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The Crossing Then

THE CROSSING THEATRE

PERFORMANCE ASSESSMENT & MANAGEMENT PLAN

The Crossing Theatre Performance Assessment and

Management Plan September 2008

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CONTENTS

1.  INTRODUCTION ................................................................................................................................... 5 

1.1   BACKGROUND ......................................................................................................................................... 5 1.2     STUDY PROCESS ........................................................................................................................................ 5 

2.  THE DEVELOPMENT OF THE CROSSING THEATRE ................................................................................. 7 

2.1  BACKGROUND .......................................................................................................................................... 7 2.2  FRIENDS OF THE CROSSING THEATRE ............................................................................................................ 9 2.3  NARRABRI SHIRE BAND .............................................................................................................................. 9 

3.  THE CROSSING THEATRE ‐ OVERVIEW ................................................................................................ 10 

3.1  LOCATION & PROPERTY DESCRIPTION ......................................................................................................... 10 3.2  THE CROSSING THEATRE BUILDING ............................................................................................................. 11 3.3  DESIGN LIMITATIONS THAT IMPACT ON PERFORMANCE .................................................................................. 12 3.4  ADDRESSING THE DESIGN CONSTRAINTS ...................................................................................................... 15 3.5  CONDITION OF THE BUILDING, FITOUT, FURNISHINGS AND EQUIPMENT ............................................................. 16 3.6  KEY STAKEHOLDERS ................................................................................................................................. 17 

4.  MANAGEMENT & STAFF STRUCTURE ................................................................................................. 18 

4.1  MANAGEMENT ....................................................................................................................................... 18 4.2  MANAGEMENT AGREEMENT ..................................................................................................................... 18 4.3  KEY ISSUES WITH THE MANAGEMENT AGREEMENT ........................................................................................ 21 

5.  USE OF THE CROSSING THEATRE ........................................................................................................ 23 

5.1  INFORMATION AVAILABLE ......................................................................................................................... 23 5.2  NUMBER OF BOOKINGS ............................................................................................................................ 23 5.3  NUMBER OF VISITORS .............................................................................................................................. 24 5.4  TYPE OF USE .......................................................................................................................................... 24 5.5  USER MIX .............................................................................................................................................. 25 5.6  USE OF SPACE WITHIN THE CENTRE ............................................................................................................. 26 5.7  CINEMA PATRONS ................................................................................................................................... 27 5.8  ENTREPRENEURIAL ACTIVITIES ................................................................................................................... 28 5.9  POTENTIAL TO INCREASE USE .................................................................................................................... 29 

6.  FINANCIAL PERFORMANCE ................................................................................................................ 32 

6.1  INFORMATION AVAILABLE ......................................................................................................................... 32 6.2    COUNCIL'S FINANCIAL POSITION ‐ SUMMARY ............................................................................................... 32 6.3  TRADING PERFORMANCE .......................................................................................................................... 33 6.4  ABILITY TO MEET COSTS & SERVICE DEBT .................................................................................................... 37 

7.  VENUE DIRECTIONS ........................................................................................................................... 41 

7.1  KEY SUCCESS FACTORS ............................................................................................................................. 41 7.2  POLICY ISSUES ........................................................................................................................................ 42 

8.  MANAGEMENT ................................................................................................................................. 44 

8.1  MANAGEMENT ISSUES ............................................................................................................................. 44 8.2  MANAGEMENT OPTIONS .......................................................................................................................... 45 8.3  CAPACITY TO UNDERTAKE IN‐HOUSE MANAGEMENT ...................................................................................... 52 8.4  MANAGEMENT COMPANIES ...................................................................................................................... 53 

9.  FRIENDS OF THE CROSSING THEATRE ................................................................................................. 55 

9.1  BACKGROUND ........................................................................................................................................ 55 9.2  RELATIONSHIPS BETWEEN THE KEY STAKEHOLDERS ........................................................................................ 56 9.3  FUTURE ROLE OF THE FRIENDS ................................................................................................................... 56 

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10.  CATERING ..................................................................................................................................... 58 

10.1  BACKGROUND ........................................................................................................................................ 58 10.2  REASONS FOR THE CHANGE ....................................................................................................................... 58 10.3  RESPONSE TO THE IN‐HOUSE CATERING SERVICE ........................................................................................... 59 10.4  ISSUES TO BE CONSIDERED ........................................................................................................................ 59 10.5  OPTIONS AVAILABLE ................................................................................................................................ 61 10.6  DIRECTIONS FORWARD ............................................................................................................................. 66 

11.  BAR ............................................................................................................................................... 67 

11.1  BACKGROUND ........................................................................................................................................ 67 11.2  BAR OPERATION ..................................................................................................................................... 67 11.3  BAR REVENUE ........................................................................................................................................ 69 11.4  ISSUES TO BE CONSIDERED BY COUNCIL ........................................................................................................ 69 11.5  DIRECTIONS FORWARD ............................................................................................................................. 70 

12.  NARRABRI SHIRE BAND ................................................................................................................. 71 

12.1  BACKGROUND ........................................................................................................................................ 71 12.2  CURRENT ARRANGEMENT ......................................................................................................................... 71 12.3  NARRABRI SHIRE BAND ............................................................................................................................ 72 12.4  BAND ROOM .......................................................................................................................................... 72 12.5  USE OF THE BAND ROOM ......................................................................................................................... 72 12.6  POTENTIAL OF THE BAND ROOM ................................................................................................................ 73 12.7  DIRECTIONS FORWARD ............................................................................................................................. 73 

13.  EXHIBITION ROOM ‐ ART GALLERY ................................................................................................ 74 

13.1  BACKGROUND ........................................................................................................................................ 74 13.2  SUITABILITY OF THE EXHIBITION ROOM ........................................................................................................ 74 13.3  VISITATION TO THE ART GALLERY ............................................................................................................... 75 13.4  DIRECTIONS FORWARD ............................................................................................................................. 75 

14.  CASE STUDIES ............................................................................................................................. 76 

14.1  CASE STUDIES ......................................................................................................................................... 77 14.2  MAIN FINDINGS ...................................................................................................................................... 81 

15.  MANAGEMENT FRAMEWORK ....................................................................................................... 82 

15.1  OBJECTIVES ............................................................................................................................................ 82 15.2  MANAGEMENT STRUCTURE ...................................................................................................................... 82 15.3  STAFF STRUCTURE ................................................................................................................................... 84 15.4  FOOD & BEVERAGE OPERATIONS ............................................................................................................... 84 15.5  USE OF SPACE WITHIN THE CROSSING THEATRE ............................................................................................ 84 15.6  FRIENDS OF THE CROSSING THEATRE ........................................................................................................... 85 

Report Prepared by: JENNY RAND & ASSOCIATES 272 Prince Charles Pde, KURNELL NSW 2231 Tel: (02) 9668 8474 Fax: (02) 9668 8474 Mobile: 0411 782 700 Email: jennyrand@aol.com

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1.  INTRODUCTION 

1.1   Background  The Crossing Theatre at Narrabri is a multi-purpose entertainment and convention centre, incorporating a large auditorium (1,000 seats), two cinemas, function room, small art gallery and basement room which is used by the Narrabri Shire Band. The Theatre opened in December 2002 and was initially managed by Entertainment Services Project Management Pty Ltd (ESPM). In January 2008 Narrabri Shire Council replaced ESPM with the EVI Group, with EVI being appointed to manage the Theatre until January 2009. Since opening, The Crossing Theatre has provided Shire residents with access to cinemas, as well as quality space for conferences, meetings, functions and performances. The Theatre has hosted a number of large conferences and touring shows which have brought significant numbers of visitors into the Shire, with flow on benefits for the Shire economy. Over the past 5 years the use of The Crossing Theatre has increased substantially, with strong growth in functions, conferences and meetings. At the same time, the popularity of the cinema has fluctuated, with patron numbers declining significantly in the past 2 years. The operating costs for the Theatre have increased each year to the point where, in 2007/08, the operating loss, depreciation and loan repayments were in the order of $1m. While Council recognises that the Theatre, like other community facilities, will require some degree of subsidisation, Council is aware that the current costs are not sustainable and is seeking to improve the Theatre's financial performance. Council is also concerned with the deteriorating relationship between the Friends of The Crossing Theatre and the Theatre Management and the implications that this has in terms of the operation of the venue and the negative publicity for the Theatre. Council recognises that it is timely to re-evaluate the operation and management of the Theatre, in particular to: Revise the management structure at The Crossing Theatre including clearly defining roles and

responsibilities of stakeholders. Improve the level of professionalism and service standards at the Theatre. Increase the level of accountability, putting in place performance and reporting criteria which will

enable Council to closely monitor the level of use and financial performance. Stream-line operations to increase efficiency. Revise how revenues and costs are distributed between the key stakeholders. Effectively market and promote the venue. As the first step in the restructuring process, Council appointed Jenny Rand & Associates to assess: The utilisation and financial performance of the Theatre Operational and management issues Opportunities for moving forward - building the use of the Theatre and the revenue generated Future management structure, including future roles and responsibilities of stakeholders This report summarises the key findings of the assessment and provides recommendations for moving forward.

1.2     Study Process  In preparing this report, Jenny Rand & Associates has drawn on information from a variety of sources including:

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Council files and records and information provided by key stakeholders. Discussions with the Theatre Manager, Friends of The Crossing Theatre (main committee and

sub-committees) and Narrabri Shire Band. Interviews with a number of Theatre users. Interviews with Councils and Managers of performing arts, entertainment and conference centres

throughout NSW and the Australian Performing Arts Centres Association. Two workshops were also held with Councillors to discuss the performance of the Theatre and develop the framework for its future management and operation.

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2.  THE DEVELOPMENT OF THE CROSSING THEATRE 

2.1  Background  The history of the development of The Crossing Theatre is summarised below. This information is taken from Council files, newspaper cuttings, Minutes from Council meetings and the reports prepared for the Centre. The background of the development process is important as it underlies some of the current conflict in relation to Council and Community expectations. Narrabri Town Hall provided the Civic Centre function from 1893 until 1971, when it was

demolished. 1977 - the concept of developing a Community Hall was proposed and supported by the

Community. 1988 - Council resolved to develop a Community Hall over the next 10 years. 1989 - By this stage the project had become a 'Town Hall / Civic Centre' rather than a Community

Hall. 1990 - An Investigative Committee was established to explore the need for a Centre. 1991 - The Investigative Committee Report recommended the development of a 'Narrabri

Community and Entertainment Centre'. 1993 - The need for a cinema was identified, with a cinema added to the development concept. 1996 - The project was revived, with Council talking about a Town Hall / Civic Centre, while the

community was talking about a Cultural Centre / Community Hall. A new committee was established and reports prepared.

1997 - Reports recommended a Cultural Centre with the key components being an auditorium

and cinema. The Tibbereena Street site was also identified as the preferred site. 1997 onwards - there was considerable conflict in the community regarding the Centre, with the

key issues being the need for such a Centre, whether Council / Narrabri could afford it and the proposed site.

1998 - the Project was known as the Cultural Centre and Council resolved in principal to develop

the Centre in 2001. 1999 - 2000 Architectural plans, construction cost estimates and reports on the Centre were

prepared and evaluated. Council then undertook an assessment of its financial position and ability to service debt.

2000 - Following lobbying from the Narrabri Arts Society, Council requested that the architect

include space in the Centre for the Civic Art Collection. The initial Business Plan forecast that the Centre would operate at break-even or at a slight profit,

before debt servicing, with Council required to pay $93,000 per year in loan repayments. This Plan envisaged that Council would manage and operate the Centre.

2001 Cultural Centre Committee started to explore options for operating the Centre. Discussions

were held with Robbins Entertainment / Entertainment Services Project Management Pty Ltd (ESPM), with ESPM submitting to Council a proposal to operate the Centre.

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ESPM painted a very positive vision of the Centre as both a Cinema Complex and Live Entertainment venue. ESPM estimated that it would cost Council $176,000 per annum to have a management company run the Centre, with this cost offset with $26,000 per annum generated from a commission on cinema ticket sales. ESPM committed to operating and managing the entire complex, with services to be provided including:

- Operation of twin cinemas with a mix of latest release and nostalgic movies - Operation of the Auditorium with live shows, exhibitions etc every 4-6 weeks - Management of all bookings and use - Management and assistance to all users of the facility - Co-ordination of facility related activities for events & users

In the initial proposal to Council, ESPM were proposing to meet most of the operating costs associated with the venue, with Council's contribution to operating costs being less than $50,000 per annum, plus an entrepreneurial budget of $30,000 per year and payment of a $93,000 per year management fee, with Council receiving income of $26,000 per year from the Cinemas. (Total cost to Council of around $150,000 pa). The basis of this proposal appears to have 'shifted' significantly in the time between ESPM coming on board in 2002 (when the original proposal favoured Council) and the Management Agreement that was signed in 2004 (when the Agreement strongly favoured Entertainment Services).

The decision to proceed with the construction of The Crossing Theatre appears to have been made on the basis that: The net cost to Council of operating the venue would be around $150,000 per annum. Council would service the debt from general revenue. By this stage, Council was looking to

borrow $4m, with annual repayments of $346,100. Council would need to set-aside $10,000 per year for future refurbishment of the Centre. Depreciation was not taken into account. The total cost to Council was estimated at $556,100 per annum. Key Findings Over the 25 year period from initial proposal to the construction of the Centre, the concept has

taken a range of forms - with the project originally conceived to meet the need for a Community Hall, with the final version being a multi-million dollar Entertainment Centre with space for the Civic Art Collection 'tacked on'. Most of the current community dissatisfaction with the Theatre stems from the fact that people within the Community regard the venue as a 'community hall' - a place that they want to use cheaply for a range of activities.

At no time did Council expect The Crossing Theatre to generate sufficient revenue to repay the

loan, with Council planning to meet loan repayments from general revenue. There appears to be a major discrepancy between what Council thought ESPM was going to

deliver and what was actually delivered. The Management Agreement shifted the balance strongly in favour of ESPM. The Management Agreement is discussed in Section 4.2.

At no time have the objectives for developing and operating the Centre been defined by Council

or an operating framework developed. Council has no policies in relation to:

- How the community will use the venue - Priorities in relation to community vs commercial use - Roles and responsibilities of the key stakeholders - Activities that will be undertaken at the Centre - Financial outcomes being sought - Systems and reporting processes

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As a result of this, the Theatre has lacked direction. It basically became a twin cinema complex operated for the financial benefit of Entertainment Services. The cultural, performing arts and commercial aspects of the Centre have developed on an ad hoc basis and are operating well below their potential.

2.2  Friends of The Crossing Theatre  The Friends of The Crossing Theatre (FOTCT) appears to have been a concept suggested by Entertainment Services as a means of trying to improve the public perception of and commitment to The Crossing Theatre. The Friends subsequently became a Committee of Council. In the initial meetings (2002), ESPM suggested that the Friends take on a number of roles including: Providing volunteer labour to assist with back of house, lighting, stage management and crewing. Operating the Bar for community events. Providing advice about programming. Raising funds for the Theatre. Introducing local business to the Centre - encouraging locals to use the Centre. The original roles appear to be a cross between trying to engender a sense of local ownership of the venue, with this hope that this would generate use of the Centre, and reducing labour costs for ESPM. As there was no formal framework put in place to define the function, roles and responsibilities of the Friends, the Committee has basically defined its own role and structure. While the Committee appears to have worked relatively closely with the ESPM in the initial start-up phase, the directions of the two entities have diverged over time. In their Policy and Procedure Manual for The Crossing Theatre, the Friends appear to perceive that they have a role in the day-to-day management and operation of the Theatre as Council's representative body. Issues relating to the FOTCT are discussed in Chapter 9.

2.3  Narrabri Shire Band  The Crossing Theatre was built on the site of the Narrabri Shire Band Hall. In the initial concept plans for the complex, it was envisaged that the building would be a centre for the performing arts, with the Band being one of a number of local performing arts groups that would have a presence in the Centre. The final plans for the building show the Exhibition Room as the Band Room, however before the Centre opened, the Band Room had been re-allocated as an art gallery to house the Civic Art Collection. The Band Room was moved to the basement in the area originally designed for a car park. There appears to be nothing on Council's files relating to an agreement to provide accommodation for the Band in the new building. There is no lease or licence agreement in place regarding the Band's occupation of the basement level of The Crossing Theatre, nor any written arrangement in relation to who would meet the operating costs of the space. These costs are being met by Council. The Band has an expectation that it will continue to have sole use of the basement level of the Theatre. The Band is discussed in Chapter 12.

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3.  THE CROSSING THEATRE ­ OVERVIEW 

3.1  Location & Property Description  Location The Crossing Theatre is located in Tibbereena Street on the north-west corner of the Narrabri shopping centre. The Theatre is part of a tourism and recreation precinct which incorporates the Narrabri Visitor Information Centre, Australian Cotton Centre, playing fields and a riverside reserve which extends along Narrabri Creek. The Theatre is extremely well located, with the key attributes of the location being: Very attractive parkland setting with views over the reserve to the River. Reserve provides the opportunity for outdoor activities (festivals, functions, exhibitions etc) to be

undertaken in conjunction with the Theatre. High profile location with strong visual impact. Adjoins the shopping centre - potential flow on benefits to the Centre from activities at the

Theatre. Close to accommodation - which is important in attracting conference and meeting business. Ownership & Title The Crossing Theatre is located on a Crown Reserve. The Reserve was first dedicated for public recreation in 1880. In 1965 part of the Reserve was excised and dedicated for a Municipal Depot (Reserve 85179). From 1880 to 2003 there have been a number of changes in the Reserve Area as land was added and the Trusteeship revoked and transferred between various parties. At no stage does it appear that any of the Reserve Land was under the Trusteeship of the Narrabri Shire Band. In 2003, the Reserve (incorporating primarily Lot 2 DP 758755) was consolidated into one large parcel and then re-subdivided to create 4 lots: Lot 11 DP 1060622 – which incorporates The Crossing Theatre, adjoining car park and the

entrance road located between the Cotton Centre and the Oval. Lot 11 has an area of 1.682 hectares. In December 2003, this Lot was notified as Reserve 1005349 to be dedicated for ‘Community Purposes’.

Lot 12 DP 1060622 – site of the Visitor Information Centre (VIC). Lot 13 DP 1060622 – Australian Cotton Centre. Lot 14 DP 1060622 – Reserve that surrounds The Crossing Theatre, VIC and Cotton Centre and

extends through to Dangar Street. The Reserve has an area of 8.009 ha.

On March 2, 2007 these lots were dedicated as Crown Reserves. Lot 11 was dedicated as Reserve 1005349 and a Reserve Trust, the ‘Crossing Theatre Reserve Trust’ was established, with Narrabri Shire Council appointed as the Corporate Trustee.

Lots 12 and 13 were incorporated into Reserve 1005350 and were dedicated for the purposes of ‘Tourist Facilities and Services'. The 'Narrabri Tourism and Australian Cotton Centre Reserve Trust' was established to manage this Reserve, with Narrabri Shire Council appointed as the Corporate Trustee. Zoning In May 2001, a strip of land approximating the proposed Theatre building footprint was rezoned 6(a) Recreation for the purposes of developing a community cultural centre. As per the provisions of

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Narrabri Local Environmental Plan No. 38, the area occupied by The Crossing Theatre building on Lot 11 DP 1060622, is zoned 6(a) with The Crossing Theatre being a permissible use. The remainder of Lot 11 is zoned 1(d).

3.2  The Crossing Theatre Building  The Crossing Theatre is a landmark building in Narrabri. Externally, the Theatre presents extremely well and catches the attention of passing motorists. The Theatre incorporates the following areas and facilities: Front of House: Auditorium - 1000 seats including the Gallery. The auditorium is a flat floor space with a full stage

and back stage area. The upstairs Gallery (207 seats) has fixed raked seating. Riverside Room - designed as a lobby and exhibition area, with views over the reserve to

Narrabri Creek. The Riverside Room has a narrow outdoor verandah extending along the length of the room. The room is variable in width (from 4m to 9m) as a result of having a curved wall.

