TAMRMS#: B06
5.1
Information Item Only
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Arden Theatre Operating Model Review
Presented by: Elizabeth Wilkie, Director, Community Services
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SUMMARY
This report is to update Standing Committee of the Whole on the recommendations from the 2020/2021 Ernst and Young (EY) Operational Review related to The Arden Theatre’s operations, focusing on Administration's ongoing work to reduce the net cost to the City and realize identified cost savings. The EY review highlighted two key opportunities: The Arden Theatre ticketing system and exploring partnership structures for operations. In 2021, the City implemented an in-house ticketing system, saving $35,000 annually and increasing revenue through the retention of user fees. Since the review, the City has continued to implement cost-saving and revenue-generating measures, with the full benefits expected to match the cumulative five-year net benefit identified through the EY review of $786,000 to $1.76 million.
ALIGNMENT TO COUNCIL DIRECTION OR MANDATORY STATUTORY PROVISION
N/A
BACKGROUND AND DISCUSSION
In 2020/21, Ernst and Young (EY) completed the Operational and Fiscal Review to identify mid-to-long term opportunities that the City can pursue to realize cost savings, generate additional revenue, and/or modernize processes and practices. Two opportunities identified are related to The Arden Theatre operation:
Opportunity One: The Arden Theatre Ticketing System
Review of the ticketing systems to analyze options that would improve functionality and usability to gain operational efficiencies such as reducing manual tasks and eliminating shadow functions. The recommendation proposed that an enhanced pricing strategy may also be leveraged and the expansion of the ticketing system for the sale of tickets for other City events.
The new ticketing system implemented in 2021 has reduced transactional fees resulting in $35,000 savings annually.
Opportunity Two: Exploring Partnership Structures for The Arden Theatre Operations
Exploring and evaluating alternative models for operating The Arden Theatre to reduce the net cost of service delivery. EY identified funding sources that they felt the City may be ineligible for and suggested that an alternative operating model could provide access to these funds, thereby reducing operational costs. According to the report, the potential cumulative 5-year net benefit was projected to be $786k to $1.76M.
In response to the Operational and Fiscal Review recommendations to reduce the net cost to the City, Administration began pursuing opportunities for transformation, including consideration for:
• alternative delivery models;
• service innovation;
o streamlining business processes and work methodology;
o organizational structure review; and
• shared services.
A detailed review of current operations, efficiencies implemented since the Operational and Fiscal Review, and an initial assessment of potential partnership structures was conducted to evaluate the continued relevance of this recommendation and identify additional steps that may be needed (see attached “Arden Theatre Operating Model Review”).
The Arden Theatre
The Arden Theatre, owned and operated by the City since 1983, has built a strong regional and international reputation for presenting a mix of City programming, professional performances, and rental events. The Arden Theatre benefits from over $300,000 annually in grants and fundraising, accessed through ongoing partnerships with two charities and one nonprofit society. The Arden’s personnel and equipment also support other City services and events, contributing over 5,000 hours of service each year. Rental revenue has grown post-pandemic, with a 36% increase in 2023, and attendance continues to climb, reaching 75,000 in 2023, a 14% increase from the previous year.
Exploring Partnership Options
Administration explored various operating models for The Arden Theatre, evaluating the opportunities and challenges associated with each. Evaluation identified both opportunities and challenges, taking into account The Arden Theatre’s past successes, its strong relationship with the community, and its overall value. Operational challenges, including the venue’s limited size, accessibility issues, parking constraints, lack of a commercial kitchen, and its designation as a historic resource, were also considered.
Historical information from regional performing arts centres, along with lessons learned from other municipalities that have partnered for theatre operations, provided valuable insights into the review. This comprehensive approach ensured the evaluation was grounded in practical experience and community context.
Review of Arden Theatre Operations
Administration initiated a review of The Arden Theatre operations to identify service improvements and efficiencies, in alignment with Phase 1 and 2 recommendations from the EY Operational and Fiscal Review. These initiatives aimed to enhance theatre utilization while managing costs and achieving savings of up to $1.76 million over five years. The review focused on optimizing resources by using energy-efficient options, improving maintenance and processes, expanding programming options through partnerships, introducing new pricing strategies, and using automation and data-driven decisions - all aimed at cutting costs and managing inflation.
