The troubled company that runs Leeds Grand Theatre, the City Varieties and the Hyde Park Picture House looks set to be turned into an independent charitable trust.
That’s one of several recommendations on the future of Leeds Grand Theatre and Opera House Ltd (LGTOH) going to a meeting of council bosses next week (Wednesday, 11th February).
They include the immediate appointment of an interim full-time chief executive – to lead the effort to turn around the company’s “current deficit-generating business model”.
A review of the way the company operates was launched by owners Leeds City Council last July following years of significant deficits culminating in a £653,000 bail out by the local authority.
The company is currently wholly owned by the council, but managed ‘at arms-length’ by a board made up of five councillors and four independent people. It’s being recommended that the number of councillors be reduced to a maximum of three in the new set-up.
It’s not being ruled out that the Grand or the City Varieties or both could be sub-contracted out in the future to a commercial operator to run. But that would be up to the new trust’s board, and there’s legal stuff that would have to be sorted, so nothing is going to happen immediately.
Consultants FEI were brought in to help the council draw up its options for the future of the company.
“The FEI report suggested that a commercial sub-contract would be the recommended route but a final decision will lie with any new trust in consultation with the council in its capacity as a funder. It is, therefore, proposed that the commercial option is held in abeyance at this time,” says a report drafted for the meeting.
Hyde Park Picture House
The future of the Hyde Park Picture House – and whether it should continue as part of the umbrella company – is similarly going to be left in abeyance, but a report going to the meeting raises the possibility that it could end up as a social enterprise.
“Although a full, stand-alone options appraisal has not been carried out on the venue it would appear that either a social enterprise or incorporation with other council run venues (in particular linking with Leeds International Film Festival) would be options worth serious consideration, assuming that practical issues including any legal considerations can be addressed,” the report detailing the recommended changes says.
The report suggests that the cinema’s future be looked at by the independent trust “in consultation with the council, the local community and friends groups”.
… and the roof replacement bill
The Leeds Grand umbrella company has been operating at a significant deficit for a number of years and has relied on its reserves and extra cash from the council to balance its books. Its unrestricted reserves have now dried up.
The council has pledged extra funding (over and above the grant it gives the company annually) for the next couple of years to make sure the company remains a going concern.
The financial situation isn’t made any easier by the fact that the company still needs to raise at least £365,000 to pay its share of the costs of the refurbishment of the City Varieties …
… and it’s annual grant from the council is going to be cut from £200,000 to £180,000 in 2015-16 …
… and, according to its most recent company accounts, it’s facing a future bill of up to £2.5m to get the roof of the Grand Theatre building replaced. “The roof is now losing slates in high winds,” said a disconsolate report from the company’s directors lodged with Companies House last month.
While such maintenance work is the company’s responsibility, the tab may end up being picked up by the council, or that at least is how I interpret the following sentence from the council report:
“… the council will remain as the owner of the freehold of the Grand Theatre and as such may be required to support capital investment into the building over and above its strict legal liabilities under the terms of the current lease with LGTOH.”
Experienced theatre manager urgently required
It’s not all bad news.
Since July last year there have been “some very significant improvements”, the report going to next week’s meeting says. “The latest financial reports indicate the potential for a break-even position for the current financial year.”
Which is pretty good going.
It’s going to be a tough call, though, for any new interim chief exec. The report says the post-holder “would require a turnaround period, potentially up to two years, to reconfigure the business model into one that is consistently surplus generating”.
On the question of leadership the consultants’ report is pretty unequivocal. “LGTOH urgently requires a full time, experienced theatre manager as its chief officer. The charity is unlikely to achieve the turnaround it requires without focused leadership able to implement radical changes to the business model,” it says.
There’s no mention in the report of the £178,000 fraud alleged to have happened at the company between 2011 and 2013, which surfaced last year and over which a court case is pending.
It does make you wonder: how did this long-term, major cock-up happen? And is anyone responsible for it?