Dundee Rep has warned it will run at a loss for several years after posting an £810,000 deficit in its accounts.
Theatre boss Liam Sinclair admitted government funding will have to “flow” to keep staffing levels at the current level.
The executive director, who also serves as the Rep’s joint chief executive with Andrew Panton, said the theatre would continue to deliver by “holding its nerve” through the coming financial “choppy waters”.
The Rep has just experienced its busiest Christmas season since 2019, recording £250,000 of sales in December and January.
But the pressures of the pandemic, as well as the inflation crisis, means the organisation has had to organise its programmes on a more reactive level.
Staffing levels
The new Dundee Rep and Scottish Dance Theatre accounts, for the year ending March 31 2023, show revenue of £3.5 million, down from £4.3m in 2022.
In 2022 the charity made a pre-tax surplus of £176,100 — made while the doors were closed to the public for part of the year because of Covid.
Mr Sinclair stressed there was no immediate threat to jobs, calling staff at the organisation “our best asset”.
Bosses are being “transparent” as possible with workers, but if more funding was not forthcoming then current levels could not be maintained.
He said: “Our priority is to deliver excellent cultural opportunities for people in Dundee and beyond.
“Part of this project is to keep the integrity of the organisation, to keep jobs secure while we can.
“We have been very transparent with staff about this, it is not a sustainable position unless government flows more money into the cultural sector.
“To retain that level of staffing, we are going to need an enhancement to our funding.
“We are a real living wage employer, but of course all of that comes at a cost.
“We stand ready to do all of the things (the Scottish Government) say they want, we are standing shoulder-to-shoulder with them on that, but they need to fund us at a level that allows us to do that and keeps jobs secure.
“Our intention is to keep a really high quality programme in place for the people of Dundee and beyond.
“But planning it on a slightly more constrained timescale so we can react and navigate the choppy financial waters with as much financial prudence as possible.”
Dundee Rep deficit
As a charitable cultural organisation, Dundee Rep is entitled to tax breaks, which cut the deficit almost in half, to £448,728 last year.
Financial projections made by the Rep’s board suggest the theatre will “run at a substantial deficit” for several years.
But they have confidence there are “sufficient reserves in place” to keep the Rep operational.
Mr Sinclair notes cultural organisations across the UK are feeling considerable financial pressures.
It follows warnings sounded by Dundee Contemporary Arts (DCA), after director Beth Bate said there was a “challenging” £300,000 funding gap.
“It is not an uncommon position for an organisation in the culture sector to be in a deficit at the moment,” he said.
“We were in the Covid recovery phase and then along came the inflationary crisis – all at a point where audience behaviours were resetting.
“There has been an impact for 3.5-4 years we are still navigating our way through.
“This presents a challenge to the business model in a range of ways, including what the financial outturn in any one year might look like.
“There is a very live conversation just now about where standstill funding for cultural organisations has run out of runway.
“Most cultural organisations have not had anywhere near enough uplift in grant funding, in some cases since 2008.
“It certainly has not kept up with inflation.”
Holding its nerve
There would be no “quick-fire decisions” made in the wake of the deficit announcement, Mr Sinclair said.
By “holding its nerve” the Rep could continue providing for the “people of Dundee”.
“A loss is to be expected and it is about how we manage this loss in this point of transition,” he said.
“If our balance sheet can tolerate a loss position for a period, then the right thing to do is to stay steady, delivering the content and getting people to re-engage.
“Get the confidence of audiences back up, deliver on the outreach and social inclusion we are known for and have a track record of, for the people of Dundee.
“We will be looking for increased funding from national government, which is the process we are in at the moment.
“We have to keep holding our nerve that there is a viable future ahead. And you do not always get to that by making quick-fire decisions in the moment.”
The company currently employs 99 members of staff.
In the last financial year, Creative Scotland funded the Rep with £1.9m and Dundee City Council provided £318,000.