Foyer - ticket office, toilets, candy Bar and small café, with the café overlooking the reserve. Two Cinemas - fixed raked seating (160 and 80 seats). Exhibition Room - used to display the Civic Art Collection and occasionally as a meeting room. Gallery Lounge, located at the rear of the Auditorium Gallery and used as a meeting room. The dimensions, area and capacity of the rooms are summarised in Table 2.1.

Table 2.1 Room Specifications - Crossing Theatre

Space Dimensions (m)

Area (sqm)

Capacity Theatre Banquet Classroom Cocktail

Auditorium Gallery Riverside Room Gallery Lounge Exhibition Foyer Cinema 1 Cinema 2 Band Room* Outdoor Exhibition

25 x26.5 7 x 26.5

28.1 x (4 to 9) 16 x 5.9

14.8 x 7.8 32 x 9.3 13.5 x 14 13.5 x 7.8

30 x 6

663

168 94 115 298 190

105.5 180

1000

160 60 100 300 160 80 200

500

84 48 72 200

120

320

80 30 50 150

100

650

150 70 75 280

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* Estimate of Dimension, area and capacity Back of House Management office - located on the Gallery level and accessed through the Gallery. Commercial kitchen - located at the rear of the Riverside Room. Stage facilities - dressing rooms (3) at stage level, with 2 green rooms below the dressing rooms. Loading dock, with access to the Stage. Bio-boxes and plant rooms for the Cinemas and Auditorium. Limited storage rooms.

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Basement Band Room - which includes the main space, storage area for band instruments and equipment,

kitchenette and toilets. Storage Room for the Theatre. Outdoors Reserve area with some power and water outlets for outdoor exhibitions and activities and an

area to erect a marque.

3.3  Design Limitations that Impact on Performance  The design of The Crossing Theatre was a response to the need to provide a large space for community events (the Auditorium) and a Cinema. As such, adequate consideration was not given to: How the building could be used for performing arts, community activities, conferences, meetings,

exhibitions or functions. How to generate or maximise revenue from the building.

The operation of the building. Design limitations that impact on the ability to use and generate revenue from the Centre are outlined below. Auditorium The size of the Auditorium was determined by the size of the space needed to meet local needs for balls, large functions, school presentation nights etc. The space cannot be divided into smaller rooms for smaller functions and performing arts events. From a performing arts perspective, a 1000 seat venue is a difficult size. For 'popular' concerts, 1000 seats is generally around 'break-even' if all tickets are sold, with promoters preferring 1200 - 1500 seat venues. For The Crossing Theatre to buy-in a popular performance, it needs the 'add-on' expenditure (Bar, candy Bar, merchandise sales etc) for the event to be profitable. For smaller performing arts activities, eg theatre, classical music etc, the auditorium is generally too large, with a smaller (200 to 500 seat) more intimate space required. The stage area is designed for concerts rather than for dance, theatre or drama. The stage does not have a full proscenium arch or fly tower which limits its potential for some performances. There are also problems with the acoustics including dead spots, lack of reverberation so that performers on stage cannot hear what the audience hears, and loss of sound into the stage wings. There is a need for sound to be projected forward from the stage, possibly by use of a sound shell over the stage and/or wooden boards on the side of the stage to reflect the sound outwards. The auditorium is suitable for larger conferences 600 - 1000 delegates, however the space is too large for small to medium size conferences. The number of large conferences held in regional centres in NSW is relatively small. Narrabri's ability to attract the larger conferences is limited to some extent by accommodation and air service capacity constraints. The Crossing Theatre also does not have the breakout rooms and banqueting space needed to support a large conference.

The auditorium is too large for most social and corporate functions, which tend to need a venue that can accommodate up to 200-250 banquet style.

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In addition to the aesthetics and acoustic considerations of putting a small group into a large space, the auditorium hire fees reflect the cost of operating the large space (air conditioning, lighting etc) with these costs often not being 'affordable' for small events. In banquet mode, there are no service corridors around the perimeter of the Auditorium, with serving staff accessing the auditorium through the Riverside Room. If the Riverside Room is being used by function guests, then the serving staff are restricted to accessing the auditorium through the door closest to the kitchen. If the Bar is operating in the Riverside Room, the 'paths' of serving staff and patrons cross (unless the area is roped off), which is potentially an OH&S issue. Having the Bar separate from the Auditorium can also 'split' a function when some guests congregate in the Bar Room. Storage space for the Auditorium is very limited and is at capacity. Equipment and the grand pianos are being stored in the Stage wings. The equipment is not secure and there are potential OH&S risks for stage users as well as the risk that the equipment and/or the pianos could get damaged. Riverside Room The Riverside Room was designed as a lobby area and exhibition space to support the Auditorium, with patrons using the space to mix before a function / show and at intermission. The Room is now being used as a function area and meeting room. Limitations with the space include: Irregular shape, with the room being 9m wide at one end and 4m wide at the other.

Approximately one third of the room at the narrow end is not useable, while the Bar and service corridor for the kitchen impact on the use of the space at the wider end.

It is difficult to use the Riverside Room and Auditorium simultaneously for different hirers. If the

Centre has accepted a function or meeting booking in the Riverside Room, this effectively 'sterilises' the Auditorium and visa versa.

The western wall of the Riverside Room is all windows. While the view over the reserve is very

attractive, the glare and heat from the sun is a major constraint to using the space in the afternoons. The room cannot be 'blacked' out, which renders it nearly impossible to use multi-media presentations.

The Riverside Room is the link between the kitchen and the foyer café. Serving staff either have

to walk through the Riverside Room (along its entire length), or come into the Riverside Room at one end, then go through to the auditorium and then exit the auditorium at the other end of the Riverside Room. This is a distraction and an intrusion if the Riverside Room is being used for functions or meetings.

The adjoining verandah is narrow which limits its use as a pre-function space and over flow area.

It is not possible to put tables and chairs on the verandah. For functions held in the Riverside Room, there is no indoor 'private' pre-function space, with

function guests basically having to share the foyer with Cinema patrons. While it is possible to 'rope-off' the café area as a pre-function area for the Riverside Room, the arrangement is not ideal. The venue also loses potential café revenue from Cinema patrons.

The room suffers from noise intrusion from activities in the kitchen, in particular the dish-washing

function (this is also audible in the Auditorium). Bar Area The Bar is not designed as a commercial Bar, with the throughput capacity of the Bar being considerably less than the total capacity of the Auditorium. The Bar can comfortably service 2-3 guests at a time, whereas, for large functions, it needs to be able to service 10 -12 guests at a time.

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For large events, the Bar cannot service the demand, with resultant long queues. There is limited opportunity for patrons to have more than one drink, with some patrons not ‘bothering’ to join the queue because of its length. As such Bar sales are probably falling well below their potential. The Bar area is also not operationally efficient with constraints including: Both the serving counter and the Bar area are too small for the capacity of the venue. The Bar

can only accommodate 5 staff, three of which are serving, plus a dishwasher and a cashier. The Bar fridge is too small to cater for major functions. Liquor has to be stored in the Bar cool

room in the kitchen and a runner is used to move alcohol from the cool room to the Bar. The capacity of the Bar cool room in the kitchen is also limited with some of the alcohol for large functions having to be stored in the kitchen cool room. If these cool rooms are not locked after each time they are accessed, then the Theatre is in breach of its Liquor Licence. There are also potential OH&S issues arising from carrying alcohol between the two areas, particularly during busy periods when staff may be rushing or take ‘short-cuts’. The 'runner' is also using the same service corridor as waiting staff.

The ice for the Bar is also kept in the kitchen freezer which creates the same potential problems

as listed above. The Bar fridge cannot be re-stocked from the rear, resulting in restocking taking place at the

same time as serving staff are trying to access the fridge for sales.

The Bar has only one cash register in operation. Exhibition Room The Exhibition Room is used to display part of the Civic Art collection. The room is also used on an occasional basis for small meetings and functions. The space is not ideal to display art works. The room itself is too small, out of proportion (in terms of height) and lacks character. There is no space available to host travelling exhibitions or art shows that would draw repeat visitors into the Centre. The Room is not supervised and as such there is a risk that art works could be damaged or stolen. There is a management conflict in terms of having the room open to the Public to view the collection and the desire to hire the room out for small meetings and functions. As discussed in Section 5.3, small meetings are the main activity undertaken at the Theatre. The Theatre does not have a purpose-built meeting room, with meetings generally being held in the Gallery Lounge and the Riverside Room. The Exhibition Room is generally not used due to issues with closing it to the public, risk of damage to art works if left on the walls, and the time taken to pull down the art works if hirers do not want them in the room. With acoustic treatment (eg carpet on the floor), the Exhibition Room would make an ideal small meetings and function room for The Crossing Theatre. Gallery Lounge The Gallery Lounge is used primarily for small meetings and functions. The Lounge is located upstairs at the rear of the Auditorium Gallery, with access via the Auditorium Gallery. The Gallery Lounge can only be used when the Auditorium is not being used. There is no disabled access to this room. Cinemas The Cinemas have been designed as movie cinemas, rather than as small, multi-purpose performance spaces with the ability to erect a small portable stage at the front of the room.

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Management Office The Management Office is located upstairs at the rear of the Auditorium Gallery, with access via the Auditorium Gallery. The location is very poor in terms of: Efficiency - one staff member has to be located in the ticket office / candy Bar foyer area at all

times, which is inefficient. If this person leaves the area (eg to take a café order to the kitchen), then the foyer and ticket office are left unattended. Ideally the office should be located adjacent to the Ticket Office with staff able to man the ticket office and candy Bar when needed and work at their desk at other times.

Customer service - the office is not readily accessible to clients or patrons. There is no disabled

access to the Gallery level. In addition, office staff are not able to see if there is a queue downstairs at the ticket office and/or candy Bar and provide assistance when needed.

Security - Office staff are not in a position to watch who is coming or going within the Theatre nor

to respond quickly to incidents. The Theatre is open to the public and it not inconceivable that equipment, art works etc could be damaged or stolen.

Kitchen The kitchen is too small for the size of the Auditorium and does not have the bench space, ovens or warming facilities to cater for the larger events. In the past caterers have brought in additional ovens to supplement the kitchen ovens. For large functions tables are set-up in the service corridor adjacent to the kitchen for storage, plating etc. This space is also used for storage. The dish-washing area is poorly located resulting in noise intrusion into both the Riverside Room and Auditorium. The other main limitation with the kitchen is the lack of a warming oven or warming lights. The kitchen has heating elements to keep food warm, however the elements 'cook' the food. These need to be replaced with heat lamps. Loading Dock The Loading Dock is designed for larger trucks. Many of the deliveries are however made by vans and cars / utes, resulting in goods having to be carried upstairs. This is potentially an OH&S issue and is inefficient. Some form of lift or hydraulic platform is needed to service this area. Workshop The Theatre does not have a maintenance workshop or area to undertake minor repairs. Staff Facilities There is no staff room or facilities for staff or for the FOTCT volunteers to use.

3.4  Addressing the Design Constraints  For The Crossing Theatre complex to 'work' more effectively there is a need for: A quality meeting room, set up for small meetings and workshops and able to be used for small

functions. Additional breakout space to support a large conference - 2 to 3 additional areas.

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A medium size space suitable for smaller conferences, functions and performances. Improvements to / redesign of the Bar area and/or the use of mobile Bars when needed. There is also a need for space that can be used by the community as their 'Community Hall', for activities that do not need a large space and/or cannot afford to hire the Auditorium. These requirements can be met by: Converting the Exhibition Room to a quality meeting room and relocating the art collection to a

more suitable venue. This is discussed in Chapter 13. Converting the basement space (the Band Room and the Theatre storage room) into a medium

size multi-purpose room that can be subdivided into three smaller meeting rooms by using sound-proof operable walls. The Band could still have access to the room for rehearsals, music lessons etc, with the space being available at other times for hire and use as part of The Crossing Theatre. The Theatre store could be converted into a secure storage area for the Band.

The space would need to be refurbished. Additional storage would need to be found for the Theatre, with one option potentially being to convert the space under the Exhibition Room into a small workshop and storage area. This is discussed further in Chapter 12.

3.5  Condition of the Building, Fitout, Furnishings and Equipment  The Crossing Theatre is now in its sixth year of operation and is getting to the stage where there is a need to refurbish some of the areas and replace equipment. There are also a number of structural issues with the Building that require rectification. The areas identified by the Theatre Manager, FOTCT and Council Officers that need to be addressed are: Immediate: Structural repairs - front stairs and rear walls, stop leaks - costs being investigated. Replace the kitchen equipment that has been lost or damaged in the past - estimated at $5,000 Purchase of sound equipment (EVI Group owns the sound equipment) - estimated at $100,000 Purchase of projection equipment for Cinema advertising - estimated at $10,000 Within 5 years: Painting of the outside of the building Replacement of carpet Replacement of tables and chairs Replacement of linen - $3,000 to $4,000 Replacement of IT equipment - $10,000 every 2 years

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3.6  Key Stakeholders  The key stakeholders involved in the operation and use of The Crossing Theatre are: Narrabri Shire Council - owner EVI Group - manager Friends of The Crossing Theatre - Section 355 Committee of Council Narrabri Shire Band - tenant Narrabri community - user and funder (from rate revenue)

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4.  MANAGEMENT & STAFF STRUCTURE 

4.1  Management   Since opening, The Crossing Theatre has been operated by a Management Company, with Entertainment Services Project Management (ESPM) operating the venue from 2002 to 2007, and the EVI Group taking over the management in January 2008.

4.2  Management Agreement  Background On 7th January 2008, Narrabri Shire Council entered into a Management Agreement with EVI Group Pty Ltd, for the EVI Group to manage and operate The Crossing Theatre. The Management Agreement is essentially the same as the former Management Agreement with ESPM. The Agreement was initially for a 6 month period, with the Agreement having now been extended for a further 6 months. The Management Agreement relates to the operation of the Theatre complex. This would appear to include responsibility for the space occupied by the Band. The Agreement does not however define whether the operation is confined to The Crossing Theatre building only, or includes the Grounds. Structure of the Agreement The Management Agreement basically divides the operation of The Crossing Theatre into two activities: Cinema and Candy Bar operations Live Operations - which include all other activities undertaken at the Centre. The key areas covered by the Management Agreement are: Cinema and Candy Bar Operations EVI Group is responsible for the operation of Cinema and Candy Bar. EVI retains all income generated by the operation of the Cinemas and Candy Bar, with a small commission payable to Council: Cinema Box Office Sales Commission Payable to Council Up to $5,000 Nil Up to $6,000 $350 Up to $7,000 $500 Up to $8,000 $650 Up to $9,000 $800 Greater than $9,000 $100 per additional $1,000 Candy Bar Commission of 1.5% of sales In relation to the commission on Box Office Sales, the Management Agreement does not: Define what 'Box Office' is. The payment appears to be structured on box office being

determined by the number of tickets sold multiplied by an average ticket price of $6. The current

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ticket prices are $10 per adult, $7.50 per student and $6.50 per child. Although not specified in the Management Agreement, a booking fee of $2.50 is charged per ticket. There is no reference in the Management Agreement as to whether 'box office revenue' should include gross box office receipts or receipts net of the $2.50 booking fee, nor any reference to $6 per ticket being the rate for calculation. If the ticket booking fee is included this would result in a significant increase in box office revenue.

Specify whether the commission payable is based on monthly income or annual box office

income. The commissions are being applied to monthly income, which significantly reduces the return to Council. The cumulative difference over the past 5 years is approximately $82,624 (net of GST).

Year Commission

Difference Calculated Annually Calculated Monthly 2003/04 2004/05 2005/06 2006/07 2007/08

$33,686 $25,660 $41,934 $22,364 $18,280

$19,650 $13,000 $23,750 $ 2,550 $ 350

$14,036 $12,660 $18,184 $19,814 $17,930

Total - 5 years $141,924 $59,300 $82,624 Provide a mechanism (eg Audit) for Council to ensure that the information provided on the box

office receipts is correct. Council relies solely on the information provided by the Management Company.

In addition, ESPM provided the projection equipment. Under the current arrangement, Council is providing the projection equipment, yet this is not recognised in the commission structure. The EVI Group is responsible for meeting all costs associated with the operation of the Cinema and Candy Bar, other than wear and tear of the Cinema fittings and fixtures. It is also responsible for meeting a proportion of Theatre operating costs, namely: Electricity $6 per Cinema session towards the cost of electricity. 50% of the cleaning and maintenance costs for the Foyer and Toilets. These cost structures are the same as in the original contract with Entertainment Services. There are no provisions in the Management Agreement to increase the electricity fee per session in line with increasing electricity costs. If EVI use other areas of The Crossing Theatre in conjunction with the Cinema Operations, the financial arrangements are the same as for the Cinema operation. Live Operations EVI is required to operate all other activities at The Crossing Theatre on behalf of Council. These activities include all venue hire and entrepreneurial activities (eg concerts). All revenue generated from these activities is retained by Council. The EVI Group was originally paid $10,000 per month to manage live operations, with this having recently been increased to $11,000 per month. This fee is paid regardless of whether or not there are live operations occurring in the Theatre. There is no incentive fee tied to the number of events or people going through the Theatre. The recent change in the catering arrangements (see Chapter 10), with EVI now running the catering for the Centre, is providing an incentive for EVI to increase use of the Centre. Narrabri Council is responsible for all operating and capital costs other than those met by EVI in relation to the Cinema and Candy Bar operations. Staff

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EVI is responsible for the employment and payment of staff. The Agreement does not require the staff to be suitably qualified. EVI Group employs four full-time staff members, plus 8 casual staff with the staff being: General Manager Assistant Manager Operations Manager (Technical) Chef The 8 casual staff include a relief Chef and 7 Theatre Assistants who work in the café, ticket office and candy Bar. The casual staff each average around 22 hours per week. The Theatre also has around 35 people on their books who can be called in for waiting, kitchen and Bar work when required. Liquor Licence Council has an 'On Premise' Liquor Licence for The Crossing Theatre, with the Centre Manager required to hold the License. As Licensee, the Centre Manager is ultimately responsible for all liquor-related activities at the Theatre. Although not included in the Management Agreement, the Centre Manager receives an allowance of around $6,000 pa from Council to hold the Licence. Friends of The Crossing Theatre The Management Agreement acknowledges that the Friends of The Crossing Theatre have the right to operate and to assist the Manager in relation to: Promoting The Crossing Theatre Fund raising for the Theatre Developing and promoting cultural activities Operating specific areas of The Crossing Theatre as may be required. Any other matter approved by Council Under the terms of this Agreement the role of the Friends is to assist the Centre Manager. The terms and conditions in relation to how this 'assistance' should work and the roles and responsibilities of each party are not specified. In terms of 'operational assistance' (Clause 11(ii)d of the Agreement) this is on the basis of 'as may be required' which implies that the Manager has the right to determine what assistance is required from the Friends. Alternatively it could be argued that the provisions (Section 11(ii)e) imply that Council will determine how the Friends assist the Manager. Entrepreneurial Activities The Agreement requires Council to provide an Entrepreneurial Fund to underwrite activities in the Auditorium. The Agreement is 'loose' on how the arrangement will work. In the past it appears that ESPM was buying in shows, with limited input from Council, with Council bearing any losses. Since the Jimmy Barnes Concert, Council has played a more active role in the purchase decisions. Currently, the Centre Manager recommends which shows to 'buy' with the General Manager in consultation with other Council staff, making the decision on whether to proceed. Council is taking the whole of the risk. Although it is providing the recommendation to Council, the Management Company does not share in the risk, however it does gain some income from ticket booking fees, recovery of some staff costs and from Candy Bar sales.

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Omissions from the Management Agreement There are a number of omissions from the Management Agreement, including: Vision / Direction - outlining Council's expectations in relation to the operation of the Centre. Performance Targets - there are no performance targets or criteria included in the Agreement -

in relation to use of the Centre, business mix, revenue generation or cost control. Café and Catering - there are no provisions in the Agreement relating to the operation of the

Café and the catering arrangements. Currently EVI is running the Café and catering and retaining all profits. Council is providing the premises and equipment and meeting costs that cannot be directly identified as catering costs.

