By N. David Milder
For many years I have thought that older adults — those over 50 — represented a valuable under leveraged asset for many downtowns in cities with populations roughly in the 20,000 to 100,000 range. Given their increasing population size and financial power, I have written an article advocating the development of downtown older adult member communities arguing that they would facilitate much needed greater functional diversity and activation. You can read that article below.
By N. David Milder
We Need More Than Pollyannaish or Wishful Thinking for Our Downtowns to Recover and Thrive
We are in the midst of what many observers have called the deepest crisis this nation has faced in many decades. It has been especially injurious to our downtowns because it has necessitated massive social distancing that makes it impossible for so many downtown entities, — e.g., shops, eateries, offices, movie theaters – to function properly or profitably. In this situation, it is understandable if downtown leaders and stakeholders look for signs that their future will be considerably better. Hope is perhaps the most underestimated, yet essential ingredient of any downtown revitalization or recovery. Still, if our downtowns are to recover, we must face realities and overcome some exceptionally strong challenges, while taking advantage of any new opportunities that this terrible crisis either creates or reveals.
In recent weeks a number of articles have appeared that have been quite pollyannaish about the recovery of our downtowns based on either wishful thinking or sloppy analysis. These puff pieces may be good for instilling hope, and perhaps are even needed. However, they are no substitutes for the kind of critical thinking and contingent planning that we need to start doing now if we are to robustly recover as quickly as possible.
Will Entrepreneurial Gold Dust Really Fall to Spark Our Economic Recovery?
The Wishful Trend. One retail expert has recently written:
“When all the dust settles, the post-lockdown era should provide a boost to downtown areas, in part due to newly unemployed but highly skilled restaurant and retail workers opening new businesses in downtowns where rent prices will trend downward.
The pandemic has left millions of highly skilled workers from the retail and food and beverage industries unemployed and eager to work. Many of these people are highly motivated to start their own businesses, creating an unparalleled pool of talent and potential entrepreneurial interest.
In a recent Forbes article, Bernhard Schroeder wrote: ‘27 million working-age Americans, nearly 14 percent, are starting or running new businesses. And Millennials and Gen-Z are driving higher interest in entrepreneurship as 51 percent of the working population now believes that there are actually good opportunities to start companies.’”1
A Reality Check. However, Schroeder was citing data from the “Global Entrepreneurship Monitor United States Report 2017” published by Babson College in 2018. It must be noted that:
This is not to say that the recovery will not see either new downtown firms appearing or the full reopening of downtown firms that had suspended their operations. The question is how many of these startups and recovering firms can fill downtown storefronts with well activated and magnetic uses? Will they bring downtown vacancies back to acceptable levels? Will they bring customer traffic back to or above prior levels? Or will they just fill a few vacancies with drab uses that attract weak flows of customer traffic? Right now the difficulty of answering those questions is compounded by the fact that we probably won’t know the full extent and dimensions of our downtown vacancy problems until after the CARES subsidies time out, when the downtown operations then have to support themselves from “normal” type operations.
Is There a Real and Strong Startup Trend That Downtowns Can Ride to Recovery? If one goes back to some Kauffman Foundation studies about entrepreneurship in the decade or so prior to Covid19, one sees that there was not any steady trend of growing entrepreneurship. Indeed, there were ups and downs, with some concerns about it stalling or even seriously declining. 6 Covid19 may be sparking a number of startups in industries that help individuals and firms cope with the crisis, but I have not observed, or heard from professional friends, or seen any published reports that claim it is causing lots of new downtown storefront-filling firms to open. There is no data-proven strong startup trend for downtowns, especially in smaller cities, to ride to their economic recovery.
In sharp contrast, there are loads of data to show that remote work increased enormously in response to the crisis and lots of surveys that show that significant numbers of both workers and employers now think their remote work arrangements will continue on into the post crisis era. These are signs that remote work is a trend that has a good chance of lasting. There are no comparable data signals for resurgent entrepreneurship in the sectors that might occupy downtown storefronts, such as retail and restaurants.
