1. 1 Missoula Performing Arts Center Feasibility Study PHASE TWO: Business Plan Presentation April 2004

2. 2 Project to Date Webb Management Services was hired to conduct a feasibility study for new performing arts facilities in Missoula. The first phase of the study, the needs assessment, suggested the feasibility of the following: A 1,400 to 1,800 seat multi-purpose hall. Additional small spaces for performance, rehearsal, teaching and special events.

3. 3 The School District is committed to the project. That means: Use of the big hall Use of smaller rooms Locating programs in the Center The sponsorship of educational programs in the Center, including artists heading out and students coming in. The location of administrative services in the Center The Role of the School District

4. 4 A number of local organizations have come forward to express their interest in joining up with this project. That could mean in the building, around the building or simply using the building. Groups include: Childrens Museum Art Museum Natural History Center All having something to add to the project. The question is how to move forward with one or more of them. Other Partners

5. 5 Criteria for Evaluating Potential Partners: Will they use components of the PAC? Can they bring capital and/or operating funds? Does their presence animate a building or district? Is their program/activity complimentary to the PAC? Does their inclusion strengthen the PAC project? Issues for each: Do they need to be in or near the PAC? Does the PAC timing and location affect their interest? Other Partners

6. 6 Here we investigate the operating and financial implications of new facilities. How should the Center be owned and operated, and how will it perform in financial terms? We have once again spoken with arts and cultural groups, regional presenters, educators, and civic, community and business leaders in Missoula. We have also advanced our research on comparable facilities and communities. Business Plan Scope

7. Comparable Projects

8. 8 Note the following lessons from the operation of these facilities: There is tremendous variability in the financial scale of facilities and their performance, affected mostly by presenting and the level of activity. More than anything else, the way the building and its operation are funded drives how the building is owned and operated. Performing arts centers succeed for many reasons, but a common thread is that they are all professionally managed and are programmed and promoted effectively for their community. Comparable Projects

9. 9 Ownership If the project proceeds on the Riverfront Triangle site, the land would be owned by the City of Missoula. Ownership for the building should be worked out according to what form of entity is best positioned to raise funds to build and sustain facilities.

10. 10 Operating Goals Given our research here and our experience with comparable projects, we would propose the following operating goals for the Center: As busy as possible. Accessible and affordable for local and regional arts groups, educational institutions and presenters. Annual funding requirements should be kept to a level sustainable with identified financial support. Opportunity for educational and artistic collaborations and partnerships within the region.

11. 11 A scheduling charrette was held as a part of our planning process. A number of community organizations participated. Our objective was to inform operating and financial decisions with community input. Important issues for users: Availability Balancing community and touring demands Scheduling priorities Cost of access Residency and capacity building There are limited resources to pay for use of facilities. The Scheduling Charrette

12. 12 There are a number of options for the operation of the Center: Private Sector: New or existing arts group (e.g., the Symphony) A school or college Commercial operator Public Sector: The City Quasi-public State or County Operating Options

13. 13 We recommend the formation of a new 501c3 organization to operate the Center with a contractual relationship with the City A non-profit has the ability to fundraise as well as accept ongoing support from the City. A new non-profit can be formed to represent all of the key constituencies in the community. Non-profits are transparent. Operator Recommendations

14. 14 Presenting Events Presenting activity is critical – where the operator buys and promotes events in the Center. This should consist of a combination of film and live presentations such as speakers or concerts. The presented programming must complement community users and be programmed for the area. Discussions with promoters: Would prefer something larger than 1,500 seats, but are excited about any new facility in Missoula – there is a definite need There is a strong audience for touring Broadway in Missoula – most past seasons have sold out Seasons could expand from 4 shows to 8 shows per year for each presenter with the right venue A high quality venue in Missoula would increase the possibility of bringing in more touring shows Sponsorships revenues for presented are also important.

15. 15 Non-arts rentals are a critical source of earned income and a means to broaden participation in the facility. We have projected corporate, civic and community uses of the facility based on: The limited inventory of event spaces now available Positive feedback from community caterers and other event planners. The assumption that the Center can physically accommodate more events. The addition of sales staff to aggressively promote the facility to potential renters. Event Rentals

16. 16 One challenge of operating cultural facilities is that they require highly specialized staff who are deeply committed to this work and are skilled at working in a non-profit, volunteer environment. The critical hiring decision is the General Manager. Though there might be good candidates in Missoula, we would encourage a broader search for the individual who will fit the job and the community. Also critical to the operation of the Center will be volunteer and internships efforts, supporting house and technical functions. Volunteer opportunities for citizens should be pursued and promoted aggressively, especially through the many local colleges and schools. Staffing Plan

17. 17 Organization Chart This is a provisional organizational chart for the hall that shows the relationship between the senior management and staff. The timing of hires will be largely a function of fundraising success.

18. 18 We have developed pro-forma operating forecasts for new facilities for a base year of operations, typically the 2nd year after the opening when operations have stabilized. We have constructed these estimates on the theory that activity (renting and presenting in the spaces) drives revenues and expenses. The pro-forma is intended to answer the basic question of what will it take to sustain operations of the Center? It is also offered as a live tool that will allow the Client to test the financial implications of various operating scenarios. All estimates are in 2004 dollars. Pro-forma Operating Budget

19. 19 Activity

20. 20 Earned revenues include rental activity, box office proceeds from presenting & rentals, income from food, beverage and special events, user fees such as cleaning, and a surcharge to ticket buyers. Earned Revenues

21. 21 Operating expenses include presenting (the direct costs of bringing shows to the building), building services, facility operations, administration and the ticket office. Operating Expenses

22. 22 With operating revenues of $1.193M and operating expenses of $1.69M, the Center covers 71% of operating costs with earned revenues, leaving an annual funding requirement of around $498,000. Result of Operations

23. 23 Funding Scenarios

24. 24 One of the keys to success for this project will be how local organizations prepare for the challenge and opportunity that new facilities represent. This must involve program development, audience development, staff development, and board development. We believe that our Client, together with groups like the Cultural Council,should take a leadership role in helping organizations prepare for new facilities. Institutional Preparation

25. 25 A very important initiative in the short-term. Potential leadership by the Cultural Council. Growing and developing festivals. Summer residencies for national performing arts organizations. Cultural Tourism Plan

26. 26 ltiplier) Effects New arts facilities can have a substantial economic impact on the community, including the impacts of construction and the impacts of the operation. A critical element is the ancillary spending associated with the Center as attenders eat, drink and/or shop before or after a performance. All of these impacts are then subject to a multiplier to reflect how those funds are spent and re- spent in the economy. Economic Impact Analysis

27. 27 Construction Impacts

28. 28 Operating Impacts

29. 29 Ancillary Spending Impacts

30. 30 Fiscal Impacts

31. 31 Conceptual design work Securing the site Consideration of the potential for commercial space in the program The further development of a funding plan Build and broaden the leadership group Next Steps