21 February 2016

Aside: What's going on over at ENO?

It seems somewhat appropriate that the timeline on the 'About' page of the English National Opera website stops at 2012.

In January 2013 it was reported in the FT and other publications that ENO's 2011/12 accounts showed a £2.2m deficit. The article drew attention to previous cuts that were made in 2007 and ENO's statement “After two previous bailouts totalling almost £20m we are very clear that we will not be bailed out again.” The shocking 2012 results were attributed to a global slowdown in audiences and the difficulty of filling a 2,400 seat theatre. Below are ENO's audience numbers for the last 10 years (some figures vary depending on the set of accounts used):


The average capacity over the past 10 years is 74%. The average implied ticket price is £39.25. The average box office receipts are £9,158,900 and the average annual audience 234,545.

What's clear from this data is that ENO's box office receipts have been volatile. The average absolute YoY change in box office receipts is about £930,000 (or ~10% of their average receipts). This volatility makes demand forecasting difficult, which in turn makes supply planning harder (but not impossible). ENO's capacity numbers are not terrible but there is no doubt room for improvement. There is a strong argument that the average ticket price is too high (audiences pay more for quality but not if they feel they are taking a risk: volatile box office receipts being a signal that perceived quality needs to go up and/or price needs to go down). Getting that average price down may help stimulate demand, increase the capacity capacity percentage, get more people in the building and reduce the volatility of the box office revenues.

ENO staged only 115 performances in 2012, had a higher average ticket price than the preceding few years and consequently suffered a very low annual attendance. They did receive less funding from Arts Council England so perhaps it's understandable that low audiences and the cuts were blamed. The major problem actually seems to be that those 115 performances had an average cost of £303,000 each, substantially more expensive than the 134 performances staged in 2011 at an average cost of £247,910 each. This represents a 22% jump in production costs. ENO's spend on productions over the last decade is shown below.


It may be stating the obvious, but reducing the number of performances makes it much harder to amortise those increasing production costs.This can be seen most clearly by comparing 2012 to 2015 in the table above. The spend on productions is equivalent at £34.8m but 32 additional performances in 2015 make the cost per performance much healthier. 2015's attendance was higher than 2012's, the capacity % was lower, average ticket price lower but ultimately box office receipts were up.

ACE Chief Executive Darren Henley's recent article implies that ACE has lost patience with ENO and it's easy to see why. ACE has been pouring money in but liabilities have increased, unrestricted reserves remain low and ENO reaches relatively few people. ENO receive a similar core annual grant to the National Theatre but the two are worlds apart in terms of reach and financial performance (despite productions involving Hytner and Norris at ENO).


ENO need a very rapid turnaround if they are to make it through the next few years. They clearly cannot survive without the full support of ACE but are in a situation where the Chief Executive is publicly declaring that they must "adapt or die." The outward signs are not promising, with cost cutting and a reduced programme appearing to be the leadership's dominant strategy. There are several things ENO needs to do urgently:

1) Stop the flow of negative press.
2) Get the chorus onside: don't trim the chorus, find more opportunities for them to perform.
3) CEO Cressida Pollock needs to step forward as a prominent, positive spokesperson with a plan. Generating hope and excitement are key.
4) Appoint (and retain) an exciting Artistic Director.
5) Focus marketing on showing ENO's value to London, the UK and the rest of the world in an attempt to reverse the feeling that they are an elitist drain on the public purse.
6) Fund-raise fiercely off the back of these things.

Anyone would think it's the first time an opera house has had such problems.