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Arts Centre Melbourne lives by a thousand cuts

Brian Benjamin

Our business analyst looks at how Arts Centre Melbourne achieved a $10 million budget turnaround.
Arts Centre Melbourne lives by a thousand cuts

Swords out: Arists of the Australian Ballet in Romeo and Juliet, Photo: Jeff Busby

Last week ArtsHub reported that Arts Centre Melbourne had achieved a $10 million turnaround: a $2.9 million operating surplus, compared with a $7.2 million deficit last year.


This improvement in financial performance of Arts Centre Melbourne was achieved through an extraordinary program of trenchant cost-cutting. Total costs fell by nearly $15 million in 2014 to $70.1 million while revenues fell by just $5.5 million to $72 million, $1 million of this being attributable to the loss of government grants.

The cost blowtorch was applied across the entire field of activity at the Centre with nearly all reporting lines showing reduced costs for the 2014 year.

Some of the largest cuts were in programming where year-on-year costs were down by $5.3 million from $16 million in 2013 to just under $11 million in 2014. Food and beverage costs were down $2 million while sales were largely unaffected.

The utilisation of the venue’s main theatres – Hamer Hall and the State Theatre – remained high but the Playhouse and Fairfax theatres were well down on the previous year. This was reflected in a reduction of $2 million in rental income for the Centre.

While overall attendances remained fairly constant at 2.2 million, the major category of performance attendances showed a drop of 230,000 patrons from last year’s high of 1.3 million, off-set in the aggregate figures by attendances at “public programs”.

Revenue per performance-attendee increased by more than 10% to nearly $50, indicating a solid box office performance and a likely reduction in the necessity to issue complimentary tickets when high-profile productions failed to sell, as occurred too often in 2013.

Government grants, while benefiting from a special additional grant during the year, were actually lower in total than in 2013 by $1 million (albeit that the previous year’s grants were partially substituting for lost income while Hamer Hall was closed for renovations).

In its media release announcing the departure of the previous chief executive in December last year, the Chairman of the Trustees stated that the board intended to maintain the strategy that she had introduced, one that was characterised by heroic programming. It seemed puzzling at the time and, with the benefit of these figures, can now be seen to be a little more than a feint.

The board makes a strong statement this year that it is now basing the Centre’s operations around the activities of its major home-based tenants – Melbourne Symphony Orchestra, Opera Australia and the Australian Ballet. This contrasts decidedly with the former approach which saw the revamped Hamer Hall open with concerts by international orchestras and attractions, relegating the MSO to junior division.

These results show the benefit of a reversal of strategy at the Centre, rebuilding its financial position to strengthen its capacity to remain at the centre of Victoria’s live performance arts scene.

About the author

Brian Benjamin is an arts business consultant.