2 November 2015

New Diorama Theatre 2014

It’s difficult to feel kindly towards London’s property developers, particularly if they own assets of around £12 billion (including Surrey Quays) and built The Cheese Grater. However, since British Land also developed the Regent’s Place campus and with it the New Diorama Theatre, they perhaps warrant some grudging appreciation. Opened in 2010 following several rounds of community consultation, the 80 seat New Diorama functions as a creative hub focusing on ensemble work, creating social cohesion and providing a valuable resource for the surrounding community.

What makes the New Diorama an interesting venue to look at financially is that they receive very little support from Arts Council England. With cuts to funding lurking round every corner, perhaps there is value in considering a funding model that relies not on government subsidy or individual giving but largely on corporate sponsorship.


2014 bought a change of pace for NDT, as Theatrical Income overtook Voluntary Income as the primary revenue stream. The 21% growth is largely due to expansion of corporate/artistic space hire, up to £77,060 in 2014 from a 2013 figure of £58,553. Box office income was £21,852 in 2014, up from £4,700 in 2013 but rather than growth, this looks to be a change in accounting since incoming 'Fees' have decreased YoY (down to £2,547 in 2014 from £13,335 in 2013). Income from the cafe/bar remains the same at ~£30,000, just over £8,000 higher than box office revenue but still around 2.5 times less than space hire.

Project Specific Funding saw a major percentage increase in 2014, with £30,380 of the £31,797 total coming from ACE - Grants for the arts. This included £8,500 for captioned performances during the 2013/2014 season and £13,200 for a NDT organisational development plan. This looks to be the only contribution made to NDT by ACE in this accounting period.

Voluntary income declined 6% YoY but this is no cause for alarm since in 2013 a £10,000 ACE grant was included under Voluntary Income but in 2014 all ACE grants were accounted for as project specific funding: it's not as if a funding stream dried up, the money just shows up somewhere else. British Land's contribution to NDT's 2014 income was maintained at a level of £25,000, preserving their Principle Supporter status. Both Carat and Santander are 'season sponsors' and their contribution amounts to £20,000. Camden Council also made a substantial contribution of £16,415. Individual giving and fundraising came to £30,747 and grants from Garfield Weston Foundation (£10,000), Co-op Community Trust (£2,000) and Garrick Charitable Trust (£2,500) make up the remainder.

In case there was any doubt, British Land are key to the success of the New Diorama Theatre. Not only did they build the theatre, James Danby (head of London leasing for British Land) is a NDT board member and British Land's representative as NDT's landlord. He has also previously acted on behalf of the Esmee Fairbairn Foundation (who helped out with a £10,000 grant to NDT in 2013) and since he was no doubt heavily involved in getting Santander Asset Management safely ensconced in their 10 Brock Street offices in Regent's Place, one must assume he also played a part in bringing Santander in as season sponsor.

On a diversionary sidenote - Sofie Mason (OffWestEnd) also sits on the NDT board. The NDT website states that Sofie currently sponsors the New Diorama Theatre's Terrorism Insurance. Insurance is a negative expectation proposition at the best of times (since the house always wins) but Terrorism Insurance is the most ludicrous of all because it so clearly exploits the conjunction fallacy whilst preying on an illogical and emotive fear of disaster. Quite why this sponsorship is in bold on the website, it's hard to say: 'Terrorism' is not listed in the annual report as a major risk.

The New Diorama Theatre's Governance Costs have not changed much YoY, with the slight reduction coming from a minor change in bookkeeping spend. The change in Support Costs appears to be down to spending ~£10,000 less on equipment purchases/maintenance and the commencement of a new arrangement with British Land. In 2013 £30,000 was listed as a donation in kind expense for rent (bringing 2013's combined office/rent/rates overhead to £48,775) but in 2014 no such donation in kind was made/utilised and the rent/rates/services expense was £41,820 (which still appears to be well below market value). NDT had a 3 year agreement in place with British Land from 2010 and some aspects of that agreement look to have rolled over in the new 3 year agreement from 2013 (the £25,000 grant for example) but it appears that in kind donations relating to rent (worth £30,000 annually) have now been closed out following what looks like a 'parachute' donation of £10,000 in 2013.

Salaries/Fees are a significant expense for NDT, with £66,581 being spent on Administration salaries/fees and £73,859 on Production salaries. The resulting £140,440 is approximately 52% of 2014's £270,381 expenditure. This seems a high percentage, particularly as NDT state that only 1 staff member was employed in production and 2 in administration. On paper, this make them one of the best paying arts organisations. However, no employee was paid over £60,000 and one must assume that fees, rather than salaries, account for a chunk of the spend and that the staff number is perhaps understated and won't include contractors (from their website, the staff number looks to be a little dated but the accounts are obviously from an older time period). Personally, I would like to see fees separated out from salaries and encourage organisations to always provide a breakdown of expenses in the same way they generally do for incoming grants. There is no regulatory requirement for an organisation to do so but (as ACE have shown by publishing so much data on their grants) transparency is always an excellent way to do business.


Taking a look at the balance sheet, there is an increase in trade debtors (money owed to NDT) and prepayments/accrued income. On the flipside, there's also an increase in accruals (up to £13,302 from £3,372 and deferred income (which refers to performance fees received in advance and stands at £63,400 at the end of the 2014 accounting period Vs £36,044 at the end of 2013). The £44,554 figure under Designated Funds represents the charity's reserves (3 months operating expenses).

Noted under 'Major Risks' in the New Diorama Theatre's annual report is that New Diorama does not receive regular core funding from Arts Council England. Reading between the lines, we must assume that the priority for NDT will be to secure ACE portfolio funding at the earliest opportunity since trustees must act to preserve the organisations that they care for. The shift in the agreement with British Land would appear to confirm this since they are scaling back support rather then building on it.

At a time when many are debating the economic value of culture, it's interesting to see that British Land were very much aware of this when developing Regent's Place over 5 years ago (it's hardly a new idea - see Jane Jacobs). Assuming that NDT will address their only listed Major Risk and actually achieve ACE portfolio status within 10 years of opening, what British Land have done is incredibly smart and long sighted: build a community asset, pour in financial and network support for it until ACE takes over as subsidy provider on their behalf. The initial building and support costs are amortised by reaping the benefits of a sustainable mixed-use destination neighbourhood and consequently being able to charge much higher long term rents across the entire development. Well played British Land, well played.