Do We Just Sit on Our Hands? The settling of the crisis’s dust may or may not occur anytime soon. Whether it happens quickly or slowly can be pivotal. As John Maynard Keyes famously wrote “In the long run we are all dead.” The full impacts of other trend breezes such as remote work, changes in commuting patterns, and e-shopping may well take a decade or more to play out. They in turn may have big impacts on the demand for downtown storefront spaces, space uses, and occupancy rates.
What will happen to our downtowns during those years? Should downtown stakeholders and management organizations then just wait for the dust to settle and hope that new startup merchants will appear? If not, then what should/can they do?
Contingent Planning
Since it is far from certain that entrepreneurial gold dust will fall from heaven as the Covid crisis ebbs, perhaps it is valuable for downtown leaders to do some contingent development planning about what they can and will do to cultivate the types of small businesses that can tenant their district’s storefronts. Here, again, the variation in local conditions will probably mean a corresponding variation in responses. And prudence suggests anticipating a process of trials, errors, learning and adapting.
Community Supported Enterprises. For many years prior to the Covid crisis, in downtowns and Main Streets that were suffering storefront vacancies, severely weakened retail, and even food deserts, some local leaders created successful solution paths to these challenges. In our Covid economic recovery period, many other downtowns of all sizes may find these solution paths worthy of consideration. These solutions were most apt to succeed in situations where profitable operations were possible, but investors considered the rewards of entering these downtowns or Main Streets lower and riskier than the opportunities they were being offered elsewhere. Some of these solution paths are:
Using such business models, and any riffs upon them, may help many downtowns and Main Streets recover their vibrancy over the next few years. They may be essential components of a New Deal program to revive retail. For more information about many of these business models see The Spotlight group of articles in the forthcoming Fall Issue of the American Downtown Revitalization Review at https://theadrr.com/ that will appear in September 2020.
Creating Supportive Small Town Entrepreneurial Environments.8 While much attention has been given to the creation of Innovation Districts, this concept is so large scale and complicated that it is only really applicable to big city downtowns and neighborhoods that are present in about 349 of our cities. Our remaining approximately 19,000 incorporated places also need a supportive startup culture and environment, but one that is simpler, less expensive to create and operate, and appropriately aspirant in its growth objectives. That is especially true at a time when many, if not most, downtowns will probably be striving to cultivate their own startups to occupy their storefronts. Such a Small Town Entrepreneurial Environment (STEE) might include: social places for new and small business operators to meet and network; access to viable funding sources; effective technical assistance; joint marketing programs, and affordable spaces in reasonable condition. It basically can take many existing downtown assets, such as libraries, bars, coffeeshops, makers places, community colleges, a downtown organization that invests in businesses and has niche marketing programs, etc., to create an informal district-wide business incubator and accelerator, Libraries in particular, are emerging as critically valuable STEE assets. Unfortunately, most downtown organizations do not yet see being actively engaged in small business development and expansion as a proper role for them to play. Nor do they exhibit any comfort or skills in playing that role when they do. A contingent planning effort could focus on how downtown leaders would foster the emergence of STEEs, should the need for it arise. This will likely entail a reappraisal of the roles the downtown organization should and can play.
Small Merchant Training. The Covid crisis has reinforced the growth of two important nascent merchant trends:
A contingent planning effort also could focus on how downtown leaders could encourage and train more of our smaller downtown merchants to use an omnichannel marketing operation that would help them to capture more sales dollars from both local and seldom before penetrated distant markets.
However, even prior to the Covid19 crisis, small merchant training has long been a challenge. In my experience, merchant training programs are often advocated, but seldom effectively implemented. The vast majority of them underperform because they ignore basic merchant needs and behavior patterns. Far too often, they want to EDUCATE the small merchants, and make them, for example, marketing savvy or bookkeepers. That can take a lot of merchant time and effort while providing them with more information than they have any need for near-term or even probably well into the future. Instead, what the merchants want is not to be taken to school, but actual solutions to their specific immediate problems. They want action steps that are credibly viable, affordable and easy to do. They don’t really want courses, workshops, or seminars. And they prefer not leaving their places of business.
