Cabinet
3 October 2011
Agenda Item No_____________
CROMER PIER PAVILION THEATRE – MANAGEMENT CONTRACT
Summary:
This report seeks to provide Cabinet with future
options for the management of the Pavilion Theatre
Cromer
The report details background information as to the
current arrangement for management of the contract
of the Pier Pavilion Theatre in Cromer.
A benchmarking exercise has been carried out with
eleven other theatres around the country and this
shows a wide range of different arrangements in
place.
The report suggests a range of potential options
each with differing levels of risk outlined.
Conclusions:
Current comparisons with other theatre providers across
the UK demonstrate that the current arrangement with
Openwide Coastal represents good value for money.
Recommendat
ions:
That Cabinet agrees to extend the current contract for a
further five years.
Cabinet member(s):
All
Contact Officer,
telephone number, and
e-mail:
Ward(s) affected:
Cromer Town
Karl Read Leisure and Cultural Services
Manager
Tel: 01263 516002
Email:- Karl.Read@north-norfolk.gov.uk
Cabinet
3 October 2011
1.
Introduction:-
1.1.
The District Council owns Cromer Pier and the Pavilion Theatre and has a
contract arrangement with Openwide Coastal, an entertainment company which
operates the Theatre, Tides Restaurant and Footprints Gift Shop at the pier
entrance under a ten year contract, operational until November 2012. There is an
option for the Council to extend the contract by up to five years and this is
considered later in this report.
1.2.
Under the contract, the District Council is responsible for the repair and
maintenance of the pier itself and the buildings occupied by Openwide, with the
contractor responsible for the programme of events/shows and maintenance of
all internal fixtures and fittings.
1.3.
The main “event” that Openwide manage is the Seaside Special Show, which
attracts a large audience with approximately 40,000 visitors attending the show
each summer. The Seaside Special Show has received national recognition and
remains the country’s last existing “End of Pier Show” with a full summer season.
1.4.
The contractor also programmes a large number of concerts throughout the year
which attracts a diverse audience. The contractor also hires out the facilities for
events such as “Folk on the Pier” and the “Cromer and Sheringham Operatic
Society”. All of these events support the local economy through an enhanced
tourism offer and visitor numbers at the Theatre which in 2010/11 totalled 71,000.
1.5
The Seaside Special Show is highly regarded within the theatre industry. One
expert in this field Dr Steve Hayler quotes:
“Cromer's end-of-the-pier variety show 'Seaside Special' has a uniqueness as the
last of its kind in the country. Other theatres, on other piers, have moved to 'onenighters' during the summer season, believing that modern audiences do not
value a 'traditional' variety show. Even the famous North Pier at Blackpool has a
'Summer Season of Shows' i.e. repeated 'one-nighters', rather than a continuous
variety show. Thus, the sheer number of performances and the composition of
the Cromer 'traditional' variety show, along with its continuity - now in its 34th
year, are its uniqueness and strength(s), and consistently selling around 90% of
the available seats is testament to the endearing robustness of a type of show
that can nevertheless be adapted to the modern age.”
1.6
This report outlines the issues surrounding future management of the Theatre
and compares the current arrangement against eleven other theatres across the
country.
2.
Background
Contractor Performance
2.1
In terms of performance, it is important that an objective view is taken of the
business, rather than focusing on the subjective quality of the entertainment
provided.
2.2
In 2001, the District Council advertised a ten year contract for the operation of
the Cromer Pavilion Theatre and ancillary facilities on Cromer Pier. The contract
Cabinet
3 October 2011
advertised, recognised the investment proposed in upgrading the theatre
including increasing the number of seats in the auditorium to 502 and the
creation of new restaurant and gift shop facilities at the pier entrance as part of
the Cromer Seafront Enhancement Programme. This investment would provide
a significantly improved facility beyond that which existed at the time the contract
was advertised.
2.3
The redevelopment of the Pavilion Theatre and facilities at the pier entrance was
undertaken over the period October 2003 to June 2004 at a total cost of some
£2.5 million, as part of the wider £6million Cromer Seafront Enhancement
Programme.
The contractor provided just under £100,000 matched funding contribution
towards the capital investment for improving the bar and kitchen areas –
repayable to the company over the early years of the contract, following which an
agreed profit-share arrangement was to operate, potentially reducing the annual
management fee paid by the Council.
2.4
Openwide has continued to invest in its offer at the Pier, and has spent some
£25,000 to improve other facilities apart from the Theatre. It has created a “cafe
culture” style experience opening out onto the Pier, with tables and chairs
creating a patio area for visitors to the “Tides” restaurant. This has been a great
success with 2011 seeing an increase in 40% income. It has also seen a 20%
increase in sales at the “Footprints” shop on the Pier
2.5
The Christmas Seaside Special was set up and has been staged by Openwide
on an annual basis since 2005. This show increased the visitor numbers by
approximately 10,000 per year. However, recent years have seen this number
drop somewhat, due to poor weather conditions during the winter period.
2.6
Attendance at theatre performances increased steadily over the early years of
the contract from 64,150 in 2002/03 to 87,900 in 2006/07. Whilst audience
figures have dropped over the past two seasons (in 2010/11 there was a total
audience of 71,497), set against an extremely difficult financial climate,
profitability has actually increased year on year, largely due to the efforts made in
terms of investment by the company in the operation as a whole. It is also worth
noting that in 2010 the summer season was shorter than normal resulting in a
loss of nine performances – this represents a potential loss of 4,518 customers.
In 2011 the Seaside Special Show is extended by two additional weeks to that of
2010.