Business Planning - the Agreement does not require the Management Company to prepare a

Business or Marketing Plan for the Centre. Business and Marketing Plans need to be prepared annually and submitted to Council for approval. The formulation and implementation of the Plans should be part of the responsibility of the Manager.

Marketing & Promotion of the Centre - The Agreement does not specify who is responsible for

the marketing and promotion of the Centre. By default, Council staff (Economic Development & Tourism Unit) are undertaking this role.

Narrabri Shire Band - There is no reference to the Narrabri Shire Band in the Management

Agreement. The Agreement does not acknowledge that the Band has any right to occupy space in The Crossing Theatre.

Maintenance of the Assets - The Management Agreement does not require the Management

Company to 'look after' the fittings, furnishings and equipment (FF&E). There is no negligence or 'responsibility' clause if the Management Company is responsible for the loss or damage of the FF&E. There are also no provisions for the Management Company to pay for any lost or damaged FF&E at the end of the Management Agreement.

Ticketing - while the Agreement requires the EVI Group to provide a booking office (ticketing

service), it does not specify who retains the revenue generated through the ticket booking fee. The EVI Group is currently retaining this income.

4.3  Key Issues with the Management Agreement  The Management Agreement is very 'loose' and appears to favour the Management Company. Issues with the Agreement include: Area to Which the Agreement Applies The Agreement does not define The 'Crossing Theatre' in terms of the areas of the building and grounds under the control of the Management Company. Structure The Management Agreement is structured in such a way that it encourages the Management Company to maximise the revenue generated from the Cinemas and Candy Bar and to minimise Live Operations. EVI Group receives a fixed fee for the Live Operations, regardless of the level of activity in the Centre. Activity incurs staff costs and increased demands on staff time, and also increased cleaning and maintenance costs of the Foyer and toilets. This is a disincentive for the Centre Management to build the Live Operations business.

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Cinema & Candy Bar The issues are: - In relation to Box Office Sales Commissions, the Agreement does not specify whether the

commission payable is based on monthly income or total annual income. Council is applying the commissions on monthly income, which significantly reduces the return to Council (see Section 4.2).

- The Commission structure in the 2008 Management Agreement is the same as in the initial

agreement entered into with ESPM in 2002. In the initial agreement, ESPM was responsible for the provision of the Cinema projection equipment. Under the current agreement, Council has provided the projection equipment.

- Electricity costs have increased substantially over the past 5 years. There is no provision in the

agreement to increase the fee per session in line with the electricity price rises. The $6 per session appears to be an arbitrary figure, with no calculation as to the actual cost of electricity for operating the Cinemas.

Live Operations There is no financial incentive for the Management Company to encourage the use of the Centre for Live Operations. In the way the agreement is structured it basically is not in the financial interests of the Management Company to have any Live Operations at the Centre. Friends of the Crossing Theatre The structure of the relationship between the Centre Manager, Friends and Council is not defined in the Agreement. Entrepreneurial Activities The Management Company is not sharing in the risk of entrepreneurial activities. As such it is not financially responsible for the recommendations that it makes to Council regarding entrepreneurial activities. Omissions As discussed in Section 4.2 above, there are a number of areas not addressed by the Management Agreement, including: Vision / Direction Performance Targets Café and Catering Business Planning Marketing & Promotion Narrabri Shire Band Maintenance of the Assets Distribution of income from booking fees

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5.  USE OF THE CROSSING THEATRE 

5.1  Information Available  Records on the use of The Crossing Theatre are only available from 2005 onwards, when a use monitoring system was put in place by the Economic Development Manager. As the monitoring system has evolved, there have been some changes in how the bookings have been recorded. As such there are minor discrepancies in the information available. The information on bookings, event-type and market mix is compiled from the Event sheets. Information on the number of people coming into the venue is taken from a 'people counter' located at the front door of the Theatre. There are no counters on the side and back doors. The number of people visiting the Theatre is an estimate only.

5.2  Number of Bookings  The number of bookings at the Theatre has increased significantly since 2005, with 96 bookings in 2005 increasing by 178.4% to 199 bookings in 2007. In the first 7 months of 2008, there were 103 bookings, one booking higher than in the same period in 2007 (102 bookings). Most bookings are for one day or less. Occasionally a booking will extend over a number of days (eg Eisteddfod, Science Challenge, Conferences). As such, the number of days in which there are one or more activities being undertaken at The Crossing Theatre is marginally higher than the number of bookings. In 2007 it is estimated that there was some activity in the Theatre on around 55 to 60% of days. This is a significant improvement on 2005 when the Theatre was used on approximately 30% of days. The number of bookings by month is summarised in Table 5.1. Table 5.1 Number of Bookings Month 2005 2006 2007 Ytd 2008 January February March April May June July August September October November December

3 4 7 1 6 7 9 12 13 9 10 15

6 14 18 10 15 16 12 11 21 12 22 16

2 8 19 16 20 20 17 18 25 19 21 14

5 10 15 19 17 24 13

Total 96 173 199 103 ytd

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5.3  Number of Visitors  In July 2006 Council installed counters at the front door of the Crossing Theatre to provide an indication of the number of people coming into the building, with visitation being: July - December 2006 40,590 January - December 2007 86,189 January - July 2007 45,011

5.4  Type of Use  The Crossing Theatre attracts a wide range of different uses. These uses are summarised in Table 5.2. Since 2005, conferences, meetings and related activities (eg auctions, health screening, interviews) have accounted for 56.3% of bookings, with meetings being the main activity (44.8% of bookings). Functions requiring catering (including weddings and balls), have accounted for 20.3% of use, while live performances (concerts, theatre, eisteddfod, school performances etc) account for 10.9% of use. These figures indicate: While The Crossing Theatre was designed primarily as an entertainment / performing arts centre,

live entertainment accounts for only 10.9% of use. Most of the entertainment is generated by concerts. There are very few theatre events, reflecting in part the lack of a small performance space.

Conferences, meetings and related activities are the main activities undertaken at theTheatre.

These bookings are being achieved with minimal marketing to this sector. In addition, the Theatre was not designed to accommodate conferences and meetings and is accommodating these activities in spaces not designed for them.

Functions are an important component of the business. As such it is important to ensure that

the catering arrangements are 'right'. While the Theatre is the town's Art Gallery, it has only hosted one Art Show since 2005,

indicating that the venue is either not perceived as a gallery, the lack of a curator and/or the area/s available are not considered suitable for displaying art works.

Most conferences, meetings and all functions potentially involve some catering. Most

conferences, functions and presentations and some of the other activities undertaken at the Theatre use the Bar.

The Crossing Theatre is used in conjunction with festivals and outdoor community events held in

Narrabri. Table 5.2 Type of Use Type of Use No Bookings Total

2005-08 % of Total 2005 2006 2007 2008 ytd

Conference Meeting Exhibition Ball Function - Corporate Function - Community / Charity Function - Private

7 39 5 2 8 3 1

6 74 5 5 14 2 11

6 83 7 2 9 12 13

1 51 - 1 2 6 2

20 247 17 10 33 23 27

3.6% 44.8% 3.1% 1.8% 6.0% 4.2% 4.9%

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Function - Wedding School Dance Festival Concert Theatre / Drama Dance School Performance Eisteddfod Presentation Night Auction Employment Interviews Health Screening Disco / Dance Party Public Inquiry Science Competition Art Show Photo Session Movie Not Stated

1 1 5 6 1 3 1 2 7 1 1 2

4 - 5 21 - 5 1 4 10 - - 4 1 1 1 1

1

9 - 2 15 1 - 1 2 9 2 - 5 - 1 1 - 2 -

4 - 4 3 1 - 1 -

10 3 - 2 - 1 - - 4 -

18 1 16 45 3 8 4 8 36 6 1 11 1 3 2 2 6 3

3.3% 0.2% 2.9% 8.2% 0.5% 1.5% 0.7% 1.5% 6.5% 1.1% 0.2% 2.0% 0.2% 0.5% 0.4% 0.2% 1.1% 0.5%

Summary - Main Uses Conference / Meetings Balls / Functions (catering) Performances

55 16 11

91 36 27

100 45 17

64 15 5

310 112 60

56.3% 20.3% 10.9%

5.5  User Mix  The information provided on user mix is inferred from the information provided on the booking sheet (name of person, organisation and purpose of the booking). As such the information should be regarded as indicative only. Bookings made by the Friends of The Crossing Theatre and their sub-committees are included as community groups. The user mix is summarised on Table 5.3. Table 5.3 User Mix Type of User % of Total Users

2005 2006 2007 2008 ytd

Total 2005-08

Corporate Government School / TAFE / Education Narrabri Shire Council Business / Industry Association Not for Profit / Community Group Individual / Private

47.9 13.5 6.3 8.3 7.3 16.7 1.0

36.4 19.1 7.5 5.8 8.1 14.5 8.7

31.7 24.2 4.3 6.5 6.5 15.6 11.3

27.4 24.2 3.2 6.3 9.5 22.1 7.4

35.3 20.7 5.5 6.5 7.4 26.2 8.0

The Theatre attracts a variety of users. Corporate, Government and Council bookings account for more than half of the use - approximately 64.5% of bookings since 2005. The Not for Profit / Community Groups are the second highest user of the Theatre (26.2% since 2005) with the main Community Groups being the Friends of The Crossing Theatre, ADFAS and the Blue Light Discos. Use by other not-for-profit / community groups is very low, indicating that the Centre is not meeting the original reason for the building - a Community Hall. From 2005 to 2007, there has been growth across all sectors.

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5.6  Use of Space within the Centre  The number of bookings taken for each of the rooms within the Theatre complex is summarised in Table 5.4. The Cinema bookings are in addition to the use of the Cinemas for movies shown by the EVI Group. The Riverside Room, Auditorium and Gallery Lounge attract the highest level of use. The Exhibition Room is under-utilised, reflecting the policy to not use the room where possible due to the art collection. The main uses of the different rooms from 2005 to 2008 are summarised in Table 5.5. Meetings are the primary use of all of the smaller rooms. Table 5.4 Number of Bookings by Room Used. Rooms No Bookings % of

Bookings 2005 2006 2007 2008 ytd

Total 2005-08

Auditorium Band Hall Cinema 1 Cinema 2 Entire Complex Exhibition Room Foyer Gallery Lounge Grounds Riverside Room Not Known

33

2 1 1 3 2

24 3 26 1

55

6 1 3 18 7 38 6 40

52 2 10 6 2 16 1 28 4 64

14

2 8

6

33 2 31

154 2 20 16 6 43 10 123 15 161 1

27.9% 0.4% 3.6% 2.9% 1.1% 7.8% 1.8% 22.3% 2.7% 29.2% 0.2%

Table 5.5 Main Activities undertaken in each Room / Area

(as a % of total bookings for the room / area)

Room Primary Uses Secondary Uses Auditorium Cinema 1 Cinema 2 Entire Complex Exhibition Room Foyer Gallery Lounge Grounds Riverside Room

Functions 28.7% Concerts 26.8% Meetings 75% Meetings 81.3% Conference 50% Meetings 81.4% Auctions 63.6% Meetings 80.2% Festival / Community Event 76.9% Meetings 43% Functions 34.6%

Meetings 8.3%, Conference 5.1%, Expo 5.1% Movies 15% Movies 18.8% Festival / Community Event 16.7% Exhibition 4.7% Meetings 27.3% Functions 9.1% Auction 13.2% Concert 7.7% Wedding 7.7% Auction 6.8% Conference 5.6%

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5.7  Cinema Patrons  The Cinema operation is controlled by the EVI Group with the Group not required to provide Council with information on Cinema use. Usage can be estimated from the returns paid to Council on Box Office sales and the electricity fee per session. The box office sales figures appear to be based on a calculation of number of tickets sold at a rate of $6 per ticket. Based on these assumptions, the estimated number of Cinema sessions and patrons is: Year No. Sessions

(based on electricity charge of $6 per session paid to Council)

No. Patrons (Based on Cinema sales revenue

divided by $6 per ticket)

2003/04 2004/05 2005/06 2006/07 2007/08

2,122 1,960 2,983 1,848 1,748

61,841 47,127 76,961 41,084 33,596

These figures indicate a decline in both session numbers and patrons since 2005/06, with patron numbers in 2007/08 being nearly half that achieved in the first year that the Theatre opened.

The decline in ticket sales over the past two years is an Australia-wide trend and appears to be due to a number of factors including: Increase in ownership of home theatre systems - as prices have come down, more people have

been purchasing these systems. Ability to download movies (both legally and illegally) on the internet. In some cases the movies

are available from overseas before they are released in Australia. The considerable reduction in time between the movie release and the DVD release. The 'explosion' in the DVD retail market, with DVDs being far more cost effective to buy than

going to the movies. Worsening economic situation, with less disposable income available for entertainment. In rural

areas, the ongoing drought has impacted significantly on expenditure. Lack of quality product available to show - in the past two years the quality of the product

available has not been particularly strong, with fewer blockbusters and less 'premier' / 'must see' films.

There may also be local factors that have impacted on performance, with issues raised during the consultation including: Difficulty in accessing The Crossing Theatre website - viewers need to have the right 'plug-in

software which is daunting for many people to download and install. The movie times given on the 'Your Movies' / 'Moviefix' website for The Crossing Theatre are for

today and tomorrow only. The recorded telephone information on session times no longer operates. Poor choice of movies - not reflecting what the local community wants to see. This criticism

needs to be balanced by recognition of the lack of quality of the product available over the past 2 years.

Decrease in the number of sessions per week.

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In addition the Theatre appears to have a reputation locally for poor supervision of the cinemas, with some patrons being disruptive resulting in a poor viewing experience for other patrons. While declining sales are an Australia-wide trend, it should be noted that there is no mechanism in place for Council to determine if the sales being reported by the Management Company are accurate.

5.8  Entrepreneurial Activities  Entrepreneurial activities involve purchasing a touring show, with the purchaser taking the risk on the Show. The entrepreneurial activities undertaken at The Crossing Theatre can be divided into: Activities undertaken by the Friends - the Friends use their profits from Bar takings to purchase

'cultural' acts. The Friends then hire the Auditorium and run the event, with most losses met from Bar profits

'Popular' events - in which Council, on the advice of the Theatre Manager, buys in shows, with

Council acting as the entrepreneur and taking the risk. Entrepreneurial activities account for a small proportion of the activities undertaken at theTheatre. Year to date, there have been two entrepreneurial events undertaken by Council, with 7 events in 2007, 6 events in 2006 and none in 2005. Records pre-2005 are not available. Of the 15 events that have been held, 5 have made a small profit, 2 have broken-even and 8 have incurred a loss. The net position is summarised below: Year No Events Profit Loss Net Position 2008 (Jan to July) 2007 2006

2 7 6

$ 6,043.55 $10,525.85 $ 1,977.31

$ 1,367.50 $15,690.30 $ 192.50

+ $ 4,676.05 - $ 5,164.45 + $ 1,784.81

Total All 15 $18,546.71 $17,250.30 + $ 1,296.41 Over 3 years, the entrepreneurial events under-written by Council has made a very small profit for theTheatre. In addition there are indirect benefits in terms of providing entertainment for residents of the Shire and surrounding region, and bringing people into Narrabri with resultant flow-on benefits to the local economy. Tourism Research Australia estimates that domestic overnight visitors to Narrabri Shire spend on average $99 per person per night, while day trippers to the Shire spend $97 per person per trip. For most entrepreneurial events, the Bar is operated by the Friends, with the Friends retaining all Bar profits. Likewise the Candy Bar profits are retained by the Centre Management with Council receiving 1.5% of Candy Bar revenue. The Centre Management also retains the ticket booking fee revenue, any profit generated through the café and catering, and also bills labour costs to Council.

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5.9  Potential to Increase Use  There is some potential to increase the use of the Centre, however this will be dependent on: Having access to the Band Room and the Exhibition Room Effective marketing and promotion Development of a strong events program The quality and pricing of the products and services offered. The potential for growth in each of the main activities is summarised below: Cinema The Cinema sector is cyclical. The introduction of each type of new media (eg videos, DVD's, internet movies, home theatres etc) has had a significant and immediate impact on the propensity to go to the Cinema. There has been a sharp decline in patronage initially, with patronage slowly building over time as the novelty of the new media decreases. Patronage is also strongly linked to the quality of the product available and to economic conditions. At present, the Cinema sector in Australia is depressed. Cinemas have closed in a number of country towns that are of a similar size to Narrabri (eg Moree and Forbes). In other towns, the number of sessions have been reduced or the cinemas have opted out of taking first release films. Within the North West Region, the cinemas at Inverell, Armidale and Gunnedah advised that they have experienced a decrease of around 20% in revenue in the past 12 months, which they attribute primarily to lack of quality product and the popularity of home entertainment centres. Patronage at Tamworth has remained relatively static. The potential for growth in the Cinema sector is probably limited. With Moree having lost its Cinema, there may be some opportunity to promote into this market for 'block buster' releases. Live Popular Concerts Attracting audiences to live concerts is dependent on the quality of the act. The Jimmy Barnes concert proved that it is possible for Narrabri to host a high profile act and to draw patrons from the surrounding region. Realistically, this level of success is probably only achievable 1 - 2 times per year and is dependent on being able to draw a regional audience. It should be noted that without the profit on the Bar, the Jimmy Barnes Concert would not have been profitable. The other factors that impact on the viability of the larger events are: Capacity constraints of the Auditorium - the room is at or just below 'break even size' for a larger

event. The operating cost structure for a 1000 seat and a 1500 seat venue is very similar, with the extra 500 patrons being the 'profit'.

Very price sensitive market - the ticket price that people are prepared to pay in regional areas for

entertainment (up to $50 per ticket) is around half what people will pay in Sydney. Ticket prices in Sydney for popular concerts are in the range of $90 to $130 for general admission.

Cultural / Performing Arts Events There is potential to grow this market, however it is partly dependent on developing a 'cultural audience' and, for most events, having a smaller performance space. The Crossing Theatre will also need to maintain an entrepreneurial budget to purchase the acts. The shows themselves are likely to break even or incur a loss, with the Theatre needing to make its money on the Bar, Candy Bar, Catering and Booking Fees. For high profile events, the cost of buying the production is significant and again Narrabri would need to rely on the regional market for the event to be viable. Most of the cultural / performing arts events

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tend to be touring and are often playing at a number of the venues in the Region. As such it is difficult to attract the regional market. For more specialised activities (ensembles, drama, classical music) that draw smaller audiences, the Auditorium is basically too large. For the audience and the artists, the experience is not intimate and the impact is 'lost'. Financially, the cost of bringing in the act and hiring the Auditorium is generally prohibitive. A smaller performance space is needed to build this market. Conferences & Meetings There has been significant growth in the use of the Centre for conferences and meetings. This has primarily been achieved as a result of limited marketing undertaken by Council's Economic Development and Tourism Unit. There is strong and growing demand for quality conference facilities in regional centres, particularly for Association based conferences. In Sydney, Newcastle and Wollongong, accommodation capacity constraints and the high costs of accommodation and car parking are forcing out the mid and lower budget association conference market. Narrabri has one of the few modern, non-club venues in NSW. While the town has accommodation and air service capacity constraints, it has demonstrated that it can accommodate large groups such as the CWA. Provided that The Crossing Theatre can meet the catering and 'break-out' room requirements of conference organisers, there is potential to attract this market. This requires access to the Band Room, with the room capable of being divided into smaller meeting rooms. It also requires quality catering at cost competitive prices. Developing the conference market will also be dependent on effective marketing and promotion. Narrabri will need to actively bid for business and Council is likely to be called upon to provide some sponsorship. There is potential to target the agricultural, mining related, astronomy and land management associations as well as Local and State Government initiated conferences, the service club conferences (Rotary, Lions etc), social services (eg Aboriginal, Community Health), special interest conferences (eg Family History Association) and some of the large religious conferences. In relation to meetings, there is potential to grow this market, particularly if the Theatre can offer purpose-built meeting rooms rather than the Gallery Lounge and the Riverside Room, neither of which are really suitable for meetings. Again, the venue has not been effectively marketed, with business coming to the venue primarily through word-of-mouth. As part of building the conference market, consideration should be given to changing the name of the venue to The Crossing Theatre and Convention Centre.

