Value Added: The economics behind ‘The Nutcracker’ are no fairy tale
By Thomas Heath,
Washington Ballet’s “The Nutcracker” is more than a rite of the holiday season. The annual show’s run accounts for 56 percent of all tickets sold each year by the company.
Those little mushrooms, snowflakes, clowns, dancing rats and sugar plum fairies are the chief reason the ballet can put on shows at all.
“It’s the engine that drives the business,” said Sylvia de Leon, the ballet’s chairman of the board.
That doesn’t even begin to tell the story of how important Tchaikovsky’s Christmas masterpiece is to the 67-year-old Washington Ballet, as well as hundreds of other ballet companies around the United States.
“Nutcracker” performances account for about 22 percent of the company’s $9.4 million in revenue, which includes not only its productions but also all the money it earns from the Washington School of Ballet and direct contributions from special events such as galas.
“ ‘The Nutcracker’ enables us to do the cutting-edge works that allow us to recruit cutting-edge dancers,” said de Leon.
The company needs the money. A couple of years ago, the District eliminated its $1 million annual grant to the ballet. Congress’s $400,000 annual subsidy also is expected to be drastically reduced.
I am fascinated by “The Nutcracker,” and not only its magical music and colorful costumes. Its business model is such a smart piece of marketing.
There’s a “Nutcracker” tea at the Willard Hotel that will net around $65,000. The ballet’s Sugar Plum Shop in the Warner Theatre produces an additional $65,000 on sales of its ornaments, soaps, Santas and soldiers. There are “Nutcracker” partnerships with Tiffany, Georgetown Cupcake, Clyde’s, Old Ebbitt Grill, and Sullivan’s Toy Store & Art Supplies, just to name a few. All told, those ancillary businesses rake in $200,000 for the nonprofit on top of the $2.1 million “The Nutcracker” earns from its 32 or so performances.
Ticket prices range from $29 to $125. Attendance averages around 1,300 per performance at the 1,740-seat Warner Theatre. That comes to more than 42,000 tickets sold.
But putting on a ballet is expensive.
The dancers in the Washington Ballet alone cost around $1 million a year in compensation for “The Nutcracker” and other shows.
The orchestra and other related costs for this year’s month-long run of “The Nutcracker” will come to around $250,000. In past years, the ballet relied on recorded music, but this year philanthropist Adrienne Arsht covered the live music cost.
The ballet pays the Warner around $500,000 for rent and stagehands for the month. Advertising and marketing eat a big chunk of revenue, as does all the producers and ballet production people who help coordinate the performance.
Then there’s unforseen costs such as weather. A blizzard two years ago resulted in $150,000 in lost revenue because the ballet refunded some tickets.
After costumes, lighting, rentals, insurance, sound, transportation and ticketing, the Washington Ballet is left with an “overage” — nonprofit-speak for profits — of $900,000.
While “The Nutcracker” is the big cash cow, the four other major productions the ballet puts on during the year at least break even because of a finance committee that has been relentless about driving down costs.
The $900,000 instead helps pay for the dance company’s various good works, including its presence in many D.C. public schools as well as its Anacostia campus, where it teaches ballet to more than 200 children. But the real genius of the “Nutcracker” business model is connected to the children.
The children’s piece of this economic puzzle didn’t sink in for me until I went to the show last week and listened to all the families around me, ooing and ahhing as they watched their kids prance around the stage in snowflake and soldier costumes. (A flock left at intermission, which I assume means their kids are only in the first act.)
There are 440 children who are members of the cast. About 30 to 50 kids are in the show each night (each child participates in multiple shows during the run).
So let’s figure it out. Each child’s family, in addition to the proud parents, might have grannies, grandpas, aunts, uncles, friends, brothers and sisters. And they all go to the Nutcracker, some several times (more on that later.)
“You take four weeks of nightly productions at the Warner Theatre, and they all have to eat dinner, park their cars, and all have their brothers and sisters and neighbors, and they go to eat at Chef Geoff’s across the street, and then there are all those bottles of wine,” said de Leon. “This is big business for the District.”
(During the 2009 blizzard, many parents of children in the ballet booked nearby hotel rooms so the kids would not miss performances.)
And the kids keep coming back year after year to be in the show, dreaming of one day becoming the Sugar Plum Fairy or the Cavalier, two of the most coveted roles in the production.
That keeps moms and dads coming, too. By the time the ballet parents are exhausted from buying all the stuff at the show’s Sugar Plum Shop each year, another class of would-be Sugar Plums is waiting in the wings.
(The model works so well that next spring’s production of “Alice in Wonderland” will include about 100 children.)
Raul and Jean-Marie Fernandez are going to 15 performances this year. Fernandez, a local businessman and investor, is going to see more sugarplums than he will see hockey this year, and he is one of the largest shareholders in the Washington Capitals.
Their daughter Sofiais in “The Nutcracker.”
I am seeing “The Nutcracker” three times this year in three different cities, and I don’t even have a kid in the show. I just love the music — and Christmas, of course.