The Southbank Centre is warning that it may not be able to reopen, unless it is able to either secure a rescue package or find a way of providing concerts with larger audiences.
At the moment, the social distancing rules could limit audience sizes in the halls to no more than a third full — which as many cultural and social venues, such as pubs and restaurants are pointing out is financially unsustainable.
The warning comes as the Southbank Centre makes preparations to cancel events from September – November 2020. The organisation is also considering the option of broadcasting concerts from behind closed-doors through Autumn 2020 and Spring 2021.
Even with a full audience, the Southbank Centre relies on a government arts subsidy of around £19 million a year, which represents 37 percent of its annual income to be able to operate, and put on the huge number of free events it also provides. It also absorbs an £11 million a year bill to maintain the Southbank estate, which is actually owned by the government.
With two-thirds of their income from ticket sales and commercial rents wiped out, they’re now projecting a loss of £5 million for this year, and that’s even after it used up all its reserves and saved £4 million in staffing costs thanks to the furlough scheme.
It now warns that there will be a need to make some staff redundant and the organisation will “cease to be a going concern before the end of the year” if further urgent support is not secured.
As it happens, the situation could be both worse and better as a decade ago the subsidy ratio was nearly in reverse, with the subsidy covering 57 percent of costs, and ticket sales the rest – so the loss of ticket sales would be less dramatic, but the reliance on annually begging for government grants is a worrying way to run an organisation.
Over the past decade, the reliance on the grant has reduced, substantially thanks to new ways of generating income, so it can be argued that a top-up to keep the Southbank Centre alive today is simply asking for the shrunken grant to be restored for a while.
Like all cultural venues, they like to tout not just the direct benefit in jobs and tourist revenues for London, but also the intangible benefits that come from providing entertainment, such as attracting businesses to set up in London so staff have a social life outside work, and the estimated £150 million a year in wellbeing value added to society.
The Southbank Centre presents over 3,500 events a year – of which over 40% are free.
The key warning is that under current plans, with a limit of 30 percent capacity in its halls, it would cost more to put on events than to stage them, and it would be less damaging to their finances to keep the Southbank closed until whenever social distancing is a fading memory.
In essence, they could end up having to mothball the Southbank Centre.