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Functions There is potential to grow the function market, however this will be dependent on: The quality of the catering and the service levels. Pricing (catering, venue hire and add ons) - taking into account the price sensitivity of the local

market, and the competition posed by the RSL and Bowling Clubs. Access to the Band Room - The Auditorium is too large for most social and corporate functions. The venue receiving positive media coverage, rather than continual criticism. Marketing and promotion. Entrepreneurial activities - packaging of events and activities in the venue with catering. Again,

this would be dependent on access to the Band Room as the Riverside Room is needed as a pre-function area for events held in the Auditorium.

Community Use Community use of The Crossing Theatre is relatively limited. This is partially due to the lack of suitable space available and partly due to a desire by Community Groups for access at no or minimal cost. Building community use would not necessarily improve the financial performance of the Centre. The fee structure that Council has in place for Community Groups is low and does not appear to meet the costs associated with making the space available. For example, the whole centre has to be open for a small meeting in the Gallery Room. The Crossing Theatre is not in a position to compete with the Licensed Clubs or the Church / Community Halls for community group business. Licensed Clubs, in offering no or minimal room hire fees, make their money on the catering, Bar and gaming. The halls and rooms offered by churches, sporting clubs, schools and community organisations are generally very basic with no/limited facilities and services. The quality of the product is not comparable. The Band Room provides the opportunity for The Crossing Theatre to offer a lower standard, smaller venue that could be priced so that it is attractive for community use. It may also provide the opportunity to allow community groups to be able to self cater for some types of activities. Restaurant / Cocktail Bar It has been suggested that the Riverside Room could be converted to a restaurant and/or cocktail Bar. The Riverside Room is essentially a pre-function space for the Auditorium and permanent use of the Room as a restaurant or cocktail Bar would effectively 'sterilise' the Auditorium. The kitchen is also not set-up for a restaurant operation. These activities could however be undertaken on an occasional basis as an entrepreneurial activity - for example themed cuisine or cocktail nights, a post-event function where guests can pay to 'party-on' or have a meal after an event etc.

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6.  FINANCIAL PERFORMANCE 

6.1  Information Available  Due to the way the Management Agreement is structured, the information available on the financial performance of The Crossing Theatre is not complete. Council has information on most of the revenue being generated by the Centre and on the costs associated with the Live Operations and the building maintenance. Information is not available on the cost structure of the Cinema operations nor on the staff or operating costs incurred by the EVI Group. Cost structures for these activities are estimated based on information provided by other performing arts centres, none of which are directly comparable to The Crossing Theatre nor to the demographic characteristics of Narrabri Shire. As such the financial information should be regarded as indicative (order of magnitude). This section discusses the financial performance of the Theatre and explores whether it is possible to improve the financial position through re-structuring the management agreement.

6.2    Council's Financial Position ­ Summary  Council's financial position is summarised in Table 6.1. In 2007/08 the Cultural Centre effectively cost Council just over $1million to operate, service debt and meet depreciation costs. Table 6.1 Council's Financial Position - Crossing Theatre 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 Income $142,012 $103,138 $229,273 $175,606 $232,701 Expenditure $317,043 $250,234 $414,189 $482,167 $570,895 Operating Profit / Loss

-$175,022

-$156,096

-$184,916

-$306,561

-$338,194

Revenue as a % of Cost

44.8%

39.8%

55.4%

36.4%

40.8%

Less Other Costs Depreciation Interest Principal Capital

$266,576 $ 99,517

$124,513 $310,038 $129,302 $ 34,551

$125,221 $291,565 $138,538 $ 38,885

$127,816 $283,009 $146,167 $ 61,230

$130,156 $256,916 $161,478

$130,154* $232,761 $165,301 $140,443

Net Position -$366,093 -$773,435 -$741,305 -$803,137 -$855,110 -$1,006,853 Figures rounded to the nearest dollar *Budgeted depreciation - actual figure not available The revenue received by Council from the Theatre has never met operating expenses, with a shortfall of $338,194 in 2007/08. The Theatre is not generating sufficient revenue to meet debt servicing or depreciation nor to fund capital expenditure. Since 2003/04, operating revenues received by Council have increased by 64.9% while operating expenses have increased by 80.1%. Council anticipates that operating costs will continue to increase, in particular electricity, repairs and maintenance costs. The Theatre will need major refurbishment in the next 5 years (generally major refurbishment is undertaken every 7-10 years). Depreciation The depreciation on the Theatre has been deferred each year, with $637,860 being the value of the deferred depreciation. This money should have been put aside each year to fund refurbishment and major capital expenditure. Loans

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The development of The Crossing Theatre was entirely debt funded. In 2002, Council entered into two loans, one for $4 million and the other for $0.8million. Both loans are principal and interest loans. These loans are re-financed every 4 years, with the $4m loan due to be re-financed again in June 2010 and the $0.8m loan in June 2011. The short duration of the re-financing period can result in higher interest rates. Options for reducing finance costs need to be explored and Council may need to lock the loans in for a longer period. Council is currently paying 6.27% interest on the $4m loan and 7.09% on the $0.8m loan. The outstanding balance on each of the loans at June 2008 was $3.287m and $672,579. In 2008/9 the loans will have a combined repayment of $427,486 per annum, with the repayment paid quarterly. It should be noted that in the original feasibility assessment undertaken by Council, the expectation was that debt servicing costs would be $93,000 per annum.

6.3  Trading Performance  Under the current management structure, there are 5 main revenue generating activities within The Crossing Theatre. Cinema Operation Live Operation Catering Bar Ticket Booking Fee Cinema Operation The Cinema Operation is managed by the EVI Group. This operation incorporates: Cinema Ticket Sales Screen Advertising Candy Bar Ticket Sales The revenue generated from ticket sales is retained by the EVI Group. Out of this, EVI is required to pay: Fee to the movie distributors. The fee varies depending on the type of film, when it is shown (first

release etc) and how long the film runs in the Cinema. The typical fee structure is:

- First release films - generally in the order of 55% to 60% of gross ticket sales for the first 2 weeks, with the fee then reducing to around 35% to 40%. For blockbusters (eg Harry Potter), the fee tends to be higher - up to 75% for the first 2-3 weeks.

- Second run films - 35% to 45%

- Third run films - around 25%

With the small population base in Narrabri, films run for a relatively short period of time, often not long enough to achieve the lower second and third run rates.

Staff costs - Staff costs are incurred in the areas of ticket sales, ushering / supervision, cleaning

the theatre between shows and projection / technical. Most of the staff are casual, with the rates being in the order of:

- Theatre assistants $15 to $18 per hour - Projectionist / technical $16 to $20 per hour

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The number of sessions per week that need to be staffed varies from 22 to 48. The number of staff required per session (including Candy Bar staff) varies depending on audience numbers from around 2 per session midweek (one front of house and one projectionist) during the day to 3-4 for blockbusters on weekends and in school holidays.

Commission to the ticketing system supplier - this is currently 55 cents per ticket sold. Advertising costs - Local media and website. Figures for the September Quarter 2007, indicates

that in the order of $6,500 was spent on Centre advertising which includes the Cinema. This probably equates to around $20,000 to $25,000 per year.

Administration costs. Commission to Council (see Section 4.2) Contribution paid to Council for electricity - $6 per session. Contribution to the cleaning and maintenance of the foyer and toilets. Revenue from ticket sales has fluctuated significantly since the Theatre opened. Sales peaked in 2005/06 and then declined significantly in 2006/07 and again in 2007/08. Possible reasons for this are discussed in Section 5.7. EVI Group is charging a booking fee of $2.50 per ticket. This does not appear to be included in the Box office sales figures. Screen Advertising There is currently minimal revenue being generated as the previous Management Company, Entertainment Services, removed the projection equipment used for advertising and this has not been replaced. The estimated cost of replacement is around $10,000. Candy Bar The revenue generated from the Candy Bar is retained by the EVI Group, with the Group having to meet the cost of Cost of goods - this is generally in the range of 30 to 40% of the sale price. Staff costs Administration, equipment lease, repairs & maintenance etc Payment of 1.5% of gross revenue to Council. Estimated Operating Position of the Cinema

The operating position of the Cinema is estimated in Table 6.2. The assumptions used in preparing this estimate are: Revenue and payments to Council - this is based on the information provided by the EVI Group

to Council Income generated from the $2.50 per ticket booking fee. This is estimated on the estimated

number of tickets sold (see Section 5.7). The cost of the ticket fee charged by the ticket system supply company is also based on these estimated ticket sales.

Payment to the film distributor - estimated at 50% of gross ticket revenue (after GST and booking

fee). Candy Bar - cost of goods estimated at 38%.

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Staffing - based on an average of 2.2 staff per session, 2 hours per employee per session and $16 per staff member per hour.

Marketing expenses - estimated at $20,000 pa Administration and other management costs estimated at 1% of total cinema income per annum. Table 6.2 Estimated Performance of the Cinema Operations 2003/04 2004/05 2005/06 2006/07 2007/08 Estimated No Sessions pa Estimated No Tickets Sold pa

2,122 61,841

1,960 47,127

2,983 76,961

1,848 41,084

1,748 33,596

Revenue (net of GST) Box Office Candy Bar Screen Advertising Booking Fee ($2.50 / ticket)

$337,316 $133,764 $ 16,173 $154,603

$257,059 $118,941 $ 15,798 $117,819

$419,790 $185,298 $ 20,869 $192,404

$224,096 $125,325 $ 8,120 $102,711

$183,252 $130,390 $ 1,488 $ 83,990

Total Estimated Revenue $641,856 $509,617 $818,361 $406,252 $399,120Estimated Expenditure Box Office Commission Candy Bar Commission (1.5%) Electricity ($6/sessions) Total paid to Council As % of Revenue Film Distributor (50% box office) Ticketing System (55c / ticket) Cost of Goods - Candy Bar (38%) Labour ($70.40 / session) Administration (1% revenue) Marketing ($20,000 pa)

$ 19,650 $ 1,932 $ 12,732 $ 34,314

5.3%

$185,524 $ 34,013 $ 55,913 $149,389 $ 6,419 $ 20,000

$ 13,000 $ 1,456 $ 11,760 $ 26,217

5.1%

$141,383 $ 25,920 $ 49,717 $137,984 $ 5,096 $ 20,000

$ 23,750 $ 2,774 $ 17,898 $ 44,422

5.4%

$230,884 $ 25,920 $ 77,455 $210,003 $ 8,184 $ 20,000

$ 2,550 $ 1,880 $ 11,088 $ 15,518

3.4%

$123,252 $ 22,596 $ 52,386 $130,099 $ 4,603 $ 20,000

$ 350 $ 2,191 $ 10,488 $ 13,029

3.3%

$100,789 $ 18,478 $ 54,503 $123,059 $ 3,991 $ 20,000

Total Estimated Expenditure $485,572 $406,317 $616,868 $368,454 $333,849ESTIMATED PROFIT / LOSS $156,284 $103,300 $201,493 $ 91,797 $ 65,271 These figures indicate that the Cinema Operations are profitable. In 2007/08 the Management Company probably netted around $65,000 from the operation, however in the past this revenue could have been as high as $200,000. Live Operations Live Operations incorporates: Revenue from the hire of rooms within the Centre Revenue from ticket sales for entrepreneurial events hosted by Council For hire activities, the EVI Group charge their labour costs for set-up, technical assistance etc, with these costs passed directly onto the Hirer. The labour hire rates, as specified in Council's Annual Fees and Charges schedule are: Cleaning $38.50 per hour Set & Strike Rooms $44.00 per hour Operations $49.50 per hour Under the Management Agreement the EVI Group is responsible for the employment and payment of staff. These staff costs are off-set by the fees charged to hirers, which reduces the Group's operating costs. For entrepreneurial activities, Council meets all costs associated with holding the event. EVI bills Council for labour, again off-setting its costs. The EVI Group also levy a $2.50 booking fee on each ticket sold for entrepreneurial events and also for any ticketing undertaken on behalf of hirers. It is not possible to estimate how many tickets are sold each year at the Theatre.

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The Revenue from Live Operations is estimated by subtracting the income received by Council from the Cinema Operation from the Total Revenue received by Council from The Crossing Theatre. As there are anomalies in the data, the following data should be regarded as indicative only. 2003/04 2004/05 2005/06 2006/07 2007/08 Income from Live Operations $107,698 $ 76,921 $184,851 $160,088 $219,671 Ticket Booking Fee Possibly in the order of $6,000 to $10,000 per year It should be noted that the hire revenue is based on the actual revenue received by the Theatre, with the Theatre 'wearing' the cost of discounts given to community and not-for-profit organisations. In some venues, the full hire cost is shown as revenue, with Council paying the community discount from other accounts. If this practice was applied at The Crossing Theatre the revenue from Live Operations would be higher, which would improve the financial performance of the Theatre. The overall cost to Council would however remain the same. It is not possible from the financial data available to separate out the operating expenses directly attributable to Live Operations. Catering Catering is a new stream of income for the Centre. The catering includes all meals and non-alcoholic beverages provided for hirers plus the café operation. Neither the café or catering are covered in the Management Agreement. The EVI Group is providing the catering service and meeting all operating costs associated with this service. The Group is however using the kitchen and equipment supplied by Council, with no payment to Council. While the billing for catering is undertaken by Council and then paid to the EVI Group, the accounting system is not set up to isolate the catering revenue and costs. From the limited, incomplete information available, it appears that the catering and café generated at least $30,000 in revenue in 2007/08. On this estimate it would appear that the Catering operation is not profitable. Venue / function catering (once the business is established) generally operates on a 30-35% profit margin after cost of sales and labour, while café businesses operate on a 20-30% margin. Given the low turnover of patrons through The Crossing Theatre mid-week, it is more likely that the Café would operate at a loss or at best, break even. The Bar Until recently the Bar has been operated exclusively by the Friends of The Crossing Theatre using volunteer labour. The income generated has been retained by the Friends and used to fund cultural performances at the Theatre. In the last financial year, the Theatre Management, on behalf of Council has operated the Bar for a few entrepreneurial events, with Bar profits retained by Council. The Bar operating figures provided by the Friends are: 2004/05 2005/06 2006/07 2007/08 Income Expenditure

$18,484 $12,373

$66,791 $37,013

$58,355 $32,529

$78,325 $32,252

Profit / Loss $ 6,110 $29,778 $25,826 $46,073 The Bar has been operated primarily as a service to hirers and a fund raiser for the Friends of The Crossing Theatre. For the year commencing September 2006, the Friends provided 1,726 volunteer hours. According to the Theatre Manager, around 90% of these hours would have been spent operating the Bar. At $20 per hour, this equates to a labour cost of around $31,063. This indicates that the Bar has the potential to at least break-even if labour costs are included.

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The Bar was commercially operated for the Jimmy Barnes Concert in July 2007, with Bar takings of $32,748, and a profit after cost of sales and labour of $19,789 (60.4% profit margin). The revenue generated from the Bar and the level of profitability should be able to be increased by: Bar being open more often (eg to service the Cinema) Purchasing the liquor from a wholesaler rather than paying retail prices Managing staff numbers Increasing the Bar through-put during concerts and functions (reduce the queuing) Commercial pricing Booking Fee The EVI Group operates the ticketing system and charges a booking fee of $2.50 per ticket for the cinema and for all performances. This revenue is retained by the EVI Group. EVI in return pays the ticketing system supplier a commission of 55 cents per ticket on all ticket sales (including cinema tickets). Information is not available on the income generated for the EVI Group from the booking fee. The estimated booking fee from the Cinema is given in Table 6.2. Based on the booking reconciliation sheets for the first 6 months of 2006, it appears that the booking fee revenue was in the order of $6,356 for live operations. The booking fee levied for the Jimmy Barnes Concert in 2007 was $3,965. Based on these limited figures, the Live Operations could be generating around $10,000 per annum in booking fees for the Management Company. EVI is currently paying around $20,000 in commission per year (55c/ticket sold) to the ticketing system supplier. This commission could potentially be saved by the Theatre setting up its own ticketing system or possibly by changing ticket supply companies. This needs to be investigated further.

6.4  Ability to Meet Costs & Service Debt  Total Revenue Generated by The Crossing Theatre The estimated total revenue that has been generated by The Crossing Theatre is summarised in the following Table: 2003/04 2004/05 2005/06 2006/07 2007/08

Cinema Operations Revenue Box Office Candy Bar Screen Advertising Booking Fee ($2.50 / ticket)

$337,316 $133,764 $ 16,173 $154,603b

$257,059 $118,941 $ 15,798 $117,819b

$419,790 $185,298 $ 20,869 $192,404b

$224,096 $125,325 $ 8,120 $102,711b

$183,252 $130,390 $ 1,488 $ 83,990b

Estimated Cinema Revenue $641,856 $509,617 $818,361 $460,252 $399,120 Live Operations Revenue $107,698 $ 76,921 $184,851 $160,088 $219,671 Bar $18,484 $ 66,791 $ 58,355 $ 101,073b

Catering / Cafe $ 30,000b

Booking Fee - Live Operations $ 10,000b $ 10,000b $ 10,000b $ 10,000b $ 10,000b

Estimated Gross Revenue $ 759,554 $ 612,002 $1,080,003 $688,695 $ 759,864a Bar revenue estimated from revenue generated by the Friends and revenue from the Jimmy Barnes Concert b Estimates only

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Opportunity to Increase Revenue Revenue can be increased by increasing prices and/or increasing business. Given the price sensitivity of the local community, the impacts of the drought and the state of the economy, increasing fees at The Crossing Theatre is not an option at this time. As discussed in previous sections there are however some opportunities to grow the business. Cinema Revenue - limited potential to grow the revenue as it is largely dependent on a range of

factors outside of the Theatre's control. There is potential to generate $15,000 to $20,000 per annum in screen advertising if the projection equipment is replaced and potentially around $20,000 pa by the Theatre developing its own ticketing system.

Live operations - potential to grow revenue from conferences and meetings and possibly from

cultural / performing arts style events. Introduction of a Subscription Series could increase revenue from cultural activities.

Potential to increase revenue by changing the accounting practices in relation to discounted hire

fees for community and not-for-profit organisations. Catering - potential to grow the catering revenue by developing the functions market and also

providing catering services for conferences and meetings. Off-site catering could also be considered.

Bar - potential to increase Bar revenue, however the revenue will be dependent on the level and

type of use of the venue. Booking fee revenue - this is entirely dependent on the number of tickets sold for the Cinema and

for events (eg concerts, performances, balls) held at the Centre. Realistically, the revenue could potentially be increased to around the $750,000 to $800,000 per annum (assuming no growth in Cinema sales), with the possibility that it could go higher if well managed. Increasing use of the venue will however result in increased costs, in particular marketing and promotional costs.

Outgoings In round figures, the operating costs incurred by The Crossing Theatre in 2007/08 were: Cinema operations (estimate) $350,000 Live operations / building $451,000 Management Fee (paid to EVI Group) $120,000 Operating Cost $921,000 (Note: the management fee has now been increased to $132,000pa) In addition, Council also needs to meet the cost of: Debt Servicing $427,500 Depreciation $130,200 Capital Works (estimate per year) $100,000 $657,700 (Note: Staff resources in Council's Financial and Economic Development Units are tied up with servicing The Crossing Theatre, with this estimated to be 4.5 days per week in administration and marketing, equating to aropund $70,000 per year in wages.) Based on these estimates, The Crossing Theatre will struggle to break-even on operations. The ability to fund its own capital works or contribute towards loan repayments is extremely low.