Also, in my experience, many small merchants are resistant to any suggestion that they are not doing things as well as they could be done, while others find it hard to ask for help even when they badly need it. Small merchants are often small merchants because of their need for independence and a strong sense of their own efficacy.
Merchant training programs would probably be more effective if they:
Perhaps some of national organizations such as IDA, IEDC, and National Main Street can develop such improved small merchant programs that can then be easily tailored to local conditions. Leaving their development solely to organizations such as SCORE or the SBDCs is a massive mistake. A strong need for such programs existed well before the Covid19 crisis, and will very likely far out last it.
ENDNOTES
1) Robert Gibbs. “After Lockdown, New Opportunities for Downtown Shopping Districts” at https://dirt.asla.org/2020/05/13/the-pandemic-will-lead-to-a-revitalization-of-main-street-retail/ Matthew Wagner wrote an interesting article on the Main Street Blog that also extolled our penchant to be entrepreneurs as a path to recovery, but most of the piece usefully went into the need for various things that I would associate with creating what I called above a STEE. See: Matthew Wagner,” Main Street America. Main Spotlight: COVID-19 Likely to Result in Increased Entrepreneurship Rates” June 9, 2020. https://www.mainstreet.org/blogs/national-main-street-center/2020/06/09/covid-19-likely-to-result-in-increased-entrepreneu
2) Julian E. Lange, Abdul Ali, Candida G. Brush, Andrew C. Corbett, Donna J. Kelley, Phillip H. Kim, and Mahdi Majbouri. “Global Entrepreneurship Monitor United States Report 2017” published by Babson College in 2018, p. 27. https://www.gemconsortium.org/economy-profiles/united-states
3) See: Julian E. Lange, Candida G. Brush, Andrew C. Corbett, Donna J. Kelley, Phillip H. Kim, Mahdi Majbouri, and Siddharth Vedula Global Entrepreneurship Monitor United States Report 2018” published by Babson College in 2019 https://www.gemconsortium.org/economy-profiles/united-states
4) I want to thank Mike Berne for bringing these stores to my attention.
5) See for example: Kate Paape and Bill Ryan, University of Wisconsin-Madison/Extension Division, and Errin Welty, Wisconsin Economic Development Corporation. “A Comparison of Rental Rates Charged for Downtown Commercial Space: A Market Snapshot of Wisconsin Communities”. August 2019 https://economicdevelopment.extension.wisc.edu/files/2019/10/Downtown-Rent-Study-100119.pdf
6) See: “Victor Hwang Testimony Before U.S. House Committee on Small Business, Subcommittee on Economic Growth, Tax and Capital Access,” February 15, 2017
7) See: Norman Walzer and Jessica Sandoval, “Emergence and Growth of Community Supported Enterprises.” Center for Governmental Studies at NIU. 2016. https://www.cgs.niu.edu/Reports/Emergence-and-Growth-of-Community-Supported-Enterprises.pdf
8) N. David Milder. “Toward an Effective Economic Development Strategy for Smaller Communities (under 35,000).”
By N. David Milder
Introduction
These organizations face the same two overarching challenges that all businesses and nonprofits in the nation now face: 1) surviving the crisis and 2) then making any operational changes needed to be successful in the post crisis environment. The legacy layer of conditions for a large proportion of these venues already placed them in grave financial danger that the additional challenges unleashed by the Covid19 pandemic probably will only exacerbate. Their size and business models are two very important variables that impact on their ability to meet these two challenges. The larger organizations are more apt to have or attract the financial resources and staff talent to survive this crisis. Nonprofits usually have a troubling hybrid income model that combines revenues from earned income with contributions from various government and numerous private sector and individual sources. That presents a managerial challenge even for the strongest of them. Another important impacting factor is an industry’s long term trends, as is the case with movie theaters. In many instances, the impacts of the Covid19 pandemic do not have to be all that strong to quickly send financially teetering entertainment and arts/cultural organizations into extremis. Getting them prompt and appropriate assistance will be critical to their survival.
