), Eleanor Lloyd and Tom Powis (both working as consultants on Fantastic Mr Fox), we built a new model that we believe will help us achieve our aims of producing a larger-scale show than normal NST budgets would allow, and that could enable us to raise commercial investment ourselves.
Our model works as follows:
1. Nuffield and Curve cap their subsidy at £60,000 at the end of the runs at each venue. This means that if sales do not hit their target, each venue would still commit to having that level of deficit at the start of the tour, even though their actual deficit could be larger.
2. NST uses its charitable status to raise additional grants from organisations including the Linbury Trust.
3. NST raises the final capitalisation needed through commercial investment. For commercial investors to invest, we needed to give ourselves every chance of recouping their investment, while ensuring that NST and Curve were also getting appropriate return on investment of public funding. Our model prioritised getting to recouping as fast as possible for investors, but then increased return on investment for NST and Curve once that had happened. We did that in the following ways:
a) NST and Curve’s deficits were capped at £60,000. If either theatre did better at the box office, that increased the pace of recoupment for everyone.
b) Pre-recoupment, the return of investment for Nuffield, Curve and the investors was set up proportionally so that they would recoup at the same time. NST and Curve’s proportional ratios were calculated using their subsidised deficits as investments.
c) Post-recoupment, proportions of return on investment changed so that NST and Curve’s total cash investment are considered investment.
Over the past six months, we have worked with the highly experienced tour booker Kayte Potter (War Horse international tour) and tour marketer Helen Snell (The Play That Goes Wrong). They have enabled us to book a fantastic commercial tour. I can’t wait to see an NST show grow and be staged on the large scale at venues including Lowry Lyric and Milton Keynes after its run this month at Lyric Hammersmith. It’s even popping over to Abu Dhabi and Dubai. It is important for us to get our work seen by audiences all over the country if we are to achieve our aim of becoming a regional producing house with national reach.
The model is still in its early stages and it’s been a huge learning curve for a passionate but small team. It has involved balancing desires of an ambitious creative team with touring practicalities, ensuring a subsidised theatre think more commercially, finding a way for the majority of NST staff not to be consumed by the show, particularly when it goes on tour (we have a new £25 million city-centre venue opening later this year), looking after a hard-working, talented company and much more.
Despite these challenges, the initial signs are promising – the show has been brilliantly received in Southampton, is NST’s bestselling production ever and early sales on tour are strong. Watch this space.
Pre-production and preview expenditure: £1million
• NST/Curve cash investment: £310,000 each
• Funding raised by NST through additional grants: £150,000
• Remaining amount raised through commercial investment: £230,000
Running costs at NST/Curve: £250,000 each
After NST/Curve runs, each theatre has a deficit capped at £60,000
Total to recoup on tour: £120,000 (NST/Curve deficits) + £230,000 (commercial investment) = £350,000
Pre-recoupment, proportion of profit share:
• NST: 17% (£60,000)
• Curve: 17% (£60,000)
• Investors: 66% (£230,000)
Post-recoupment, proportion of profit share:
• NST: 41% (£310,000) Original cash investment over total pre-production, less additional grants, plus majority of 40% of profits on commercial investment raised by NST
• Curve: 41% (£310,000) As above
• Investors: 27% (£230,000)
These figures are presented as indicative example
Sam Hodges is director and chief executive of Nuffield Southampton Theatres