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From the information available, it is not possible to determine whether it is possible to decrease operating costs. The immediate opportunity for Council lies in restructuring how the revenue and costs are distributed. Current Revenue Distribution Under the current arrangement the Management Company is receiving the majority of the revenue with Council incurring most of the costs. Management Company In addition to receiving a management fee of $120,000 per annum (recently increased to $132,000 pa), the Management Company is retaining the revenue from: Cinema Candy Bar Screen advertising Café Catering Booking Fee In 2007/08 the revenue is estimated to have been: Actual Income Management Fee $120,000 Cinema Box Office ` $183,252 Candy Bar $130,390 Screen Advertising $ 1,488 Booking Fee - Cinema $ 83,990

Estimated Income Booking Fee - Live Operations $ 10,000 Catering / Cafe $ 30,000 Total $559,120 In addition, the Management Company charges labour costs (for cleaning, set & strike, technical assistance) to venue hirers. (This is a standard industry practice). In 2006 (year for which data is available) it appears that the Management Company was reimbursed around $22,000 for labour. This helps off-set staff costs. From the revenue generated, the Management Company has to employ staff, meet the operating costs of the Cinema, Candy Bar and Catering operations, pay for public liability insurance and meet its own administration costs. With a depressed Cinema market, the profit margin is likely to be small. If Council were to take over this operation by employing the Theatre Manager and staff direct, the staff costs (after Cinema staff costs and costs reimbursed from hirers), would be of a similar order of magnitude to the Management Fee. The costs for operating the Cinema, catering, ticketing system etc would essentially remain the same. Having in place a Council employee as Manager should result in some indirect cost savings in terms of reducing the administrative and marketing work-load on Council staff. The advantage of in-house management is that all revenue generated is retained by the Centre. In addition, there is opportunity to recover some of the costs from hirers. (This is discussed further in Section 8.3)

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Bar Revenue Most of the Bar revenue is going to the FOTCT. The Friends primarily use this revenue to fund cultural performances at the Theatre. These events are generally not profitable however they are important to the community. If these events are to continue and are not funded from Bar revenue, then they may need to be funded by Council.

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7.  VENUE DIRECTIONS  The management structure and management policies determine how the venue will operate and are a major factor in influencing financial performance. When the Theatre commenced operations there were no policies or directions defined for The Crossing Theatre or framework put in place. Some of the basic policy issues that need to be considered by Council are outlined below.

7.1  Key Success Factors  For a venue to operate successfully in today's marketplace it requires: Experienced Venue Manager - the manager must be entrepreneurial and have a sound

understanding of the performing arts and conference and meetings sectors, venue management, financial management and the local audience. A good manager is more important than the management structure.

Supportive & committed Council Clear charter of Councils objectives and expectations - the operating framework needs to be

clearly defined. Entrepreneurial approach - with the venue buying-in acts and taking the Box office risk. The

number of touring acts that hire a venue has declined significantly in recent years. Willingness to accept / develop business that will generate revenue, but is not necessarily

core business. The Manager has to have a high level of autonomy, in particular:

- The ability to negotiate financial arrangements (do deals) to secure acts. - Short decision making framework - the Manager may need to make a decision on the spot

whether to buy a show and accept the conditions attached to the purchase. - Working capital and an entrepreneurial budget - with flexibility to determine expenditure

priorities. Strong community involvement with and commitment to the venue - Manager needs to

implement effective audience development and retention programs. Flexible contracts for staff - venues are a 7 day per week operation with a high proportion of

evening work. This requires flexible working conditions, minimal penalty rates and skill sharing. Appropriate reporting and financial systems - to track every aspect of venue use and

operations. Three year programming and planning framework - with the ability to commit to bookings,

shows, audience development programs and capital expenditure programs outside of the financial accounting year.

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7.2  Policy Issues  Issues that Council needs to address and resolve as part of the planning for The Crossing Theatre include: Management style - Entrepreneurial vs Caretaker. Under caretaker management, the focus is

on taking bookings, minimising operating costs and not taking risks. An entrepreneurial approach requires the venue to take financial risk and the realisation that not every show will be successful. (Council currently takes a 'cautious' entrepreneurial approach).

Role of the venue - What is the venue's primary function/s - is it a community centre, quality

performing arts / entertainment venue, cinema or conferences and meetings venue. Financial requirements - what are Council's financial expectations and objectives? What level

of subsidy is Council prepared to accept, what will it 'sacrifice / compromise' to break even or operate profitably.

Community use of the venue - As the venue is funded by Council, there is strong pressure from

community groups for a significant discount. Council needs to determine whether the Theatre or Council will be responsible for funding the discount. There is also considerable debate on what constitutes a community group. The approaches that have been taken by different venues include:

- Council (under Section 356 of the Local Government Act) subsidises community use of the

venue. This is done either as a rebate by Council to the venue, or a rebate by Council to the community group.

- The venue records the subsidy amount that has been given to community groups and this is

rebated by Council to the venue as part of the venue's annual operating grant.

- The venue takes over the management and accepts the risk for community shows. Management usually agrees to pay the community group a lump sum fee or a set fee per ticket, with the venue retaining the remainder of the box office revenue. The venue then assumes responsibility for ticketing, marketing, staffing and other theatre costs incurred with the production. The venue may also insist on being actively involved in directing, set production, costumes etc.

User priority - Conflict can arise between community bookings and entrepreneurial and

commercial bookings. Local users often secure their space by taking out an annual booking, sometimes for a number

of years in advance. This practice can create major problems for venue programming. Touring acts generally have a relatively inflexible touring program and a venue is often given the opportunity to purchase the act for specified dates. Likewise, conferences often have fixed dates. A standing community booking can prevent a venue accepting acts or bidding for conferences as the space is already committed. To counteract this, venues are increasingly securing and programming their touring product first and then opening the bookings for community groups. Community use is also being programmed for non-peak times (eg Monday to Wednesday). Some venues are also attaching conditions to community bookings which enables the venue to change the booking if needed to accept a major commercial booking (eg a conference). Programming community bookings around other bookings that generate a higher return can result in community groups feeling discriminated against, which can create political problems for Council.

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To date The Crossing Theatre has not had to face this issue as it is not used by community groups on a regular basis (eg for weekly dance classes, fitness etc). This will however become an issue if the Band Room is to be used as part of the Theatre operations.

Use of volunteer staff - some venues use volunteer staff in a range of capacities including duty managers, ushers, refreshment and Bar sales and very occasionally, in technical positions. The use of volunteers has the advantage of reducing staff costs and can provide work experience for people wishing to enter the workforce. Some venues charge hirers at commercial rates for volunteer staff and generate revenue for the Theatre, while others include 'staff at no cost' as part of their negotiations, enabling them to offer a very attractive 'deal' to a potential hirer.

Use of volunteer staff is generally resorted to as a necessity rather than as the ideal mode of operation. The use of volunteers is not efficient and generally does not result in the same level of professionalism that is achieved with paid staff. Issues that often arise with the use of volunteer staff include:

- Difficulties in attracting people interested in volunteering and prepared to volunteer on an on-

going basis, week in and week out. People are generally not as willing to volunteer to staff a venue (particularly one making money) as they are to assist with a charitable or sporting group. Venues are generally considered the responsibility of Councils with volunteers being seen as a way of Council doing it 'on-the-cheap'.

- Volunteers tend to be less reliable than paid staff, often wanting to change hours at short-

notice or simply not turn up. Time is then spent trying to find other volunteers to cover or, paid staff may be required to cover the hours either on a paid (possibly overtime) or time-in-lieu basis. This is inefficient and can result in over-spending. There is also a need to have a large pool of volunteers from which to draw, which has implications in terms of training time and costs.

- Lower level of professionalism. Most volunteers do not have professional qualifications, skills

or experience. This can have ramifications for the venue in terms of image and reputation, and also financial implications if the service is inefficient (eg potential sales are being lost through slow service).

- Training is time consuming and there is no guarantee that the volunteer will stay long enough

for the venue to 'recoup its investment'.

- Difficulties in supervising volunteers. Volunteers generally have the mind-set that they are 'doing you a favour' and that 'you should be grateful'. This makes it difficult to give volunteers directions, ask them to work times that they do not consider desirable or take on tasks that they do not particularly enjoy and/or to discipline them when necessary. Volunteers need to be managed very 'gently' which is time consuming and often frustrating, inefficient and/or ineffective for management.

- Volunteers can develop a very strong sense of ownership and become 'territorial' which can

lead to conflict between staff and volunteers, and between volunteers and patrons.

- Increase in 'office politics' with tension between volunteers and paid staff, and between volunteers themselves (generally over who gets the more interesting jobs and/or the better hours), with these tensions needing to be handled delicately to minimise the chance that the volunteer will walk out.

Catering - Different user groups have different catering needs and expectations in relation to

catering. Most corporate and commercial users are looking for a 'one stop shop' with the venue providing the catering while community groups tend to want to do their own catering to minimise costs. Catering is discussed further in Chapter 10.

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8.  MANAGEMENT  

8.1  Management Issues  During the initial consultation for this study, a number of issues relating to management have been raised by the FOTCT, Council staff and users of the Theatre. These issues are listed below. JRA is not in a position to verify whether the individual criticisms are valid. It is important to note however that there appears to be a number of areas where management improvements are needed. It is also important that Council and the Venue Manager are aware of negative 'perceptions' so that they can be addressed. Issues identified include: Difficulty in contacting the Manager - with calls and emails not returned in an acceptable time

frame or not returned at all. The Assistant Manager does not take over the management role if the Theatre Manager is

absent. The Assistant Manager is not in a position to give quotes, take bookings etc. Difficulty in getting available dates and quotes from the Theatre, with the potential hirer having to

chase the Theatre for this information. The quotes, when obtained are not always comprehensive, with additional charges included on the account that were not included in the quote. Hirers are not necessarily told of the additional costs when they ask for services, nor are these costs confirmed in writing as a variation to the quote.

Management is slow in invoicing and providing information to Council, with Council not receiving

some of the invoices for weeks after the event. Poor communication between the Theatre Manager and the FOTCT, with communication break-

downs and miss-communication. Lack of attention to detail in relation to the cleaning and presentation of the Theatre complex.

Theatre staff are often slow to strike a room after use. Bar and kitchen areas are not adequately cleaned. Issues with the storage of stage and technical equipment, with this not being put away after use.

At the time of inspection, there was equipment spread over the stage and stacked in the Theatre wings. The lack of storage space and the absence of workshop area contribute to this problem.

Issues with the care of the pianos, as there is no piano store in the venue. Occasional breaches of the liquor licence conditions - by both management and the Friends.

There are issues with the storage of alcohol, with alcohol being stacked in the corridor at the time of inspection.

Low skill levels and lack of professionalism of some of the staff. (Note: the Technical staff are

perceived as being very good). Issues with ticketing - the complaint being that the ticketing system was not good - but no other

details were given. Considerable delays in receiving ticket money taken by the Theatre on behalf of community

groups. Variable quality of the catering and catering related service, with complaints from people not

receiving meals and the time involved in serving meals.

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Under-staffing, particularly mid-week with one staff member trying to man the ticket office, service the Candy Bar, run the café and clean the Foyer and cinemas.

Use of service corridors / fire corridors for storage. In collating the information for this study it has also become apparent that: The Management Agreement is very 'loose' and open to misinterpretation and potentially 'abuse'. Council is dependent on the honesty of the Manager in relation to takings - there is no

mechanism that allows for Council to monitor or audit takings. The booking and financial systems are not designed for Council to effectively monitor the

performance of the Centre. Council cannot readily track the financial information to enable it to identify anomalies and ask for explanations from Management.

Other areas of concern are: Lack of marketing and promotion by the venue management company. Council's Economic

Development and Tourism Unit has undertaken some marketing and promotion on a limited basis and also bids for Conference business. These activities (although limited) have yielded results, with a significant increase in use of the Theatre. This demonstrates what could be achieved if the Management Company actively marketed the venue.

The Management Company appears to specialise in Cinema operations and popular live music

concerts. It does not appear to have the expertise to build the conference, meetings and exhibitions markets, nor to develop a strong cultural events program for the Shire.

Lack of commitment by the local community to the Centre - whether this is the result of

management, the programming, activities of the Friends, the negative publicity that the Centre receives and/or other factors is difficult to determine.

Lack of definition of the roles and responsibilities of the key stakeholders. Council appears to be

undertaking activities and meeting costs that would appear to be the responsibility of the Management company. The FOTCT appear to have taken on a 'watch-dog' role, that oversteps their Advisory Committee status. This role of the Friends is discussed in Chapter 9.

8.2  Management Options  This Section provides an overview of the Management Options that have been put in place in regional performing arts centres, theatre complexes and conference centres throughout Australia. The most common models are: Department / Business Unit of Council, with the Manager reporting directly to Council. Department / Business Unit of Council with an Advisory Committee reporting to either the Theatre

Manager or to Council. The Committee provides input, advice and direction but has no decision-making power or authority.

Management Committee or Board, with delegated powers from Council to manage the venue. Company established by Council with Council represented on the Board of Directors. External Management - Management Agreement, Lease or Licence with a commercial

management company.

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The strengths and weaknesses of each of these options are summarised in the following Table. Regardless of the structure, the success of a venue primarily comes down to the skills, expertise and commitment of the people involved in the management.

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Table 8.1 Overview of Management Structures Structure Advantages Disadvantages Department / Business Unit of Council The Theatre is managed as a Department / Business Unit of Council and forms part of Council's day to day operations. The Manager and staff are employees of Council and Council is responsible for all aspects of the operation including artistic content. There is no community input.

Council has direct control over the venue and its

operation allowing it to 'protect' its investment and ensure that community needs and aspirations are met.

Stream-lined administration for Council - Manager

does all billings etc. From a management perspective - more opportunity

to seek variations in the budget or to 'fall back' on Council if additional funds are required.

Council retains all revenue that is generated. Can be a highly efficient form of operation if the

theatre has a skilled and experienced manager with delegated powers and a high level of autonomy.

Susceptible to political intervention in programming,

budgets, relationships with community groups etc. Lack of community involvement with and

commitment to the venue. The Manager is operating in isolation without the

benefit of input and support from people who are interested in and cognisant of performing arts and theatre operations. This support can be critical to maintaining the theatre operations in a 'hostile' Council environment.

Difficult to achieve a 3-5 year planning framework

unless minimum budgets can be guaranteed. Lack of flexibility under the Local Government Act -

can reduce flexibility when negotiating to purchase product.

Council may require a low risk approach (ie

minimise entrepreneurial activities), which can reduce the cultural content.

Threat that the management could become a 'care

taker' arrangement responding to hire requests rather than being pro-active.

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Structure Advantages Disadvantages Department / Business Unit of Council - with an Advisory Committee This is the same structure as above, with community input provided by a Section 355 Committee. The roles and powers of the Committee will depend on the powers delegated by Council. In its simplest form, (ie no delegated powers) the Committee would have an advisory role only. Council is the ultimate decision-maker and responsible for operations. Council is under no obligation to accept or act on the advice and issues raised by the Advisory Committee.

As above with Council having direct control of the

venue and its programming. Community input and feedback in relation to policy

and operations - provides a different perspective. Manager has support from people who are interested

in and committed to the venue and to performing arts in general.

Range of ideas going into the programming. Committee can 'lobby' politically which the Manager

and staff cannot do.

Susceptible to political intervention at both Council

and community level. Committee structure places additional reporting and

time demands on the venue manager and Council. As the committee members have no responsibility

or accountability, particularly for financial performance, members can become unrealistic in their expectations.

Committees can develop a perception of 'power'

and overstep their advisory role, trying to become involved in day to day management of the venue and 'directing' the venue manager.

As above in relation to planning frameworks, lack of

flexibility and low risk approach.

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Structure Advantages Disadvantages Management Committee / Management Board The Management Committee / Board is responsible for the management of the venue within a framework policy established by Council. The Committee / Board is established under Section 355 of the Act and receives delegated powers to manage the Theatre under Section 377 of the Act. Boards can be skill based (most effective) or community based. The Committee/Board has responsibility for all aspects of management other than setting the fee structure - this must be done by Council. Council sets the policy framework and provides the Committee/Board with an annual operating grant. The Committee/Board is responsible for all aspects of running the business including budgeting and financial management. Staff are employed by and report to the Board. Council, as the venue owner, takes on the landlord responsibilities - major repairs & maintenance, refurbishment, building insurance and rates & taxes,

For the Venue: Board is committed to making the venue 'work'. If skill based - the Board contributes a range of skills

and expertise from which the manager can draw. Greater flexibility in financial management. Minimal political interference at the operational level. Council is generally bound by an agreement to

provide a guaranteed level of funding for a specific time period - this assists with financial planning.

More flexible conditions for employment and

advantages of potentially lower cost structures. Funds generated by the venue form part of the on-

going working capital and can be carried forward. Council and community are jointly responsible for

venue performance. For Council: Less political risk - Board, not Council is responsible

for performance. Council's objectives can be achieved through the

conditions it places on the Board without the need for Council to be involved in day to day operations.

Board provides specialist expertise that is generally

not available in Council. Roles & responsibilities of each party are clearly

defined and documented. Council's financial commitment is defined and

'locked-in' which Council not responsible for 'over-runs'.

For the Venue: Difficult to obtain additional funding from Council to

supplement short-falls. Boards (like Council), can become politicised and

individual agendas promoted. Success depends on the calibre and commitment of

the Board members. For Council: Loss of control of day-to-day management. Generally 'locked in' to provide a specified level of

funding and as such it is difficult to divert funding to address other Council priorities.

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Structure Advantages Disadvantages Company Structure Under Section 358 of the Local Government Act, Council has the power to establish a corporation, cooperative society or company to operate the venue. The company is responsible for managing the venue within the framework set by Council in the company articles. The company is bound by Corporations Law. Council may wish to chair the company (particularly in the start-up years) and be represented on the Board of Directors. The Company is responsible for all aspects of operating the venue. Council may act as landlord or delegate responsibility for the maintenance of the venue to the Company. Where maintenance is delegated Council commits to providing an annual capital works grant and may agree to funding a pre-determined refurbishment and replacement program.

Largely the same as the Management Board arrangement with the added advantages of: Operating under Corporations Law which provides

more flexibility than the Local Government Act. Council can determine its own level of involvement

by the positions that it takes on the Board.

Loss of direct control of the venue. Company may be required to pay taxes and charges

that could increase operating costs. The Company may, or perceived to be, motivated by

the 'bottom line' which can alienate the local community and create political problems for Council.

Council is not involved in the operation and therefore

doesn't understand the demands placed on it. Difficult to change the operating framework - need to

change the Company Articles.

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Structure Advantages Disadvantages Out-Sourcing the Venue Management The venue management is out-sourced to a third party - commercial management company, catering company, individual or community group. This can be achieved under a lease, licence or management contract basic. The conditions under which Council wants the venue to operate are specified in the legal agreement between Council and the management group. The legal agreement needs to be extremely comprehensive and well structured, and clearly define the roles and responsibilities of both parties.

For Council, its level of financial exposure is defined

and contained in a legal agreement. The Management company should be taking the financial risk, not Council.

For the venue - provides maximum operating

flexibility, particularly in relation to financial negotiations, programming and employment.

Commercial management company will be 'bottom-

line' focused and not necessarily act in the best interests of the community. Activities that are not profitable are not undertaken.

The local community may be, or perceive to be,

alienated from the venue. Possibility of being locked into a management

company that uses the venue as an outlet for productions funded by the management company or one of its related operations. The management company may have 'deals' with distributing companies that limit the product that is shown at the venue.

There are very few management companies in

Australia that have expertise and experience in managing community-based performing arts centres.

Community groups may form an association to tender

for the management. Often these groups have no or limited expertise and experience, or the groups under-quote and experience significant financial difficulty.

The priority of the management group is the business

not the assets. Building and asset maintenance are not a priority and can quickly become run-down.

