This is a gift to you!

gift box by Norbert Kucsera from the Noun Project

If you are an existing membership company in Los Angeles, this is an amazing opportunity. How could AEA give you a bigger gift than this? Accept it — and flourish!

You can continue doing business as usual with your current membership — and with actors who are members of other membership companies
Those ranks are swelling like never before
The energy, determination and focus in your company have never been higher
You have been guaranteed an advantage over some of the more prominent current competitors, and all future competitors. Let me repeat, you have been guaranteed an advantage over all future competitors
Donors have heard the news, and many are now more likely to donate
There is too much supply in your marketplace, and this real change will probably bring about a market correction, allowing you to stand out — and reap the financial reward for standing out
Many existing limits, obligations and restrictions just went bye-bye
The potential profitability of a hit just went way up
The next few years will be — by far — the best opportunity membership companies have ever been given to work, thrive and flourish

And one recipe to survive is simple. If you simply sock away the tens of thousands of dollars that you have just been given, and use it as necessary, and not begrudgingly, on new contracts that will be required from time to time, your future is ensured well beyond the next few years. I really do believe that is the accurate way to look at it: you have just been given tens of thousands of dollars.¹ And on top of all this, you will have the satisfaction of employing actors, and you will have been part of real change.

Additionally, if you don’t like the new world and its amazing gifts, you just have to disband for 12 short months and then get together again as a loose affiliation of friends.

Or, if the “Plan A” and “Plan B” ideas that I mention above don’t work for you, find another way. You’re correct in observing that you won’t be able to operate in your current manner in perpetuity, but remember that you are creative and resourceful individuals who will find another way, and you’ll turn this opportunity into a business plan where you can pay the required wage.

This large, amazing, unique gift has been laid at your feet. Welcome it. Practice acceptance.² Accept this change (the sooner the better), and get to work. The very critical Phase One is happening right now, and it goes until April 1.

And guess what? There’s another little gift, even if we don’t like talking about this one. You see, if you do screw it up, or if you do your very best and you still don’t survive for reasons beyond your control, you have a scapegoat. Everyone will agree you were great, and that it was all Equity’s fault.

This is a gift — seize it!

I have yet to see anybody talk about the positive financial impact of all of the proposed changes. Consider these back-of-the-envelope calculations.

First, I can only make financial estimates if I make a few assumptions: You play within the Equity rules now, you will continue to play by the Equity rules, and you don’t give actors anything that you are not required to. You sell tickets for $34, but via GoldStar, so really just $17. You have 50 seats in your theater. You put on 4 shows per year. You rehearse for 36 hours per week over 3 weeks. You run each show for 24 performances. One show a year does really well, and you add another 12 performances.

These are my assumptions, some more important to the math than others. Second, consider some of the changes in the new, upcoming LA Membership Company Rule about tickets: Ticket prices. Old rule: $34.99 max. New rule: no maximum price. Complimentary tickets. Old rule: approx 9 comps per member. New rule: no comps required. AEA members at the door. Old rule: half price. New rule: no discount required.

Let’s estimate that these ticket-related changes will combine to allow you to get $3 more per seat, even if only for one of your shows. Maybe you ask for $40 and give them away at half price. Or maybe you say goodbye to Goldstar, because by golly your show is now worth $20 period. Either way, with $3 more per seat on one of your shows, you just increased revenue by $3,600.

Also, you ask $50 for a gala opening night. Your donors and fan base like you, so you sell out and you just increased your revenue by $1,600.

Your show is a real hit, you add another 12 performances. At $3 a seat, that’s another $1,800 in increased revenue compared to the current rules.

Combined, that adds up to $7,000 of increased revenue, for your one hit show. Of course, these estimates will be reduced if you can’t sell the tickets, but I’m assuming at least one of your shows is good and successful as I make these rough estimates. I mean, I’ve seen the enthusiastic full houses when something rocks.

By the way, this $7,000 of increased revenue goes into a pot. You save it.

Now consider that the Equity proposal changes other rules, which are not directly related to tickets. These will surely add value to your bottom line, as well. Soon you’ll be allowed 10-out-of-12 techs, soon you can run forever, soon you’ll have no requirements about future rights, soon it will be okay to ask members to pay dues, etc. etc. Let’s say all these things impact your bottom line by $1,000 per show, regardless of its success. This is a wild-ass guess, but you’ve always insisted these things have been real constraints in the current world, so I can only conclude that they must have some real financial value. Arbitrarily, I say a grand. It might be a helluva lot higher. If you don’t play within the current rules, it could be much lower. I’m open to hearing other numbers. Whatever number it is, it goes into a pot.

Okay, let’s add it up. You put on 4 shows a year, but only 1 is very successful and able to take advantage of all this new revenue. So all 4 shows will improve by $1,000 and 1 will improve by $7,000 above that. That’s $11,000 more revenue per year.

Moving forward, you won’t be adding company members after April 1, 2015, which is a real change, but that won’t really have a direct impact on your shows for about 3 years. That is, for 3 years, you’ll choose material differently, more precisely suited to your 2015 membership. Most casts now seem to be exclusively made up of your company, so it seems a good assumption that you’ll cast strictly within the membership for a few years.

Fast forward past the next 12 shows, when you realize you need a supporting cast member that cannot be found within your company. By now, you’ve had 3 shows that did really well, and 9 that were not able to take advantage of new ticket revenue, and as we saw above you now have a pool of reserves of $33,000. At that time, you will utilize the 99-seat Agreement for the first time, and you will pay this supporting cast member a salary based on minimum wage.

It’s a supporting role so she is in half of the rehearsals, and she is hired for the best-case scenario of one of your hits, therefore you’ll pay this Actor $486 for rehearsal and $702 for those 36 blockbuster performances. And this $1,188 salary will come from your pool of increased revenue you’ve set aside for just such an occasion. Recall, that pool will be $33,000 (plus interest) at this point. Except wait! She’s really great, your show is really great, and that pool goes to approximately $39,000 with this show, even accounting for her new salary.

Now, you may be worried that because she is so good, you might go dark one night when she’s shooting a TV or film role. But that can and does happen now with your current members, so we can only deduct $150 ($3 higher ticket price of a full house) from your bottom line if this happens.

So, it seems that you could add 2 contracts per show for all of your shows going forward for quite some time to come, and this pool of reserves will be there to pay for all those contracts. Further, this all assumes that you simply keep your same business model and you only have one successful show per year. There are ways that you can change your business model and further improve your bottom line. Your company is run by creative and resourceful individuals who will find a way to thrive after Council adopts these proposed changes on April 21, 2015. ↩
Council approved this unanimously, the vote is advisory only. Do the math. This gift is coming. Those who practice opposition at this point are spending energy for naught. Welcome it. Acceptance is the key. ↩

Footnotes