For those that do survive, legal or customer sanctioned adaptions to make them more pandemic proof could pose new operational challenges and financial burdens, especially for those with weaker financial and staff resources. Moreover, the book on what such adaptations might be has only begun to be written, so it is difficult at this time to scope out what the post crisis needs of these organizations might be. However, the more quickly this task is accomplished, the sooner programs can be created to help assure these organizations will operate well into the future.
Downtown organizations should not overlook the needs of these organizations as they also try to help retailers and restaurants.
Looking at Some For Profits
Downtown Cinemas. For many small and medium sized downtowns, their movie houses are one of their strongest assets and their most important entertainment attraction. It is often also a source of considerable community pride. When the conversion to digital projection threatened their local movie theaters, residents in many communities across the nation banded together to raise funds to keep them in business. Saving them unleashed an impressive amount of community action across the nation.
Nevertheless, movie theaters long have been on a rather steady path of decline, and “the totals for both 2017 and 2019 rank as the worst years for movie ticket buying since 1995.”1 Attendance also has been in sharp decline. Over the past 20 years, it has dropped by about 25% nationally, while the population has grown by 15%.2 Making things worse for theater owners, 2019 was the strongest year yet in the number and quality of the movies sent either directly or very early to streaming outlets. Netflix, for example, produced and distributed many films. It also “received the most Oscar nominations of any company (24) for films like The Irishman and Marriage Story”.3 Americans, since at least 1994, have preferred by rather large margins to watch their movies at home to seeing them in a theater (see the table below).4 And they watch more movies per person at home than in movie theaters by a 5 to 1 ratio. Moreover, even the most frequent movie goers prefer home viewing.5
Downtown cinemas can spark a lot of community pride
Movie theaters were immediately hurt by their inability to have onsite patrons during the pandemic crisis as long as social distancing measures are required, or they were closed outright by local governments. Many were already badly financially stressed, and they are unlikely to survive a year or longer recovery period. Long term, they were already likely to be hurt at an accelerating rate by increased studio direct releases to streaming, and consumers’ increased online movie going. Their financial and management burdens will only be increased if they are also forced by customer pressures or legal requirements to install anti- pandemic physical and operational improvements (e.g., reducing seating so they are 6 ft from each other, better air filtration, taking patrons’ temperatures, more frequent and more thorough cleaning, customer spacing on entry and egress).
Any downtown EDO that wants to keep its movie theaters should look at the toolbox of programs that was developed by many downtowns to help their movie theaters cross the digital divide and then have their own program ready to implement. Quick action is often needed when a movie theater gets in trouble. Crowdfunding and forming a community owned corporation to buy and operate a cinema were two of the most powerful tools used.6 The alternative is likely to be trying to find new uses for these empty large buildings. That may be an even more challenging task.
Professional Sports Events. Major league sports teams, these days, are often fairly large organizations that are worth billions of dollars (see table below) that are owned by people who often are billionaires themselves. They also have very significant annual sales and very high proportions of those revenues come from contracts with cable and tv networks. The NFL in 2019, for instance, had a total revenue of about $14.47 billion, with $452.375,000 the average team revenue.7 About 57% of the league’s revenues come from TV and cable contracts, with the remaining 43% coming from fans in the stadiums.
Most Americans do not attend professional sports events with any real regularity. Tickets are just too expensive, or the games/events are too geographically distant. They predominantly watch sports events on TV. Quartz reports that: “The average 2019 NFL regular season broadcast (and there are many of them) was watched by nearly 17 million Americans.”8 In contrast, the total attendance for all of the NFL’s regular season games in 2019 was 16.67 million.9 One may doubt if TV-based fans really care if there are fans in the stands of the arena or stadium. While social distancing directives are in effect, they might be adhered to, in part, by dispersed seating. That, of course, would mean reduced revenues for the teams and venue owners/operators. Heightened sanitation measures for seats, restrooms, and concession stands would also add to operating costs. The flows of fans entering and leaving these venues, and their use of parking, restrooms and concession stands also will need to be regulated while social distancing is in effect. At the moment, most discussions about resuming the play of professional sports games involve no fans attending them in person, an indication that making the needed adaptions in the operations of arenas and stadiums might be either too problematical or difficult.