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8.3  Capacity to Undertake In­house Management  As discussed in Chapter 14, most Performing Arts / Civic Centres in regional NSW are managed in-house by Council. The key is finding a 'good' manager. The operating figures discussed in Chapter 6 were re-worked to exclude labour and management fee costs and catering revenues and costs. The resultant figures were:

Revenue Expenditure (excluding Management Fee & Labour)

Venue Hire Cinema Box Office Candy Bar Screen Advertising Ticket Booking Fee Bar Recoverables Total Revenue

$147,724 $183,252 $130,390 $ 1,488 $ 76,355 $100,000 $ 41,522 $680,730

Film Costs* Ticketing Costs* Candy Bar Cost of Goods* Cinema Marketing* Cinema Administration* Recoverables Rates & Charges Advertising Cleaning Electricity Printing & Stationary Security Legal Show & related costs Consumables Repairs & Maintenance Total Operation Expenses

$100,789 $ 18,478 $ 54,503 $ 20,000 $ 4,000 $ 30,340 $ 16,158 $ 51,469 $ 1,243 $ 51,345 $ 1,243 $ 4,165 $ 1,200 $251,728 $ 1,722 $ 51,272 $636,890

* Estimated expenses The net operating position excluding labour and management fee costs is $43,840 (surplus). Through the Management Agreement, net profit from the Cinema operations, the licensee fee and labour recoverables, Council is effectively paying around $353,700 pa to the EVI Group: Management Fee $132,000 Licensee Fee $ 6,000 Labour recoverables $ 22,000 Cinema / Candy Bar / Ticket Booking Fee $193,700 Total $353,700 This analysis indicates that there is potentially $350,000 that Council could apply to paying in-house staff. In addition, it is estimated that Council Financial Services and Economic Development & Tourism staff spend on average 4.5 days per week on the administration and marketing of the Crossing Theatre, with an estimated cost of $70,000 per annum. If Council employs in-house staff to operate the Theatre, there will be some cost savings of Council staff time. Based on rates paid at other Centres (see Chapter 14), the estimated cost of employing in-house staff is: Position Salary Range

Low High Venue Manager Operations Manager / Coordinator] Technician Box Office / FOH Coordinator FOH Casuals (60 hours per week) Bar Casuals (30 hours per week) Total

$ 75,000 $ 50,000 $ 50,000 $ 45,000 $ 56,200 $ 35,000 $311,200

$100,000 $ 60,000 $ 70,000 $ 50,000 $ 62,400 $ 35,000 $377,400

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The analysis indicates that operating the venue in house, with Council retaining all revenue and employing all staff would not result in a significant increase in direct operating costs. Employment of Staff Staff employed at Centres operated by Councils are employed in two main ways: Local Government State Award for Entertainment, Performing Arts Centres and Theatres Individual Enterprise Agreements - using relevant industry awards such as the Restaurant and

Catering Award or the Arts Alliance Award. Both forms of employment recognised that venues operate 7 days per week, with a significant component of evening work. Under the Local Government State Award, the key conditions are: Variable work hours are recognised, with full-time staff required to work 140 hours per month with

8 days off during the month. When the hours are worked is determined by the venue programming.

From Monday to Friday any hours worked between 6am and 11pm (defined as core hours), do

not incur a shift allowance of penalty rates. After 11pm, a shift allowance of 20% per hour must be paid.

Weekend work incurs a weekend allowance or loading of 25% on Saturdays and 50% on

Sundays for all hours worked regardless of the time (ie no shift allowance after 11pm). According to Theatre Managers, employment of staff under Individual Enterprise Agreements using industry awards which do not pay weekend allowances can result in a reduction in labour costs of around 15 - 18%.

8.4  Management Companies  When competition policy was first introduced in Australia, a variety of venue management companies were established with these companies managing a range of sporting, performing arts and entertainment venues. Over time, the number of management companies has declined substantially with Councils and operators taking back the management of their venues to run them in-house. While there are a number of 'one man' companies (eg the EVI Group) operating one venue, there are very few companies remaining that are operating more than one performing arts - entertainment venue. Companies identified by this study are: Pegasus Group - manages the Hills Centre in Baulkham Hills Shire and Angel Place Theatre for

the City of Sydney. Pegasus is based at the Hills Centre. Venue Management Services - Melbourne based management company who operate four

function centres / rooms in Melbourne plus the Biloela Civic Centre in Banana Shire in Central Queensland.

Ogden IFC (Convex Australia) - international venue management company that manages major

venues such as the Brisbane Convention and Exhibition Centre, Hong Kong Convention and Exhibition Centre, Telstra Stadium, Suncorp Stadium etc.

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Playbill Venues - manage three venues in the Moore Park Precinct (former Sydney

Showgrounds) - Hordern Pavillion, Royal Hall of Industries and the Byron Kennedy Hall. It may be difficult to find a management company with a depth of resources to manage The Crossing Theatre.

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9.  FRIENDS OF THE CROSSING THEATRE 

9.1  Background  The Friends of the Theatre was established as an independent group in 2002, to foster support for The Crossing Theatre. In September 2002 Ken Robbins from ESPM addressed the Friends and suggested possible roles for a Friends group in the operations of the new Theatre, with these roles being: Provide volunteers to assist with front and back of house operations - reservations, ushers, back

of stage helpers. Obtain a liquor licence and operate a Bar at the Theatre on Friday and Saturday nights, with the

Bar being a fund-raiser for the Friends. Fund raise for the Theatre. Generate business for the Theatre by encouraging locals to use the venue. Robbins also advised that he needed volunteers to fill the roles of Gallery Curator and Artistic Director for the Theatre. The Friends ultimately took on the role of Curator. The original concept for a Friends Group as proposed by ESPM appears to have been to harness the local enthusiasm for the Theatre and to use this to provide free labour, raise funds and generate business for the Theatre. The proposed relationship was between the ESPM and the Friends, with the Friends providing assistance to ESPM. At this initial meeting, Council became involved through a Council Officer offering to let the Group run under Council's auspice for the present, but advised the Group that it should move towards putting in place its own arrangements. Due primarily to insurance considerations, the Group became a Section 355 Committee of Council. The relationship between the Friends, Theatre Management and Council, the roles and responsibilities of the Friends and lines of reporting were never defined. In response to the lack of direction and framework, the Friends established their own structure, defined their own objectives and formulated a Policy & Procedures Manual for the Theatre. This Manual was not adopted by either Council or ESPM. Objectives The Friends have defined their objectives as: "The objects of the FOTCT are to raise funds for the continued improvement of The Crossing Theatre complex and its facilities, to provide volunteer support for the operation of the Complex, and to provide community input into the range and variety of entertainment and activities secured for the venue." Structure The Friends now have 4 subcommittees involved directly with The Crossing Theatre: Event Services - which runs the Theatre Bar. Until 2006, the Friends held the Liquor Licence for

the venue (see Chapter 11). Performing Arts - which organises and co-ordinates cultural activities (eg plays, music recitals

etc) at the Theatre.

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Classic Cinema - known as Friend's Flicks, which screen a monthly 'classic' or 'arts' film in the

cinema at the Theatre. Art Gallery - have taken on responsibility for the Civic Art Collection and established the Narrabri

Shire Art Collection. For insurance purposes, the NOSH Festival Committee is also a sub-committee of the Friends. Funding The Friends was originally funded by a grant ($30,000) from Council, plus donations from other sources and a nominal membership fee. The Friends have generated revenue from the operation of the Bar and from some of the shows that they have held in the Theatre. The funds raised have been used to purchase equipment for the Theatre (including a Baby Grand Piano), to under-write cultural shows and activities, to provide funding assistance to community events such as Keyplay and NOSH, and to acquire art works for the Narrabri Shire Art collection.

9.2  Relationships between the Key Stakeholders  The Friends was established to provide assistance to ESPM. Council provided the mechanism (Section 355 Committee) to enable the Friends to operate. Initially the relationship between the Theatre Manager and the Friends was productive, with the parties working relatively closely. With changes in management direction and the significant increase in activity at the Theatre, the relationship has become strained to the point were it is probably not workable. Over the past 5 years, the Friends have put considerable time and energy into the complex and as such have a very strong sense of ownership and commitment. In the first few years of operation, the level of use of the Theatre was very low, rendering it possible to use volunteers to assist. As use of the venue has increased, the demands on both staff and volunteers have increased. Basically, the Theatre operation has surpassed the type and level of assistance and input that ESPM originally sought from the Friends. The Theatre is now at the stage where it needs qualified staff. As a result of a combination of factors, (including personality conflicts, differences in management styles, poor communication etc), the Friends in recent years appear to have taken on more of a monitoring, watch-dog style role, with the focus appearing to be on 'protecting' their own interests in the Theatre. The key concerns of the Friends appear to be to ensure the continuation of cultural shows at the Theatre and to 'supervise' and provide 'advice' on how equipment that they purchased for the Theatre should be looked after. This is generating conflict between the Friends and Council, and the Friends and Theatre Management, with some of the conflict finding its way into the public arena. This is not in the best interests of the Theatre.

9.3  Future Role of the Friends  The Friends are an Advisory Committee to Council. As such the Friends are Council's responsibility. Council needs to determine whether there is a need for a Friends group, and if so what form this Group should take. With the growth in the use of the Theatre and the recent changes in the Bar operations as a result of changes in the Liquor Licensing Act, it is recommended that responsibility for the Bar operation be transferred to the Theatre Manager (see Chapter 11) and the Bar operated professionally. It is also recommended that the Art Gallery be relocated out of The Crossing Theatre (see Chapter 13). If

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these recommendations are adopted, then these two roles of the Friends will become redundant. NOSH is also looking to become an independent committee of Council. In determining the future direction Council needs to consider: If the role of the Friends is to assist the Theatre, then the Friends need to be a committee of the

Theatre Management, with the Manager determining the type and level of assistance required and selecting the skills / people that are needed to achieve this. It should be noted that different managers will bring to the Theatre different expertise, interests and management styles. Some will welcome assistance and input, while others will prefer to act more independently. For the arrangement to be workable, the Manager needs to have responsibility for the committee.

If the committee is going to be an Advisory Committee of Council, Council needs to determine

where it needs assistance and advice and then structure the terms of reference accordingly. Council also needs to select the best combination of skills and people to deliver the desired outcomes.

If the Friends wish to become an independent group for the purposes of holding cultural events at

the Theatre (or other venues), then they become like any other community group and hire the venue for their activities. Council may elect to provide them with an annual grant to undertake this.

If the role of the Friends is to fund raise to purchase equipment for the Theatre, it will be

important for Council, in consultation with the Theatre Management, to identify what they need funds raised for. Who owns, and is responsible for, the purchased asset also needs to be clarified and the item included on the relevant asset register.

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10.  CATERING 

10.1  Background  From opening until 2007, there was no catering service available at The Crossing Theatre. Theatre users were able to hire the kitchen and either cater themselves or bring in commercial caterers. People attending events in the Auditorium would often bring in their own snacks, while community groups would have a 'bring a plate' arrangement. An in-house catering service was introduced in October 2007. For a short period, the Theatre trialed joint use of the kitchen, (ie sharing the kitchen between the in-house caterer and external users). This proved un-workable due to the small size of the kitchen, lack of storage space and the inefficiencies of the caterer moving food and equipment in and out. It also resulted in loss of equipment and food supplies and generated cleaning issues. The EVI Group introduced a sole caterer arrangement with the Group employing a Chef and kitchen staff, with all catering in the Theatre provided by the Management Company. The EVI Group also operates a café in the Foyer as a means of supplementing the catering operation. The introduction of the catering service provides the Management Company with a financial incentive to build the Live Operations side of the business. The introduction of the catering service has created angst amongst some of the local users of the Theatre. The Theatre has received negative publicity and there appears to be a perception that the catering service is expensive and that the food and service standards are not good. A few hirers are reported to have cancelled their booking at the Theatre.

10.2  Reasons for the Change  The reasons for introducing the in-house catering service included: Significant increase in use of The Crossing Theatre, with more demands on the kitchen. Each

time the kitchen was used, Theatre staff had to spend time explaining the equipment etc, and stock-take crockery, cutlery, glassware etc after the use. This is both time consuming and inefficient.

There is only one kitchen in the venue. This limits the ability for the Theatre to accept 'back-to-

back' or simultaneous hire bookings unless the hirers are prepared to use the same caterer. An increase in the number of requests from hirers for the Theatre Management to organise the

catering. To reduce loss and damage of kitchen equipment, crockery, cutlery etc. To increase the professionalism of the venue and to set and maintain high catering and service

standards. To ensure that all food served at the venue meets all relevant Food Safety standards.

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10.3  Response to the In­house Catering Service  The response to the catering service has been mixed. Some users of the catering service and people who have attended catered functions, have indicated that the meals and service were excellent. Other users, particularly the FOTCT, have expressed concerns. The concerns raised are listed below. Break with tradition - to quote one of the letters received by Council "It is a tradition in the country

that people bring their own suppers to such events" and that the introduction of the catering service was a "city rule"

Increased cost for local people to use the venue and a reduction in the profitability of events

organised by community groups as they could not self-cater. Lack of choice - people / groups wanted to use caterers who they had used in the past and were

happy with. The in-house caterer does not provide value for money. The potential loss of business for the Theatre. The caterer does not have the capacity or experience to cater for large functions. Specific complaints received from people who had used the catering service related to: Caterer not providing the menu items that were agreed verbally with the Theatre Manager. Guests at some tables at a function did not receive their meals. No person of 'authority' available at one of the functions to discuss catering issues and rectify

problems. Poor standard of the meals served. Poor service.

10.4  Issues to be Considered  Catering is an issue faced by most performing arts / civic centres. There are no 'easy' solutions, with Council having to balance a number of factors. These factors include: The needs and expectations of clients Corporate, Government, Council and Business Association make up approximately 68% of the client base at The Crossing Theatre. Most of these clients are likely to be looking for a 'seam-less' catering service - where they can arrange the catering at the same time as the booking. While this market is not particularly price sensitive, it does demand quality, value-for-money food, good presentation and professional, efficient service. In contrast most community groups and some individuals are more price sensitive and/or have limited budgets, and as such are looking for the ability to self cater. Prior to the current arrangement, The Crossing Theatre was the only large, quality venue in the Shire in which self-catering was possible.

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Reputation and Image of the Centre The Crossing Theatre is a quality, professionally operated venue. The quality of the venue needs to be reflected in the catering. Guests attending a function are generally not aware of who is undertaking the catering, and if the meals and/or service do not meet expectations, then it is the Theatre that receives the criticism. Food served at the Theatre needs to meet agreed standards. Risk Management To minimise risk, there is a need to ensure that the food served is prepared in accordance with health standards. The Theatre / Council has no control over food prepared off-site and then brought into the Theatre. There are also potential OH&S risks associated with the use of the kitchen equipment by people who are not trained to use commercial equipment. Loss & Damage The Crossing Theatre has a commercial preparation kitchen and a full complement of crockery, cutlery etc. There has been damage and loss in the past, particularly at times when there has been shared use of the space. It is also time consuming and demanding on staff or the Friends, to stock-take equipment and crockery after each use. Level of use of the Theatre The level of use the Theatre. The Theatre is now attracting both simultaneous use and back-to-back bookings. With only one kitchen, the catering arrangements need to be structured to enable multiple use of the Theatre. Financial Considerations The main financial considerations are: - The impact of the catering arrangements on the use of the venue - will it increase or decrease

use. - The costs involved under different catering arrangements. - The revenue generating potential and the implications for the venue, Management and Council. Skill Base Available Council needs to take into account the expertise, capacity and capability of the catering available in Narrabri and the surrounding region. The Capacity of The Crossing Theatre Kitchen. The Theatre kitchen is not designed or equipped to cater for large functions. It does not have the cool room space, ovens or bench space for large events. In the past, caterers have brought in their own equipment to supplement that available at the Theatre. Business Generation Business that can be generated by Caterers, with the Caterers recommending the Theatre as a possible venue to their clients.

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10.5  Options Available  The catering arrangements at other venues include: Kitchen available for hire by different users - community and commercial. Kitchen can only be hired by accredited caterers / qualified chefs. Preferred Caterer arrangement - Companies bid for the right to provide catering services at the

Centre. Potential hirers are then given a choice of 2 or 3 caterers. Contract caterer - commercial caterer has the catering rights for the Centre. In-house operation - Chef employed by the Theatre. These options are discussed below.

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Table 10.1 Overview of Catering Structures Structure Advantages Disadvantages Open access - with the kitchen able to be hired by any hirer of the Theatre. The hirer would pay a hire fee plus a bond to cover potential cleaning, repairs and maintenance costs.

For the Hirer Hirer has the flexibility to provide the type of catering

that they require. Can reduce the cost of having a function by self

catering. For the Venue Generate revenue from the hirer fee (note: this is

generally minimal)

For the Hirer Inconvenient to have to arrange their own catering -

some hirer's want a seamless service. Responsibility for equipment, people working in the

kitchen etc. There is a potential risk. For the Venue Prevents simultaneous and back-to-back hire of the

Theatre by groups with different catering requirements.

Inefficient to have to explain the kitchen functions and

equipment for each hirer and stock-take at the end of each use. Staff also need to be available to assist the hirer if they run into problems with the equipment.

The hire fee is generally not sufficient to cover staff

costs involved in assisting the hirer and undertaking a stocktake after the event.

Increased risk of equipment being damaged due to

inexperienced users. No control over the quality of the food or service. If

catering and/or service levels are substandard, this reflects poorly on the venue.

No control over food safety standards. There is a risk

of the venue being sued. Crossing Theatre specific - potential for conflict with

the alcohol storage arrangements.

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Structure Advantages Disadvantages Access to the kitchen by accredited caterers and chefs only. Hirers can bring in their own caterers / chefs however these caterers / chefs need to be accredited - for example they need to have a Gold Licence and be licensed to operate in the area where they are based.

For the Hirer Hirer has the flexibility to provide the type of catering

that they require. Can reduce the cost of having a function by being

able to negotiate prices with different caterers For the Venue This arrangement is far more desirable for a venue than having unqualified people using the kitchen. Generate revenue from the kitchen hirer fee. Some

venues also charge a percentage of gross catering revenue or levy a fee per meal served.

Less chance that equipment will be damaged. Caterer is required to adhere to food safety

standards and will carry the appropriate insurance. Venue can provide a 'Bare' kitchen with the caterer

having to bring in all cooking utensils, crockery, cutlery, linen etc.

For the Hirer Inconvenient to have to arrange their own catering -

some hirer's want a seamless service. For the Venue Prevents simultaneous and back-to-back hire of the

Theatre by groups with different catering requirements.

If an equipped kitchen is provided, inefficiency with

having to stock-take equipment after each function No control over the quality of the food or service. If

catering and/or service levels are substandard, this reflects poorly on the venue.

Crossing Theatre specific - potential for conflict with

the alcohol storage arrangements.

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Structure Advantages Disadvantages Preferred caterer arrangement - in which caterers bid for the right to provide catering services at the venue. The venue then offers the hirer the choice of 2 to 3 different catering options. As part of the contract, the venue puts in place the operating framework and specifies minimum performance requirements, service standards etc. The caterer pays a fee to the venue for the catering rights.

For the Hirer Provides a limited choice in catering with some

flexibility to negotiate. Limited competition helps regulate the price. For the Venue As per the caterer only option, but with control over

the quality of the catering and service. Different caterers / chefs can offer different services

(eg sandwich platters for meetings and function catering for large events)

Most food is prepared off-site which reduces the

wear & tear on the kitchen. Caterers pay a fee for the catering rights - generally a

% of gross revenue or a fee per meal served

For the Hirer Locked into a limited choice of caterers. Possibly higher catering costs due to the fee levied by

the venue. For the Venue Prevents simultaneous and back-to-back hire of the

Theatre by groups with different catering requirements.

Caterers are generally more interested in the larger

functions that involve a meal rather than providing sandwiches and fruit plates for meetings.

Caterer generally has other clients and may not be

able to meet its commitments to the venue. Caterers are generally not available at short notice. Potential for conflict between the caterers. Inefficiencies of bump-in and bump-out of the kitchen. Crossing Theatre specific - potential for conflict with

the alcohol storage arrangements.

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Structure Advantages Disadvantages In-house catering with the venue having a sole caterer. This can be undertaken under a contract arrangement or by employing a chef.

