Economic Impact of Theatres is Substantial
From the Summer 1995 U.S. Outdoor Drama, pages 1-3
by Ed Devany
Although The Lost Colony (Manteo, NC) was born when a tiny out-of-the-way community wanted to put on a pageant to celebrate its history, its modern-day equivalents have grown into an "industry" comprised of close to 100 outdoor theatre companies all over the U.S. Closely affiliated with tourism, the nation's second largest industry, today's outdoor dramas have a powerful economic impact on their local areas and often their regions and states.
This is relatively easy to see when examining the effect of The Lost Colony on the once isolated Manteo area which, since 1937, has grown into a major coastal resort in large measure because of the popularity of the drama. But, to obtain a clearer picture, remove the ocean and beaches from the equation and consider the case of Eureka Springs, AR, home of The Great Passion Play which, in 1994, played to 248,000 paid attendees, bring in $2,500,000 in ticket revenue. The Great Passion Play's chief executive officer Robert C. Foster states unequivocably, "We're definitely the backbone of the Eureka Springs economy. Three-hundred of the town's total population of about 2,000 are in the play," which recently launched its 28th season in April. Foster continues, "If we went back to a pre-play economy, it would be devastating." The economic impact of this, the nation's largest religious drama, affects the entire community directly and indirectly -- from the tax base, municipal services, local businesses, and schools to individual quality of life.
As population and area size increase, economic impact is harder to determine though no less important. Most outdoor dramas measure direct economic impact by adding known income from three major areas: admissions, concessions and tourist sales (i.e., overnight lodging, meals, transportation, retail sales, etc.). Audiences are further broken down into local, out-of-town, out-of-state, FITs (free independent travelers), overnights, groups/motorcoaches, etc. This allows an accurate picture of how much is spent and where. Then, theatres include the actual costs of production (salaries, utilities, materials, PR, etc.), all adding up to a substantial direct economic impact as the chart (see below) shows.
Many outdoor productions are created specifically to draw visitors to the area. Because of this, municipalities and state legislatures often contribute funds to the theatres as an investment in and stimulant of the tourist economy. In the case of Anasazi: The Ancient Ones (Farmington, NM), nearly all of its operating budget comes from the city; or, for Mark Twain -- The Musical! (Elmira, NY), a percentage of hotel/motel bed tax earnings.
A study of Anasazi shows that while Farmington spent $184,586 to put on the drama's 37 performances, the direct economic impact of ticket sales, overnights, etc., was $257,500 before using a multiplier effect (of which more will be said later).
In a detailed study by the Utah Office of Planning and Budget, the breakdown of industries affected by the Utah Shakespearean Festival (Cedar City, UT) includes agriculture, mining, construction, manufacturing, transportation and public utilities, trade, finance, insurance and real estate, services and government. According to the report, the Festival "provides employment for 268 people, who earn a total of $3.4 million, and sustain 146 people in addition to themselves. The $3.4 million in earnings is estimated to generate $741,276 in government revenue. Although this provides a livelihood for 414 people in the Cedar City area, these people require government services estimated to cost $659,644. On net, then, the Festival is estimated to have generated $81,632 more revenue than expenditure for government."
Another element often used in determining overall economic impact is the use of the aforementioned multiplier effect, a concept which is difficult for some to accept. A multiplier is calculated to be the number of times a tourist dollar circulates within a community before leaving again. Thus, a dollar paid for an outdoor drama ticket might pass to a lighting technician as salary, then to an ice cream vendor who sells the technician a cone, then to a bulk supplier of ice cream who pays the dairy farmer who pays the feed supplier who pays a store clerk who sends it out of the community as part of a magazine subscription. This suggests a multiplier of six which might be applicable to major tourist centers such as New York City, Honolulu or Orlando but not to the smaller communities hosting most outdoor dramas. The size of the multiplier used in calculating indirect economic impact varies from community to community, but, as a rule, the smaller the community, the smaller the multiplier. Also note: because taxes are involved in most of these expenditures in such calculations, they too are often multiplied.
