The cancellation of a regional festival franchise in Riviera Beach FL and cutbacks by the City of Chicago at its several festivals suggest that city-managed festivals may be the first festival sector to be impacted by the recession. Of course, every festival producer is operating in a new economic environment, but most long-running events will be staged as usual in 2009. Smart producers are tightening their belts, expecting that attendance will be down, and hoping it's a one-year phenomenon.
Some of the nation's top festivals are city run—in some cases wholy produced by the city's department of cultural affairs (or some such) or produced in partnership with a non-profit festival organization. Cities may produce festivals as an expression of civic pride, to promote tourism and economic activity, or for other reasons. Successful events reach a point of sustainability where the funding necessary is negligible or even cash-flow positive.
After nine years, Riviera Beach was not yet at that place. In theory, the city was supposed to foot the bill for a reasonable $75,000 of seed money per year. But in 2008, the festival went in the red to the tune of $400,000 and the city ended up eating it. This time around, the festival managers put forward a scaled-down proposal, but budget-minded city council members pulled the plug on this year's festival.
No doubt city officials must make prudent budgetary decisions for the upcoming economic downturn. But festivals do play an important role in spirit and morale of a community. Far-sighted cities will understand the value of maintaining their festival traditions, perhaps by scaling back as Chicago has done to ride out the next season or two.
The situation is dicier for destination festivals like all those launches from last year. Both Pemberton in British Columbia and Rothbury in Michigan are unsure at this point. Pemberton's way has been cleared by a Canadian court decision, but producer Live Nation has not yet said if it intends to back the event.
We'll write more about these matters in future Economy Watch reports.
