I predict that 2009 will bring about lower production cost events. Everyone in the industry has no choice. You will see major produced productions take a year off. Events, sports, and touring shows will take a second look and decide if they can make it in this current economy.
The first arena victim was announced today. The 22 year old Arena Football League has cancelled its 2009 season. The reason is the economy. Here is a league that has done some amazing things in the past few years. They were averaging over 10,000 fans a game, player salaries were in check, and they had a decent TV contract with ESPN.
So what happened? I believe a few reasons. First off they have a big arena production. It costs a lot to put on an AFL game. Even though they have a good deal with the players, it takes a lot of players and staff to run an AFL team. The rent at the arena is not cheap either. The bigger leagues know that you have to own the arena to keep the building costs in line. The AFL is just a tenet. They don’t get all the revenue that the arena brings in. The season ran 17 weeks. If you average 10,000 (round number) fans per game that’s only 170,000 fans per team per season. The league promoted family friendly pricing (great for the fan). While keeping the price of a ticket low (some seats under $10) it does not help the bottom line. All sports leagues live or die with the sponsorship deals. While I have no first hand information, I am sure that AFL sponsorships took a hit for the upcoming season.
If you run an arena, you may have more open dates then you are used to. You need to look at what you can do to fill the inventory. Several years ago I was promoting family shows in Toronto. I spent a lot of time at SkyDome. Anyone that has been to the building knows it is huge. Besides, being a stadium, it has a hotel in the outfield. The cost to run this place is tremendous. They knew that keeping the building busy was the way to go. Besides the sports teams and large concerts that played there, they could turn the stadium into a smaller arena sized venue where the family shows played. When they could not book all the open dates from the promoters, they created their own events. For example, they took one week of open dates and created their own indoor carnival. It had everything that an outdoor carnival would have including a midway, arts & crafts, food, exhibits, etc… This was their event and they could control all aspects. They kept the costs low and kept the revenue in house.
I am on the board of a non-profit theatre in my town. I chair the annual benefit concert. We had a wrap up meeting last night. While this year’s event did not lose money, it did not make the budget. We took the recession hit in both sponsorships and ticket sales. For 2009 we discussed is it possible to raise money with this kind of event while keeping production expenses lower for a better ROI? This is what all of us in the entertainment industry need to discuss.