However, these professional teams plainly have the on-hand financial resources and the financial and political connections to have a very good chance of getting through the crisis and adapting to any anti-pandemic requirements that may emerge in the post crisis period. The TV and cable contracts provide a very important assured revenue stream. “Fanless events” mean reduced revenues, but may also mean significantly reduced operating costs.
Look Out Fors:
Cultural/Arts Venues: Nonprofits
Arts and cultural organizations are being hit hard by the Covid19 crisis. Americans for the Arts on its website claims that these organizations are ”experiencing $3.6 billion in devasting losses.”10 The organization’s recent survey of artists and craftspeople showed that a very large number of their incomes have been squashed by the pandemic. Over two-thirds reported being unemployed. However, unless these artists were hugely successful or working for a corporation, they have long had very modest incomes that had to supplemented by non-arts and culture jobs. That they have long been on the cusp of financial need is evidenced by how long the phrase “starving artists” has been a part of our culture.
“Word Class” Museums in Major Cities. Pre Covid19, many museums in our largest cities aspired to be world class and followed a strong bigger is better strategy comprised of major exhibitions that would attract lots of the tourists who were visiting their city. The result was often overcrowded galleries that impeded art appreciation, big museum budgets that often totaled in the hundreds of millions of dollars, and attendance numbers in the millions that were overwhelmingly the result of-out of- town visitors. For example, here in NYC, 87% of the Guggenheim Museum’s visitors are tourists and that number is 75% at both MoMa and the Metropolitan Museum of Art.11 The pandemic has shut off the entire tourist spigot, foreign and domestic. The museums for the most part are closed to in-person visits, but many are offering online access. Their visitor income streams have been choked. The Metropolitan Museum just announced an anticipated deficit of $150 million. However, many of their board members are titans of their business communities with records of making large donations and having strong connections to our largest financial institutions. The museums’ real estate properties and art holdings (which they normally should not deaccess), are often worth billions of dollars. They have huge capital assets, though they may not be very liquid. Equally important, they have very valuable political, social and financial connections. These arts organizations have proven capability of raising $400 million (MoMA) to $500 million (the Met).
If they reopen while physical distancing guidelines are still in effect, it will be interesting to see how that transforms the long lines of visitors who in the past entered their buildings, paid admission fees, and then stuffed their gallery rooms? Will they, too, strengthen their sanitation efforts. Can they take advantage of this crisis and treat it as an opportunity to make much needed improvements? Many museums in Europe, such as The Louvre in Paris are limiting access to famous works, such as the Mona Lisa, because of overcrowding. The Guardian has reported that: “The Vatican Museums are considering putting a cap on visitor numbers amid fears among tour guides that overcrowding could provoke a stampede unless security policy is changed.” 12
A Curmudgeonly Opinion. I think that these museums have holdings that are far too large – most pieces are not even exhibited – and they are far too crowded. They have lost sight of providing an excellent art appreciation experience and instead seem to focus on cramming as many visitors as possible into their buildings as often as possible. The actual feet on the gallery floors are undeniable and prove the veracity of that statement. Consequently, how they operate needs to be rethought. The Met in NYC, for example, has many galleries that are so wonderful they could be very strong museums on their own – something like Ron Lauder’s Neue Galerie. A visitor then can be have a less crushed and more intimate and relaxed interaction with the art. Entry to them could be more appointment based and limited to a tolerable number per hour. This is how the Glenstone Museum in Potomac, MD works and the Barnes Foundation operated in its former home. These decentralized museums could enliven neighborhoods across a city. If they instead were clustered together, that still would decentralize the entry and existing processes, and reduce the density of visitors in the galleries.
Smaller Arts Nonprofits.
Most Arts Organizations Are Small .13 Most arts organizations are small, with revenues probably under $28,000. In 2012, about 63% of the nation’s estimated 110,000 arts organizations had revenues below $25,000.14 A study done in 2017 estimates that there were 39,292 nonprofit arts and cultural organizations in the USA that had revenues over $50,000.15 This means most art nonprofits will have little or no staff and will very likely either have very few performances or very few hours when they are open to the public. If they rent street level storefronts, when closed, they function as dead spaces that detract from their block faces walkability, while also signaling a lack of vibrancy.