For the Hirer Catering available - efficient operation For the Venue Meet client needs and expectations, including short-

notice requests. Enables simultaneous and back-to-back bookings. Can market a comprehensive service. Increases efficiency. Set and control standards. Source of revenue for the venue. Control over who is employed. There is more control

over an employee than a contractor. The venue can increase revenue by undertaking off-

site catering.

For the Hirer Locked into one caterer. Possibly higher catering costs. For the Venue Dependent on the caterer fully meeting the varying

needs and expectations of the market. Can alienate some users. Increased wear & tear on the kitchen from continual

use. Crossing Theatre specific - potential for conflict with

the alcohol storage arrangements.

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10.6  Directions Forward  The catering operation is relatively new and still in the development phase. Council does not have any financial information on the operation to determine if it is viable to operate in-house. The structure of the catering operation will need to be determined once the management structure is in-place. The preferred catering structures are: In-house caterer if the operation is viable. Preferred caterer arrangement, with the Theatre having a few nominated suppliers, who are

prepared to work with the Theatre Management to provide a 'seamless' catering service.

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11.  BAR 

11.1  Background 

In September 2002 Ken Robbins from ESPM addressed a meeting of the Friends of the Theatre and outlined the need for a Friends group to support the Theatre. In outlining possible roles for the group, Robbins suggested that the Friends look at obtaining a Liquor Licence and operate a Bar in the Theatre on Friday and Saturday nights to improve the ambience of the venue. He indicated that the Bar could be operated as a fund-raiser for the Friends. In 2003 the Friends operated the Bar on three occasions. On each occasion the Friends applied for a Temporary Liquor Licence. In mid 2003 the Friends, in conjunction with Council, began the process to obtain a Permanent Function Licence for The Crossing Theatre. The Permanent Function License was granted in January 2004, with the License permitting the Theatre to provide alcohol for up to 26 functions a year (with the option to vary this marginally). As a Permanent Function License was expected to be restrictive, Council, in 2003, began the process of applying for a Governor's Licence for the venue. In applying for the Licence, Council proposed that it would hold the Licence, with the Licensee being the Manager of the Theatre. The application for the Licence met with considerable opposition from local Liquor Licence holders and the Police, with the Police wanting the Permanent Function Licence to remain in place. In 2005 the Friends of the Theatre wrote to Council asking for the Governors Licence to be expedited if possible due to the workload and difficulties being experienced by the person holding the Permanent Function Licence. When the former General Manager of the Theatre resigned Council continued with its application for the Governor's Licence, nominating Debbie Went (Permanent Function License holder) as the potential Licensee. This created issues with the application, with the Liquor Licensing Court wanting an employee of Council to hold the Licence. The Governor's Licence was finally granted in August 2006. Ownership of the Licence was vested in Council, with the Theatre Manager appointed as the Licensee. The Licence conditions require that the License be held by a Council employee, and that this employee be a member of the Friends of the Theatre committee. (Note: this latter condition needs to be removed). As a result of changes in the Liquor Licence Act, the Governor's Licence was replaced by an 'On Premise Licence' in July 2008. Council continues to own the Licence with the Theatre Manager being the Licensee.

11.2  Bar Operation  Until 2006/7 the FOTCT Event Services Committee operated the Bar for all functions. Over the past 12 months, Council in conjunction with the Theatre Manager, have operated the Bar on an occasional basis for larger functions (eg the ABBA and Jimmy Barnes Concerts), with the FOTCT providing the Bar service for smaller functions and events. With the granting of the Governor's Licence, the Permanent Function Licence was surrendered. As the Friends could no longer purchase alcohol for re-sale, Council has had to take on this role. The alcohol purchased by Council is on-sold at cost to the FOTCT. Alcohol is now primarily purchased in bulk (at wholesale rates) and stored at The Crossing Theatre for used when the Theatre operates the Bar and for resale to the Friends. Once the Friends have purchased their alcohol from Council it is stored separately in the Bar fridge and Bar Cool Room. This results in two liquor stores being maintained at the Theatre.

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The Bar operation is managed by the Friends Event Services sub-committee. The sub-committee has a small, core group of who undertake most of the administration and supervision, as well as a group of 20 to 25 volunteers from which to draw. All volunteers working at the Bar have their Responsible Service of Alcohol certificates. Initially the Bar was a minor operation within the Theatre (3 functions in 2003). As use of the Theatre has grown, there have been more demands placed on the Friends. For the year commencing September 2006, the FOTCT provided 1726 volunteer hours, the majority of which were Bar-related. On average, volunteers are working around 30 hours per week in the Bar, plus the administration associated with the operation. The current Bar operation is not running smoothly or efficiently, with conflict between the FOTCT and the Theatre Manager. This appears to be the result of a number of factors including: Lack of clear definition of the new roles and responsibilities of Theatre Management and the

Friends as a result of the changes in the licence arrangement. Until very recently, there were no systems or procedures put in place to accommodate the change. There are essentially two parties operating under one Licence, each with different approaches.

The pressure to comply fully with the Liquor Act and Responsible Service of Alcohol

requirements. Both parties are watching each other to ensure that the other does not breach any of the requirements. This immediately sets up a potential conflict situation. The situation is exacerbated by clients who do not understand the requirements of the Act and RSA, and will both knowingly and unknowingly breach these requirements. Under the Liquor Act 2007, which came into force in July 2008, the conditions on liquor sales have been tightened and penalties substantially increased.

Poor communication between the Theatre Management and the Friends. Competition for the Bar revenue. The Bar revenue is the main source of income for the FOTCT,

with this income underpinning the Friends activities at the Theatre. There is also pressure on the Theatre Manager to increase revenue from Theatre operations, with the Bar being one of the areas where revenue can potentially be increased.

The more convoluted purchasing process resulting from the Governor's Licence. This is

inefficient for all parties including Council. The need to manage two liquor stores within the venue, without adequate space to store the

liquor. Double handling is also occurring as the alcohol is moved between the different stores, which is also inefficient.

Issues with the Service Issues with the Bar service that have been raised by Theatre users during the consultation are summarised below. Having not seen the Bar in operation, JRA is not in a position to comment on the validity of these issues. Bar queues are too long - it takes too long to get served at the Bar. This was a repeated

criticism and is a source of frustration for patrons. The physical design and set-up of the Bar is a significant factor in this.

Variability in service standards - with some volunteers considered to be extremely helpful and

professional while others are slow, inexperienced and/or unfriendly. Authoritarian approach to alcohol sales and consumption, with staff not trained and/or

experienced in customer service and conflict resolution. Bar closing early, rather than remaining open until the end of the function. The Theatre is

licensed until 2am.

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Desire by some volunteers to stop and chat with patrons rather than undertake their duties

efficiently. While this is perceived as a negative by some venue users, for others it was perceived as friendly service. Regardless of the perception, emphasis must be on providing an efficient service to all guests, minimising queuing and waiting time as much as possible.

The Theatre Manager has also raised concerns with: Pricing - with alcohol being sold at below recommended retail prices. As such the Bar does not

maximise its sales potential. Lack of accountability with Bar receipts, with individual sales not recorded against the type of

alcohol sold. The revenue is totalled at the end of the function so that it is not possible to undertake reconciliation of type of sales against revenue, nor to monitor what is being sold and at what rate.

11.3  Bar Revenue  The revenue generated from the Bar has increased substantially over the past 4 years, with the income generated by the FOTCT from the Bar being: 2004/05 2005/06 2006/07 2007/08 Income Expenditure

$18,484 $12,373

$66,791 $37,013

$58,355 $32,529

$78,343 $32,252

Profit / Loss $ 6,110 $29,778 $25,826 $46,073 In 2007/08 Council / Theatre has run the Bar for a small number of events held at the Centre. The largest event was the Jimmy Barnes Concert in July 2007, with Bar takings of $32,748 and a profit after cost of sales and labour of $19,789. The total revenue generated by the Bar in 2007/08 was over $101,000, with a profit exceeding $65,800. As discussed in Section 6.3, there are opportunities for increasing revenue. The new Liquor Act 2007 relaxes some of the restrictions on alcohol service and enables an 'On-Licensed' premise to, on application, serve alcohol without having to provide a meal. Under the new Act there is potential for the Theatre to apply to be able to open the Bar for patrons, at times other than those specified under its 2006 license.

11.4  Issues to be considered by Council  In determining the most appropriate structure for the Bar operation, Council needs to take into consideration a range of factors including: Legal responsibilities as the licence holder and venue owner. Council is the License holder

and responsible for the service of alcohol in the Venue. Council needs to ensure that it has the systems and controls in place to protect its position. Under the current mode of operation, there appears to have been minor breaches of the License and Act by both parties. The 2007 Act has made the Licence holder and Licensee directly responsible for the acts of their employees, which means that the Theatre Manager is responsible for any of the Friends providing Bar service.

The new Liquor Licensing requirements - in terms of both the operation of the Bar and the

revenue generating potential that can now exist. The 'positioning' of The Crossing Theatre - the level of professionalism and the quality of the

service that Council wants to provide. This is partly an issue of volunteer versus professional staff.

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Meeting customer needs and expectations - how best to meet the needs generated from

increased use of the Theatre and from changing needs and expectations amongst Theatre patrons.

Physical limitations of the Bar and Bar storage arrangements - these are discussed in

Section 3.3 and impact on the way the Bar is operated and the resultant sales and profitability. Financial potential of the Bar - to generate increased revenue for the venue, and how profits

should be distributed. Cost implications for Theatre users - whether having professional staff will increase the cost of

using the venue. The demands being made on volunteers - including the high level of responsibility imposed by

the Liquor Act and RSA requirements, the level of administration involved with Bar operations, and the number of hours required to provide the service. The Bar operation has essentially become a commercial entity and it is unrealistic to expect volunteers to meet the demands of a commercial operation.

The structure of the operation - in terms of efficiency and accountability. At present it is neither

efficient nor accountable. Under the requirements of the new Act, the Theatre Manager needs to have 'control' over anyone who works at the Bar.

11.5  Directions Forward  As a result of the changes in the Liquor License requirements and the increased level of use at the Theatre, it is recommended that the Bar be placed on a commercial footing as part of the Theatre operations. As part of this operation it is recommended that: Systems have to be put in place to ensure that the Bar operation is fully accountable, with audit

procedures to track the purchase, storage and sale of alcohol. Breakages and wastage also need to be monitored.

That breaches of the License, Act and RSA requirements or anomalies in alcohol sales be

grounds for dismissal of the Licensee / Management Company and staff involved. The profits from the Bar operation become part of the operating revenue for the Theatre. The physical constraints of the Bar design and fitout be addressed, possibly using portable Bars. An agreement also needs to be put in place regarding the funding / subsidising the cultural activities held at the Theatre.

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12.  NARRABRI SHIRE BAND 

12.1  Background  Narrabri Shire Band occupies the basement level of The Crossing Theatre. The Band Hall was demolished to make way for the Theatre. The initial plans for The Crossing Theatre show a Band Room in what has become the Exhibition Room. In early documentation relating to the development of a Cultural Centre and then the Entertainment Centre, it was envisaged that the Band, Arts Council and the Musical and Dramatical Society would each have a presence in the Centre. The current Band Room is approximately 3 times larger than the Exhibition Room space that was originally allocated. The fact that the Band is occupying the space indicates that there was an arrangement between Council and the Band in relation to access to the Centre. A search of Council's files relating to The Crossing Theatre and the Band, has failed to locate any documentation relating to this arrangement. Neither of the Management Agreements that have been entered into for the Centre mention use of the space by the Band.

12.2  Current Arrangement  The current arrangement is: The Band has sole use of the basement level of The Crossing Theatre. This space has been

fitted out by Council. Council meets all operating costs for the space. These are not on-charged to the Band. Council provides an annual grant to the Band, pays the Band's insurance costs and occasionally

provides grants for purchase of instruments and Band activities. The subsidy has been in place since at least 1997 (Council's file on the Band dates from 1997).

The payments that have made to the Band are summarised below. Since 1997 annual payments to the Band have increased by 189%.

Year Grant Insurance Donations Total 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

$ 6,000 $ 7,000 $ 8,000 $ 9,000 $ 9,000 $ 9,000 $ 9,000 $14,000 $14,000 $14,000 $14,000

$ 1,221 -

$ 1,685 $ 1,152 $ 1,177 $ 2,810 $ 3,220 $ 3,325 $19,054 $ 3,183 $ 6,937

$150 - Xmas party $10,000 - tour $110 $1,250 instrument $1,000

$ 7,221 $ 7,150 $19,685 $10,262 $10,177 $11,810 $13,470 $17,325 $34,054 $17,183 $20,937

Total since 1997/98

$113,000

$43,764

$12,510

$169,274

The payments received since 2002 ($114,779) have more than compensated for the loss of the original Band Hall.

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12.3  Narrabri Shire Band 

Narrabri Shire Band is a community-based brass band. The Band is an incorporated association and has around 40 members (aged 8 to 58), 31 of whom are active. The Band also has a junior band with 12 trainees.

The Band plays at a number of Civic functions and community events including Anzac Day, Remembrance Day, Carols by Candlelight and Australia Day. Other activities include:

Provide a Bugler for funerals of Returned Soldiers. Participate in the annual National Band Competition. Provide music lessons free of charge to school aged students - there are around 6 children in this

program. The Band relies primarily on the funding received from Council. It also receives the occasional donation for performing at funerals and community events (generally around $150 per event) and undertakes some fund raising. The Licensed Clubs in Narrabri also provide occasional grants. The Band struggles financially and is not in a position to replace its older instruments or uniforms, both of which are needed. The Band also struggles to recruit new members and there is a high attrition rate amongst students participating in the music lessons.

12.4  Band Room  The Band Room is a rectangular shaped room that appears to be larger in size than the Riverside Room. The room is divided into three sections - store room for instruments and equipment (approx 15sqm), practice area, and kitchenette and bathroom facilities. The room has a separate access to the Theatre. It opens directly onto the Reserve with views across the Reserve to Narrabri Creek. The room is basic. It was never 'finished' and there is minimal sound separation between the Band Room and the Riverside Room. There are occasional problems when the Riverside Room is in use and the Band is practicing. At the time of inspection, the room did not present well, with the walls being marked and the room being dusty and messy. The Band generally leaves chairs and music stands in the practice area.

12.5  Use of the Band Room  The Band uses the space on Tuesday nights for practice and on some afternoons for student lessons. Scheduled rehearsals in the Band Room average around 4 hours per week, with this fluctuating from no rehearsals in some weeks, to multiple rehearsals in the weeks leading up to the National Band competition. The Band Room is located adjacent to the outdoor exhibition space and marque site. The Room has been used occasionally in conjunction with festivals and community events, however this has resulted in some conflict between the Band and the users. The Band Room has also been used twice for meeting hires, organised through The Crossing Theatre. The current level of use of the Band Room is exceptionally low and Council needs to consider whether it can continue to afford to have this space not generating revenue.

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12.6  Potential of the Band Room  The Band Room has the potential to become a revenue generating space for The Crossing Theatre. As discussed in Section 3.4 there is a need for: Meeting rooms - particularly smaller rooms that can be hired simultaneously and breakout rooms

for conferences. Function Room - positioned between the Riverside Room and the Auditorium in size. Smaller, more intimate performance space. Lower cost space that can be used by community groups. With appropriate fit-out the Band Room could be used for these purposes. It would also attract use during outdoor events. The availability of the Band Room space would enable the Theatre to accommodate simultaneous hirers and also provide flexibility to relocate smaller activities out of the Gallery Room and Riverside Rooms when bookings for these areas prevent the use of the Auditorium. In 2007, the Riverside Room generated just over $58,000 in revenue. There is potential for the Band Room to generate a similar amount (if not more) The Band could still be accommodated in the room. The Theatre store room could be converted into a secure instrument and equipment store for the Band. The Band could then 'book' the practice space in advance for times that it needs it, with the Room being available at other times for hire. There would need to be a degree of flexibility on both sides, with the Band being able to schedule additional rehearsal times if needed, and the Theatre being able to request the Band to reschedule if the room is needed for a major conference or event.

12.7  Directions Forward  It is recommended that: The Band Room become part of the 'useable' space within the Crossing Theatre. The Band be given secure storage space for their instruments and equipment adjacent to the

Band Room, and access to the Band Room for training. The Band Room be refurbished and used for meetings, small performances and functions.

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13.  EXHIBITION ROOM ­ ART GALLERY 

13.1  Background  Since the late 1960's the Narrabri Art Society has promoted the need for a public art gallery in Narrabri. In 2000, following lobbying from the Society and the arts community, the architect for The Crossing Theatre project was instructed by Council to include a space in the building to exhibit the Narrabri Civic Art Collection. The space originally allocated for the Art Gallery was the room adjacent to the Theatre entrance. This space ultimately became the second cinema, with the Art Gallery moved to the far end of the Foyer in the space originally identified as the Band Room. At the request of ESPM, the FOTCT established a sub-committee to manage the 'Narrabri Civic Art Collection'. This collection was started in the late 1960's with Council agreeing to accept a work or works from each Narrabri Art Show. While Council owned the collection, it had no place to store or display the works. The collection is now kept at The Crossing Theatre with some of the paintings on display in the Exhibition Room. The Civic Art Collection has around 35-40 works and is valued at around $200,000. The Art Gallery sub-committee of the FOTCT has also established a Narrabri Shire Art Collection, which incorporates works that have been donated to the collection and works that have been acquired by or on behalf of the FOTCT. In establishing the collection, the FOTCT have reserved the right to acquire, accept or dispose of art works in this collection. There is no dedicated space in The Crossing Theatre for the display of the Narrabri Shire Art Collection, with some of these works being hung in the Foyer. Narrabri also has a third collection, the Cotton Fibre Expo Collection, which is in storage as there is no where for it to be displayed. Of the three collections, this one differentiates Narrabri from other regional centres and would appear to have the strongest tourism potential.

13.2  Suitability of the Exhibition Room  The Crossing Theatre is not a suitable venue for the Art Gallery. The main issues are: The hanging space available in The Crossing Theatre and the Exhibition Room is limited and not

sufficient to display the collections. The Exhibition Room is not an ideal space to display art works. The room itself is too small, out

of proportion (in terms of height) and lacks character. The Exhibition Room is located at the rear of the Foyer. The room is often locked and not

accessible to the public. There is no space available to host travelling exhibitions or art shows that would attract repeat

visitors into the Theatre. The Exhibition Room and Foyer are not always supervised and as such there is a risk that art

works could be damaged or stolen. There are no security cameras in the Exhibition Room. To use the room for non-gallery activities, the art works need to be removed and stored. This

requires the use of the hydraulic platform and a minimum of two staff, and is extremely time consuming to pull down and re-set up.

The storage space available for the art works is limited with art works being stored with theatre

equipment. The space is not adequately climate controlled.

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The Art Gallery sub-committee has a policy of minimising the handling of the art works to minimise risk of damage.

There are no facilities in the Theatre for the repairs and maintenance of art works. There is no curator and no firm collection policy. There is a management conflict in terms of having the room open to the Public to view the collection and the desire to hire the room out for small meetings and functions. The Exhibition Room is far better suited to a small meeting and function room than to an Art Gallery.

13.3  Visitation to the Art Gallery  Visitation to the Art Gallery is reported to be very low, in the order of a few visitors per week (maximum). There appears to be very limited commitment to the space by the Narrabri community. The Art Society's focus is on its Art and Craft Gallery and workshops in Dangar Street. The schools do not use the Gallery for their art programs. In the past 3 years there has been only one art show held at The Crossing Theatre. The Art Gallery is functioning more as a place to store paintings. It is not playing an active role in attracting people into The Crossing Theatre, generating revenue for the Theatre, fostering visual arts in the Shire or contributing to the Shire's tourism industry. With The Crossing Theatre needing additional space, it is hard to justify the continued use of the Exhibition Room to hang paintings.

