Financial Models and Sell-Off fees

Hire Arrangement

The producer will hire a venue and take the full box office risk on the performance or season.  The presenter (or venue) receives a fixed hire fee and the producer (or promoter) receives all box office income.  The producer is responsible for all costs associated with creating and presenting the work.  In some instances, the venue/presenter may provide some marketing services as part of the hire agreement.

Risk-Share Arrangement (door deal)

Negotiated on a case-by-case basis, where the costs (and the risks) are shared between the producer and the presenter.  Both the producer and the presenter are invested in the box office success of the performance or season.  Often the extent of risk or 'split' is based on the expense incurred by each party to make and present the work.

Sell Off Model

The presenter buys the show from the producer and the presenter takes the financial risk on the box office. The fee paid by the presenter comprises of the cost to create the work and the cost to perform the work:

Remount
The total cost of remounting the show is shared amongst all the presenters for a tour and forms the first component of the sell off fee.  The remount period is no longer than two weeks of rehearsal (remount is not creative development of a new work or full re-rehearsal of existing work). Remount expenses include:

• performers' wages for re-rehearsal period
• director's fee for re-rehearsal period
• rehearsal space for re-rehearsal period
• set maintenance, or construction of a new set suitable for touring
• designer's fees to revise lighting and sound plans to suit touring venues
• management/administration fee for re-rehearsal period

Weekly costs (or running costs)
The second component of the sell-off fee is the weekly fee, which may also be referred to as the running costs.  These costs are incurred by the producer for performing the work and are calculated per week on tour.  The expenses include:

• wages for the touring company (including performers, production staff and creatives on the tour)
• administration costs (including insurances, phone, internet usage on tour)
• set, prop and costume maintenance
• creation of marketing materials (if the producer is to supply printed marketing, then printing costs can also be included)
• documentation

 
Touring costs
The cost of touring the show, referred to as the net touring costs, include freight, touring allowances, accommodation and travel costs.  The net touring costs are either met by funding from government sources (eg Queensland Government though the Playing Queensland Fund, or Australia Council through the Playing Australia Fund), or added to the sell-off fee.

Touring costs include:

• transport (flights, excess luggage fees, ground travel, vehicle hire, fees for drivers, freight, petrol etc)
• accommodation for touring party
• living away from home allowance. This is a fee paid to the touring cast and crew to help cover additional expenses incurred personally by being on the road. These fees are payable under federal award conditions
• production equipment essential and specific to the work that managed venues will not be able to supply
• tour coordination fees

Royalties
As well as the sell-off fee, some shows require a royalty payment to be made to the producer. The royalty is a fixed percentage of the income received from ticket sales (the total box office income, minus booking charges, credit card fees and GST) and is usually between 5% and 15%.

The royalty is a payment to cover the work of artistic staff involved in the creation of the production (usually writers, directors, set, costume, lighting and sound designers).

Calculating The Sell-Off Fee

The proportion of the remount costs and the weekly costs applicable to the particular presenter (including performances and bump-in time) is then added together to determine the sell-off fee. It is common for the fee to be finalised after the draft itinerary has been developed.  However, the producer should be able to offer an estimated weekly cost and remount cost when making a show available for touring.

To calculate your sell off fee, you must consider the amount of time required for bump in, and realistic travel times between venues (remember travel counts towards the working day).  Can you really do two different venues in two days, or will you need a travel day in-between?  Also remember, some presenters / venues may want the show for one night, some presenters may want the show for two nights, some may want the show for an entire week.  A rough guide to calculating fees is below, but remember, this is a guide and final figures must be calculated for your show, based on a draft tour itinerary and venue requirements.

• 1 day buy = 25% to 45% of the weekly fee
• 2 day buy = 50% to 60% of the weekly fee
• 3 day buy = 65% to 70% of the weekly fee

Example

• REMOUNT:  Remount wages for one week for 5 people (3 performers, one technician and one director) plus venue hire = $7,000.  The producer has interest from six venues and aims to tour to the six venues over 3 weeks. Therefore remount is divided by the six venues and each venue would need to pay $1,200 towards the costs of remounting the show.
• ESTIMATED SELL OFF FEE: Wages for four people on tour (3 performers and one technician) plus weekly costs (administration, consumables, production hire, marketing etc) = $12,000 per week on tour. The producer could have estimated the costs of the shows using the following (shown in column C in the draft itinerary below):
  o    1 day buy = 40% of the weekly fee = $4,800
  o    2 day buy = 55% of the weekly fee = $6,600
  o    3 day buy = 70% of the weekly fee = $8,400
• WEEKLY COSTS CALCULATED PER PERFORMANCE: Wages for four people on tour (3 performers and one technician) plus weekly costs (administration, consumables, production hire, marketing etc) = $12,000 per week on tour. Weekly costs for three weeks = $36,000, divided by the 10 performances = $3,600 per performance (shown in column D in the draft itinerary below).
• DRAFT ITINERARY:
  Venues on tour = 6
  Performances on tour = 10
   

 
References
APACA (Australian Performing Arts Centres Association): Guide to Touring, September 2013
Arts on Tour: To Present or Not to Present, That is the Question, Factsheet #4