Even when budgets get somewhat higher, the impacts are not likely to be significantly large. For example, the Wyoming Territorial Prison, a museum in Laramie, WY, (population 32,000) reported revues of $90,290 on its IRS Form 990 in 2015, but its annual visitation was about 16,000 (averaging about 2,700 per month) during a season that lasts from May 1st through October 31st. To put that attendance in perspective, consider that the Laramie Main Street Alliance around then held seven one-day events that attracted a total of around 8,250 people.16
There is a real question about whether the positive impacts of these very small arts/cultural venues outweigh their negative ones that is too often drowned out by the advocacy efforts of those who believe that the arts are the engine for economic development in these communities. That is not to say that the arts cannot be a valuable asset, but that knee-jerk advocacy can produce a lot of underperforming or even failing arts organizations that really do little for their downtowns.
A Structural Propensity to Have Deficit Annual Budgets. 17 Roland J. Kushner and Randy Cohen in their National Arts Index 2016 paint a troubling picture of the financial condition of many arts organizations A very large number of them do not have break-even budgets and consequently, raise concerns about their long-term sustainability. According to Kushner and Cohen:
“Arts nonprofits continued to experience financial challenges: The percentage of arts organizations operating at a deficit has ranged from 36 percent in 2007 (during a strong economy) to 45 percent in 2009 (the deepest part of the recession). In 2013, a time of improved economic health, 42 percent of arts nonprofits still failed to generate positive net income—a figure that raises concerns about the long-term sustainability of arts organizations that are unable to achieve a break-even budget. Larger-budget organizations were more likely to run a deficit, though no specific arts discipline is particularly more likely to run a deficit…. (I)t is clear that the budget fortunes of nonprofit arts organizations got worse during the Great Recession and have been very slow to recover.” 18
Consequently, it would seem very reasonable and very prudent for downtown leaders to expect that large numbers of their arts organizations were long primed for being pushed over the edge by the Covid19 crisis.
The Proven Long-Term Uncertainty of Their Revenue Streams. The hybrid model is based on revenues coming from many very different sources and obtained through different means. According to Americans for the Arts: “Support for the nonprofit arts is a mosaic of funding sources – a delicate 60-30-10 balance of earned revenue, private sector contributions and government support.”19
Other research has found a slightly different funding mix. The National Endowment for the Arts (NEA), using data from the Urban Institute and Census Bureau for 2006-2010, found that the revenue sources for nonprofit performing arts groups and museums were:
Earlier, pre-Great Recession estimates showed that earned incomes only accounted for about 50% of the revenues of nonprofit arts organizations.
Perhaps it is best to amend AftA’s statement to read that arts organization funding has been a delicate balance of 50% to 60% earned income, 30% to 40% private sector contributions and 10% or less from government support.
In any case, there is general agreement on the types of funding sources and the fact that there are many of them. In a 2012 study of the factors that challenge the financial sustainability of nonprofit organizations, the RAND Corporation’s authors placed at the top of their list:
“Risk of reliance on external funding sources and streams. In contrast to for-profit organizations, nonprofits in the United States depend on diverse sets of funding sources and streams of funding to sustain their operations. Most nonprofits receive funds from multiple sources (e.g., government, foundations, private donors) and streams (e.g., grants, contracts, membership fees). Substantial cutbacks in both government and foundational funds suggest that nonprofits should develop or revisit their fundraising plans to support financial sustainability.” 21
The hybrid business model both taxes the skill sets of nonprofit managers in organizations too small to structurally differentiate and staff their earned income and contributed income activities, and bets too much of their financial future on the strong generosity of many others. Consequently, nonprofits were easily badly hurt by the Great Recession and the Covid19 crisis.
Saved by The Feds? Americans for the Arts apparently feels that the recent stimulus program can be of great help to arts and cultural organizations. It cites the following programs that can help them.
It will be interesting to see just how many of these arts and culture organizations get enough support from these federal programs to last into the recovery phase. There are about 30.2 million businesses in the US with fewer than 500 employees. To date only about 1.3 million, about 4.3%, have reportedly obtained the SBA loans. Hopefully recent legislations will produce a much higher number.