Arden Theatre Financial Overview
The Arden Theatre has demonstrated a steady trend of reduced net subsidization from 2016 to 2023, with some anomalies due to pandemic and post-pandemic recovery, inflationary pressures, and significant changes in consumer habits. Despite a sharp increase in net subsidization during the pandemic 2020-2021, expenses in 2023 remained lower than in 2016, reflecting ongoing efforts to control costs. The 2024 budget projects a continued positive trend with an anticipated 69% cost-recovery by the end of Q4, driven by improved operational efficiencies and new revenue streams.
Next Steps
The Arden Theatre has maintained stable operations despite ongoing inflation, which has affected areas such as maintenance, supplies, artist fees, and other operational costs like equipment, and transportation. These inflationary pressures, along with the need for cost recovery, have been carefully managed to sustain the theatre’s performance and service delivery. Administration is committed to minimizing the City’s net cost, having already surpassed regional cost-recovery benchmarks. Administration expects to achieve the proposed cumulative net savings of $786,000 to $1.76 million over five years and will continue ongoing service reviews to ensure the sustainability of operations and alignment with community needs.
STAKEHOLDER COMMUNICATIONS OR ENGAGEMENT
The Arden Theatre review, included the work of a steering committee with representatives from across the City of St. Albert and Arts and Heritage Foundation.
ALIGNMENT TO PRIORITIES IN COUNCIL’S STRATEGIC PLAN
None at this time
ALIGNMENT TO LEVELS OF SERVICE DELIVERY
Continuous Improvement Program Management - Program and Service Reviews
Implementation and management of the standardized and systematic approach to support identification, management and review of programs and services on an annual basis. The program ensures the programs, services and service levels are responsive to community needs and delivered efficiently. Service reviews include the overall analysis of delivery of programs and services, service delivery model review, service levels, processes, procedures, and resourcing requirements.
A. Community Amenities
A.1 Access to Amenities
A.1.2 Cultural Amenities
Provision of facilities or amenities for participation or engagement in cultural activities by members of the general public.
A.1.2.a Arden Theatre
State-of-the-art entertainment venue offering a variety of music, theatre, and dance to art lovers of all ages.
Services and fees are in alignment with Council Policy: C-FS-16: Municipal Fees and Charges.
A.1.3 Management of Facility and Amenity Partnerships
Provision of management services related to facility and/or amenity partnerships.
A.1.3.b Reciprocal Use Agreement
Agreement management between City of St. Albert and St. Albert school divisions for collaborative use of City recreation and cultural facilities and school facilities.
Reciprocal Agreements are in place between the City of St. Albert and the St. Albert school divisions and requirements are fulfilled within the parameters of the Reciprocal Use Agreement.
A.2 User Experience
A.2.1 Client Services
Provision of assistance, advice, resources and transactional support to visitors and users of community and recreation amenities, facilities, and parks.
A.2.1.a Arden Theatre Box Office
Ticketing services for The Arden Theatre, City of St. Albert events and rental clients.
Provide access via phone, email, on-line or in-person to event information, transaction services, and ticket printing services. Box Office hours are posted on the City website.
B. Community Development
B.1 Community Events
B.1.1 City Delivered Events
The coordination and delivery of events to the community.
B.1.1.b Entertainment Events
Delivery of entertainment events to an audience at community locations. (e.g. Arden Theatre, Community Arts Space, Servus Place)
Events are hosted throughout the City annually to provide diverse, quality professional and emerging live entertainment for all ages, cultures and backgrounds.
B.3 Cultural Development
B.3.1 Cultural Programming
The provision of cultural programming for participants.
B.3.1.a Arden Theatre Professional Series
The provision of a collection of ticketed live stage performances presented by professional artists.
Live stage performances are delivered year-round.
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Report Date: December 10, 2024
Author(s): Elizabeth Wilkie
Department: Community Services
Department Director: Elizabeth Wilkie
Managing Director: Diane Enger
Chief Administrative Officer: Bill Fletcher