13.4  Directions Forward  The Art Gallery function should be removed from The Crossing Theatre. The most successful regional art galleries are those that incorporate a range of functions including: Display space for the permanent collection - with the collection curated and the exhibition

changed regularly. Display space for travelling and temporary exhibitions. Retail space - for the display and sale of quality arts and crafts. Workshop rooms - for community art groups and school groups, and for the art gallery to run

workshops and lectures as both a community service and to generate revenue. The Inverell and Moree Galleries are good examples of community based galleries. Possible locations for the relocation of the Art Gallery include: Community Health Centre - when this function is relocated to the hospital. Former ambulance station The disused wing of the Gaol.

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14.  CASE STUDIES  Performing Arts and Entertainment Centre venues in regional NSW that can accommodate an audience of 450+ people are summarised in Table 14.1. With the exception of the Crossing Theatre and the Griffith Regional Theatre, these venues are located within the larger regional centres. Griffith is a sub-regional centre servicing Griffith, Leeton and Narrandera (population 42,300). The Crossing Theatre has by far the smallest base population from which to draw. It takes 7.1% of the population of Narrabri Shire to fill The Crossing Theatre auditorium, whereas in most other area, less than 3.5% of the LGA population is needed to fill the largest room in the venue. (Note: Tamworth is an anomaly due to the size of the venue). Furthermore, most of the venues with a ratio of 2 - 3.5%, also draw significantly from adjoining LGA's (eg the Centre in Albury also services Wodonga, while Bathurst draws from Orange and Lithgow), which decreases their ratio to around 1 - 1.5%. Table 14.1 Performing Arts and Entertainment Centre in Regional NSW

Centre Location LGA Population

Facilities % of LGA pop to fill theatre*

Crossing Theatre Narrabri 13,800 Auditorium - 1000 seats 2 cinemas 80 / 160 seats Riverside Room Exhibition Room

7.2%

Albury Convention & Performing Arts Centre

Albury 42,314 - Albury 33,000 - Wodonga

Theatre 800 seats Theatrette - 190 seats Auditorium - 1000 seats

2.4%

Bathurst Memorial Entertainment Centre

Bathurst 31,424

Civic Hall -1100 seats Theatre - 642 seats 4 meeting rooms (each 70 seats)

3.5%

Broken Hill Entertainment Centre

Broken Hill 20,440 Auditorium - flat floor 700 seats Meeting rooms

3.4%

Dubbo Regional Theatre & Convention Centre (under construction)

Dubbo 40,000 - Dubbo Catchment - 120,000

Theatre - 500 seats Auditorium - 800 seats Civic Centre auditorium 950 seats

2.4%

Glasshouse Performing Arts Centre (under construction)

Port Macquarie

72,440

Regional Art Gallery Theatre - 606 seat Exhibition-Performance Studio Multi-purpose rooms Community Workshops Café

0.8%

Griffith Regional Theatre

Griffith 23,805 - Griffith Catchment 42,300

Theatre - 526 seat Function Room - 120 seat

2.2%

Illawarra Performing Arts Centre

Wollongong 195,678 Lyric Theatre - 515 seats Theatre - 222 seats

0.3%

Manning Entertainment Centre

Taree 45,145 Theatre - 505 seats 1.1%

Newcastle Civic Theatre, City Hall & Playhouse (3 venues)

Newcastle 141,753 City Hall - 800 seat auditorium + 6 function rooms Theatre - 1520 seat Playhouse Theatre - 205 seat

1.1%

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Orange Civic Theatre & Orange Function Centre (2 venues)

Orange 35,446 Theatre - 520 seats Function Centre - 800 seats

1.5%

Shoalhaven Cultural & Entertainment Centre

Nowra 93,000 Retractable tiered seating over flat floor space Theatre - 930 seats / 1000 flat Theatre - 192 seats 2 meeting rooms 2 rehearsal rooms

1.0%

Tamworth Regional Entertainment Centre (TREC)

Tamworth 55,900 5,100 seat - mixed flat floor & tiered seating 300-350 seat theatre under construction

9.1%

Wagga Civic Centre Wagga Wagga

54,845 Theatre - 488 seats 0.9%

* Estimated by dividing seat capacity of largest performance space by the population of the LGA in which the venue is located.

14.1  Case Studies   Information on the management structure and operating performance of these regional centres is summarised below. Illawarra and Newcastle are not included due to the size of the population, while Tamworth is not included as the TREC is operating at a different scale and was designed to accommodate the Country Music Festival. Albury Convention & Performing Arts Centre Theatre 800 seats, Auditorium - 1000 seats, Theatrette - 190 seats ACPAC was one of the first centres developed in regional NSW, with the venue now being more than 40 years old. Initially the venue was operated by Council and incurring significant losses. To 'contain' the loss Council brought in a management company, RANS Management. The Company operated the venue for a number of years, before the Company collapsed. Council then opted to run the venue in-house as part of Community & Recreation Services. The venue operates with 6 permanent staff plus casuals. Its annual salary budget for full-time staff is in the order of $320,000 per year with a further $90,000 for casual Bar, theatre and function staff, with some of the labour costs recovered from hirers. Staff are employed under the Local Government State Award. Catering is tendered out. In 2007/08 the Centre generated in the order of $1.5m in revenue, with an operating cost of $1.8 million ($300,000 loss). In 2008/09 Council has budgeted $1.4m in revenue and $2.1m in expenditure ($500,000 loss). Council budgets to subsidise the venue by $300,000 to $600,000 per annum. Due to its age, ACPAC carries no debt or building depreciation charges. The venue is tired and in need of major refurbishment. Albury has a professional theatre company (Hot House Theatre Company) plus two amateur theatre groups that use the Theatre. The town is also popular for conferences and meetings. Albury does not have a Friends Group or advisory committee involved with the venue. Bathurst Memorial Entertainment Centre Civic Hall -1100 seats, Theatre - 642 seats, 4 meeting rooms - each 70 seats (amalgamated to form 2 larger rooms of 150 seats) Bathurst Memorial Entertainment Centre incorporates the former Town Hall plus a 650 seat theatre. The Centre is operated as a business unit of Council. The Centre has 6 full-time staff, 2 permanent part-time box office assistants (1 fte) and 8 to 10 casual staff. In addition, the Centre currently has a government funded Creative Producer who is setting up a performing arts programs for the

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community. The Centre has around 40 volunteer ushers, however is moving towards employing casual ushers Staff are employed under the Local Government State Award. Council budgets around $600,000 to $800,000 per annum to subsidise the Centre. In addition, Council subsidises community use of the Centre, with not-for profit groups and educational establishments receiving discounts of 20% and 40%, respectively on hire fees. The Centre operates the Bar and candy Bar. There is no on-site caterer with venue users able to hire the kitchen and bring in professional caterers or chefs from local restaurants and licensed clubs. Due to health and safety considerations, the Centre does not hire out the kitchen to non-qualified users. The Centre does not provide any crockery, cutlery, linen etc, with the caterer having to supply these. The Centre Manager would prefer to have an in-house caterer however this is being met with resistance from Council. The Centre has a small Friends Group. The Group is a sub-committee of the local Arts Council. Its main role is in audience development and value adding with the Friends organising functions and activities (eg guest speaker, activities for school children etc) to value-add to performances, Broken Hill Entertainment Centre Auditorium - flat floor 700 seats, Meeting rooms Broken Hill Entertainment Centre was built in 1970 and incorporates a flat-floor auditorium (700 seats) plus meeting rooms. The Centre is operated by Council and is managed by Council's Event Manager who is part of, and based with, the Tourism Unit. The Centre has a full-time Supervisor and Technician and a number of casual staff. The Centre runs the Bar and candy Bar during and after shows. At other times (eg for functions and conferences) the hirer can hire the Bar (including equipment, glassware and cool room) and organise a temporary liquor licence. The kitchen is included as part of the venue hire fee with hirers able to cater themselves or bring in a local caterer or chef. The Centre incurs an operating an loss of around $300,000pa. Due to its age, the Centre is fully paid-off and depreciated. Dubbo Regional Theatre and Convention Centre Theatre - 500 seats, Auditorium - 800 seats, Civic Centre auditorium 950 seats The Dubbo Regional Theatre & Convention Centre is currently under construction and due to open in 2010. Council is proposing to operate the Centre in-house and is currently advertising for a Venue Manager. Council is proposing to employ 5 full-time staff plus 2 part-timers (1.5 fte) and casuals to staff the centre. Council has budgeted $547,200 (plus on-costs) for salaries. The Manager will be employed at an Executive level with no provision for overtime. Staff will be employed under the Local Government State Award. Council is proposing that hirers can bring in professional caterers, with caterers paying Council a kitchen and equipment hire fee plus a fee per head for all meals served. Council is budgeting to lose around $2.088m pa annum in operating costs, plus debt servicing costs of $1.733 million, with the losses reducing as use of the Centre increases. The Venue Manager will be developing a season program which will incorporate a diversity of cultural events. In addition Dubbo Arts is expected to continue to bring cultural shows to Dubbo. This special interest group currently brings 4-5 shows to Dubbo each year, with the group booking venues and taking the risk on the shows that they bring in. Dubbo City Council has received inquiries from performing arts based groups in the community who are interested in providing volunteers to assist the Theatre in return for free or discounted tickets to performances. At this stage Council is reluctant to use volunteers, however this issue is yet to be determined.

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Glasshouse Performing Arts Centre, Port Macquarie Regional Art Gallery, Theatre - 606 seat, Exhibition & Performance Studio, Multi-purpose rooms, Community Workshops & Café The Glasshouse Performing Arts Centre is part of a cultural precinct. The Centre is under construction and due to open in June 2009. The Theatre will be operated in conjunction with the Regional Art Gallery, with Council employing all staff. To date, staff have been employed on individual agreements. The Theatre will have 8 permanent full-time staff, plus a number of permanent part-time and casual staff for front-of-house operations. Council is budgeting around $800,000 for salaries. Council is planning for an operating loss of $1million per annum. In addition Council will be servicing a $26m loan, with depreciation of $2m per year, and a commitment to a refurbishment reserve of $600,000 per year. The catering is being out-sourced initially, with the caterer to operate the Bar. The Bar operation is likely to be brought back in-house once the venue is through the initial establishment phase. The Theatre has set up its own ticketing system (cost $30,000 to establish) and also pays for an internet ticketing portal for which it pays 70 cents per ticket sold over the internet. The Theatre has a patron and donor program and is actively pursuing sponsorship and grants. The Centre inherited a Friends of the Gallery group which provides volunteer tour guides in the Art Gallery. Volunteers will not be used in the Theatre. The 'Friends' is being restructured to operate along the lines of loyalty-rewards program. Griffith Regional Theatre Theatre - 526 seat, Function Room - 120 seat Griffith Regional Theatre is operated by Griffith City Council, with the venue operated in conjunction with the Art Gallery. The Cultural Director manages both venues, spending approximately 60% of his time managing the Theatre and 40% in the Gallery. In addition, there are 4 full-time theatre employees, plus two permanent part-timers (1 fte) and a Marketing and Education Co-ordinator for both the Theatre and the Gallery. The Centre has minimal demand for catering, however when catering is required, it is organised by Theatre staff from local caterers, restaurants or cafes. The Centre is subsidised by Council, with the subsidy being in the order of $400,000 per annum plus capital works. Manning Entertainment Centre Theatre - 505 seats The Manning Entertainment Centre is owned and operated by Council. The Centre has three full-time staff (Manager, Technician and Trainee) plus a part-time FOH Manager. The Manager's base salary is $63,000pa. The Centre has a Bar and kiosk but no catering. Ticketing is undertaken by a video store in Taree. The Bar is operated by a Bar committee of volunteers who report to the Centre Manager. In addition, the Theatre has around 50 volunteers who assist with ushering, stage management, cleaning and operating the kiosk. The volunteers are co-ordinated by the FOH Manager. Council advised that the volunteers are aging and reducing their hours, and that it is becoming increasingly difficult to find new volunteers. The Centre is fully paid-off and depreciated. Council budgets around $285,000 to $400,000 per year to meet the shortfall in operating costs. The operating costs include some up-grading expenses (around $70,000 pa). For 2008/09 Council has budgeted around $264,000 for income and $621,300 for operating costs ($367,300 loss).

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Orange Civic Theatre & Orange Function Centre Theatre - 520 seats, Function Centre - 800 seats Orange City Council owns and operates three function centres - the Orange Civic Theatre (tiered seat performing arts theatre), the Orange Function Centre (flat floor banquet space) and a small function room at the Orange Botanical Gardens. Management is undertaken in-house by an Events Unit. The Unit has 5 full-time staff plus 4 part-time box-office sales / front of house staff and a caretaker who is based at the Function Centre. The Manager is paid in the range of $70,000 pa plus superannuation. The Theatre has a preferred caterer in place. Hirers can hire the kitchen and use their own caterer at the Function Centre and the Botanic Gardens Function Room. The venues are more than 20 years old, with the loans fully repaid and most items fully depreciated. Council budgets for an operating loss of around $600,000 to $700,000 per annum. Council charges a levy of $1.50 per ticket sold with the funds raised going into an asset replacement fund for the Theatre FF&E, Shoalhaven Cultural & Entertainment Centre Theatre - 914 seats / 1200 flat floor, Small Theatre - 192 seats, Rehearsal Rooms (2), Conference Rooms (2) The Shoalhaven Cultural and Entertainment Centre is a new a venue. It operates as a Business Unit of Council, with Council deciding to adopt this management structure for the first few years of operation, with the possibility of moving to a company structure in the future. The Centre currently has 4 full-time staff and 60 casuals, with a proposal to bring on another 2 full-time staff this financial year. For 2008/09 Council is budgeting $1.55m in income and $1.85 in expenditure (operating loss of $300,000 pa), plus loan repayments and depreciation. Council has also budgeted around $300,000 to subsidise community use of the centre. Wagga Civic Theatre Theatre - 488 seats Wagga Civic Theatre is operated by Wagga Wagga City Council. Council employs three full-time, two part-time (40 hours total) and casual staff. The Theatre has a kiosk and Bar which are operated in-house. There is no catering provided at the venue. Hill Centre - Baulkham Hills Shire Theatre - 1550 seats, two smaller flat-floor performance spaces - 250 seats each, studio - 150 seats The Hills Centre is located at Castle Hill in the Sydney Metropolitan Area. The Centre is included as a case study as it is one of the few venues operated under an external management arrangement. The Centre is owned by Baulkham Hills Shire Council. Until 1992 it was operated as a business unit of Council. As a result of increasing losses and political issues (balancing commercial and community use to reduce the loss), Council appointed a management company, Pegasus, to manage the Centre. The original contact was for 10 years, with the contract having recently been renewed for 5 years. Council pays Pegasus a management fee of $290,000 per year. Community access (at reduced rates) is available for 13 days per year with Council determining which groups will get access on these days. Council pays for the maintenance and some of the property costs of the Centre. There is also a capital works agreement in place with Council required to refurbish the venue and update furniture, fittings and equipment as per an agreed schedule. The actual cost to Council is over $400,000 per year. The kitchen at the Hills Centre has been leased out to a caterer who, in addition to providing catering at the Centre, operates an external catering business from the site. The Bar is operated by Pegasus.

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Pegasus has established the Hills Centre Co-operative as a not-for-profit production company which produces quality musicals which are staged at the Centre.

14.2  Main Findings  The Case Studies showed that: In-house management was the preferred form of management. All centres operated at a loss, with the operating loss being upwards of $300,000 per annum. All of the centres had a far larger catchment population from which to draw than The Crossing

Theatre, with less than 1.5% of the catchment population needed to fill the venue.

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15.  MANAGEMENT FRAMEWORK 

15.1  Objectives  In the future management of The Crossing Theatre, Council's key objectives are: To present and promote a range of quality entertainment and cultural activities for residents of

and visitors to Narrabri Shire. For The Crossing Theatre to provide quality customer service - both front and back of house. For the Theatre to be operated as a business, having in place clear policies, systems and

procedures to enable effective and efficient management, operation and monitoring of the venue. To improve the financial performance, with the objective being to minimise and manage the

operating loss. To 'protect' the asset to ensure that it is well maintained and presented. To ensure that the Theatre operation is not politicised. To build community support and use, with the Theatre meeting the social and cultural needs of

the Shire community.

15.2  Management Structure  It is recognised that it may be difficult to attract a qualified and experienced Theatre Manager to Narrabri Shire. As such Council needs to keep its options open and 'test' the market in relation to: In-house Management - employing a Theatre Manager and staff and operating the Theatre as a

business unit of Council External Management under a management agreement arrangement. It is recommended that Council proceed simultaneously with both options. Expressions of Interest to manage the Crossing Theatre should be called from venue management companies. At the same time, the position of Theatre Manager should also be advertised to assess the level of interest and the calibre of the applicants. Expertise and Experience Required The Theatre Management (either in-house or an external management company) will require expertise and experience in the areas of: Expertise & Experience Required Duties / Responsibilities Strategic planning and policy formulation

Preparation of Business Plan & annual operating plans Input into Council's Management Plan Budgeting Audience / Business Development Programs Policy development, including:

- Programming / content - Education & public programs - Use of volunteers

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- User policies - Fees & charges - Risk management - Procurement of services and equipment - Sponsorship & fund raising

Expertise & Experience Required Duties to Include Venue operations and management Financial Management including:

Budget preparation Performance monitoring and forecasts Preparation of quotes Accounts - payable and receivable Purchasing Pricing Financial reporting Management of Staff including: Develop staff structure & position descriptions Recruitment Induction & Training Rostering Performance Appraisals Property asset management including: Cleaning Maintenance of the venue & FF&E Fire & regulatory compliance Procurement / service provider contracts Contract management & performance reporting Security Development & implementation of systems & procedures Customer Service Ticketing Risk Management / OH&S

Cinema operations Programming / film selection Operations

Venue programming Implementation of Programming Policy Liaison with event managers and planners Selection of acts / productions Contract negotiations Production of an annual subscription series Sourcing funds to subsidise cultural activities - grants,

sponsorship etc Business Development - conferences, meetings, exhibitions, functions etc

Identifying potential sources of business Preparation of bids Sales calls Professional Conference Organisation (PCO) services

Marketing & Promotion Market research / patron monitoring Develop and implement marketing plan / strategy for

each area of operation Production of promotional collateral Advertising / promotion - print, radio, television, internet

Food & Beverage Oversee the venue catering, Bar and candy Bar Liquor License / Compliance with Liquor Act / RSA Purchasing Inventory control

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Communications Reporting to Council

Liaison with community groups / stakeholders Negotiations with potential Theatre uses Media / public relations Liaison with State & Federal Government Agencies

15.3  Staff Structure  For in-house management, the suggested staff structure is: Permanent Full-Time Theatre Manager Assistant Manager / Operations Manager Technician Front of House / Box Office Supervisor / Reception Part-Time / Casual Box Office / Front of House Staff Bar Staff Technician It is envisaged that the management functions outlined in Section 15.2 will be shared by the Theatre Manager and Assistant Manager. The positions should be viewed as complementary. For example, if the Theatre Manager concentrates on business development, programming and marketing and promotion, then the Assistant Manager would need to be responsible for the day-to-day management and administration of the venue. Alternatively, if the Manager selected has an operational focus, then the Assistant Manager would need to be business development, sales and marketing focused.

15.4  Food & Beverage Operations  It is recommended that: The Bar be operated by the Theatre using professional Bar staff. The Candy Bar be operated by the Theatre. The feasibility of the café and catering operation be assessed, with the Centre either continuing

with an in-house caterer (if viable) or moving to a preferred caterer arrangement.

15.5  Use of Space within The Crossing Theatre  It is recommended that: Art Gallery The Art Gallery be relocated off-site to a more appropriate venue and that the Exhibition Room

be used for meetings and small functions. Band Room The Band Room become part of the 'useable' space within the Crossing Theatre.

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The Band be given secure storage space for their instruments and equipment adjacent to the Band Room, and access to the Band Room for training.

The Band Room be refurbished and used for meetings, small performances and functions.

15.6  Friends of the Crossing Theatre  The role of the Friends of the Crossing Theatre needs to be re-defined after the Theatre Manager is appointed and the operating and management policies have been formulated (see Section 9.3).