2.7
Latest figures suggest that ticket sales for the 2011 season are approximately
8% up compared to 2010. This is very encouraging and largely due to
Openwide offering special promotional discounts in order to increase ticket sales
3.0
Background continued
Current position
3.1
Under the current contract, Openwide Coastal are contracted by the Council
to operate the Pavilion Theatre, “Tides” Restaurant and “Footprints” Gift Shop
until November 2012. The Council has, through the current contract, a strong
influence as to what is offered at the Theatre and the pricing structure
Cabinet
3 October 2011
3.2
The Council has the option to extend the contract for a further five years,
assuming that the contractor’s performance has been satisfactory and that an
extension would represent good value to the Council.
3.3
Openwide Coastal has expressed a desire to enter into a contract extension.
3.4
Officers have undertaken a benchmarking exercise of other similar theatres
across the country to compare the current arrangement and examine other
options for the future management of the contract.
3.5
A total of eleven other theatres responded to the Council’s request for
information. A table detailing the responses received from those local authorities
has been drawn up (see Appendix 1). This information is commercially sensitive,
and so this information is exempt from the main report
3.6
The data in Appendix 1 demonstrates the vast array of different theatres, seating
capacity and costs attached. Upon discussing the costs of running those theatres
with those Councils it became evident that any costs were dependant upon the
current state of theatre and relevant repairs and maintenance regime. No further
detail of those costs were provided and so an assumption is made that they are
the bottom line figure taking into account capital depreciation and income
received.
3.7
It became clear following the theatre benchmarking exercise that it is extremely
difficult, if not impossible to compare theatres ”like-for-like”. The programming
varies enormously with many theatres diversifying and offering other events,
shows and conferences to maximise visitor figures and increase income. Smaller
theatres find it extremely difficult to attract “A-list” comedians and performers and
cannot offer the same programme as far larger theatres.
3.8
A cost per head “League Table” (Appendix 2) details the cost per visitor of
running that theatre for each Council. This has been calculated using the visitor
figures against running costs at each theatre. As previously mentioned a “like-forlike” comparison is very difficult but it does provide some comparison taking into
account seating capacity; which is often the limiting factor in generating
income.
The Pavilion Theatre is placed
fourth from eleven theatres in this table,
demonstrating a relatively low cost per head and good value for money. The
three theatres with a lower cost per head are either under a leasehold
arrangement or operated in-house.
Theatre D does not appear in the table as visitor figures are not available at this
theatre, due to conditions of the lease.
3.9
In addition to the benchmarking, a soft market testing exercise was undertaken
with two other theatre providers. Both organisations were asked whether they
would be interested in taking on the current contract under the existing subsidy.
Both replied positively; they would be willing to bid for such a contract should it
come up for tender.
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3 October 2011
4.
Future Options:-
4.1.
There are three options for the Council to consider moving forward. Each is
detailed below with some context set against each:
4.2
Option 1: Extend the current contract with Openwide Coastal for a period of up
to five years.
Assuming Members wish to continue with the current provision of the Pavilion
Theatre and retain some control over the programme; this option ensures the
cost to the Council remains unchanged and allows Openwide Coastal to further
invest in the offer at the Pier.
This option provides a known value for money figure, as the management fee will
remain at £82,597 per annum with no inflationary increase. It will also provide the
Council with good continuity of provision with a contractor that knows the
business, knows the local area and its target audience.
4.3
Option 2: Put the contract out for tender. This option allows the Council to “test
the market” to see what other organisations can provide and at what cost.
Whilst this option may provide better value for money, the key risk is that the cost
could significantly increase and the Council would then be unable to go back to
Openwide extend the current contract.
It also allows other companies the opportunity to change and or adapt the
current programme in order to increase audience figures. This also presents a
risk as what is currently provided works, with current theatre audience figures
remaining relatively stable.
4.4
Option 3: Advertise the Pavilion Theatre on a leasehold arrangement. As
demonstrated in the benchmarking exercise, this option could undoubtedly offer
the best financial option.
Should the Council wish to take this option, it would then sacrifice all influence
over the Theatre programme. This in turn presents a risk of losing the ‘End of
Pier Show’, and indeed of having influence on the quality of the offer provided.
As demonstrated in the benchmarking, the Councils that have opted for this
arrangement have also lost their right to monitor what is delivered and any visitor
figures also.
5.
Risks and Implications for Council:Reputational Risks
5.1
Members have previously made it clear that this show is of genuine significance
to the local tourism offer, so it is imperative that any existing or incoming
contractor understands the importance of the Show to the Pavilion’s offer, and
continues to provide an End of Pier Show.
5.2
Should the Council decide to offer the Theatre as a leasehold arrangement then
this would put the Seaside Special Show at real risk. This would almost
definitely adversely affect the audience figures, and so put the Council’s
reputation at risk
Cabinet
3 October 2011
6.
Financial Implications:
6.1
Should the Council decide on option 1, then the financial risk is minimal. In real
terms this option provides financial stability due to the current management fee
not being subject to an annual inflationary increase.
6.2
Option 2 presents the most risk financially, due to the uncertainty of any incoming
tenders for the contract. Whilst this option could save the Council money it could
also result in an increase of the current management fee.
6.3
Option 3 could potentially provide the Council with the most significant saving.
However as previously stated, with this the Council would sacrifice all influence
of programming of the theatre and subsequent monitoring of theatre audiences.
7.
Legal issues
7.1
As a result of the relevant procurement regulations reflected in the wording of the
renewal clause in the Pier management contract, any decision to extend should
not be linked to any investment or use of council service by the present
contractor. This would be anti-competitive as against unsuccessful and potential
tenderers denied the opportunity to offer similar or preferable terms to the
Council for what is, in effect, a new contract. From this perspective the three
options identified in the report are fair and do not raise procurement concerns,
although for the reasons indicated above option 1 should refer to an extension for
a period of up to five years.
8.
Recommendations
8.1
That Cabinet agrees to extend the current contract for a further five years.