Looking to the Future. Looking out to the post pandemic phase, the anti-pandemic measures the arts/cultural organizations will have to take and the cost burdens that might add still remain largely unknown, but seem fairly likely to appear.
We have a consumer-based economy, so economic recovery will depend a lot on spending power and inclinations returning to our households. Revenues promise to be a serious problem for these organizations well into the future unless our national economy has an unexpected robust recovery.:
The fact that these arts and cultural organizations continue to have the same problems time after time after time should be taken as a strong signal that the way they have operated is seriously flawed. For me, a major statistical indicator of this is their needed revenue per visitor, which probably is also a good indicator of their cost per visitor since few make any substantial “profit.” Computing from the data in the above table, among those with budgets above $50,000 per year, the revenue per visitor for museums is $72.01 and for nonprofit theaters it’s $56.15. If 50% to 60% of those revenues come from admission fees and other earned income streams, the admission prices of these venues are still probably multiples higher than what local cinemas are charging for their admissions, (a good benchmark for local affordability).
How do these organizations explain the amount of income needed by them that is not market supported? A curmudgeonly explanation are artistic aspirations that are unconstrained by their boards whose members are insufficiently concerned about their fiduciary responsibilities and the long-term well-being of their organizations.
These organizations need a new operational model that should:
Some Take Aways
As a result of the Covid19 crisis, downtown leaders and their organizations need to be concerned about the health and retention of their arts and cultural organizations, not just their retailers and restaurants. Assisting them will often be a very challenging task.
These organizations have congenital weaknesses caused by their size and business model that make them prone to extremis even in none crisis times, but that worsen exponentially during trying times.
Art and cultural organizations have the potential to be more important than ever to our downtowns, as that of retail subsides. However, their financial fragility means that there will be substantial churn in the actual organizations that are present. While some downtown BIDs and Main Street programs have retail and restaurant retention programs, they now may also need one for their arts and culture organizations.
Downtown stakeholders and their leaders should definitely explore using the arts to spark more economic and community development, but they should do so with adequate awareness of and knowledge about the fragility of the organizations they will be working with, and the tendency of artistic aspirations to lead to financial shortfalls and organizational failures.
If appropriate lessons are not learned, then post pandemic, a lot of our arts and cultural organizations may be in worse shape than ever.
ENDNOTES
1) Dade Hayes, U.S. Movie Ticket Sales Dip Nearly 5% In 2019, Reflecting Competition Deadline ,January 17, 2020, https://deadline.com/2020/01/movie-ticket-sales-2019-decline-domestic-box-office-1202834469/
2) Brooks Barnes and Nicole Sperling, “Movie Crowds Stay Away. Theaters Hope It’s Not for Good”, New York Times, March 15, 2020 https://www.nytimes.com/2020/03/15/business/media/movie-theaters-coronavirus.html
3) Same as endnote 1.
4)Paul Taylor, Cary Funk and Peyton Craighill. “Increasingly, Americans Prefer Going to
the Movies At Home: Home “ticket sales” dwarf theater attendance 5-1”. Pew Research Center, May 2006. https://www.pewresearch.org/wp-content/uploads/sites/3/2010/10/Movies.pdf
5) ibid
6) See: Downtown Formal Entertainment Venues Part 4: Movie Theaters post to the Downtown Curmudgeon blog in 2014.
7) See: https://www.statista.com/statistics/193553/revenue-of-national-football-league-teams-in-2010/
8) Adam Epstein. “In the age of streaming, the NFL is the last refuge for traditional TV.” Quartz,
January 30, 2020. https://qz.com/1793242/the-nfl-and-the-super-bowl-are-tvs-last-weapon-against-streaming/
9)See; https://www.statista.com/statistics/193420/regular-season-attendance-in-the-nfl-since-2006/
10) “FEDERAL ECONOMIC STIMULUS RELIEF FUNDS PROVIDE ENCOURAGING SUPPORT TO THE NATION’S COMMUNITY-BASED ARTS AND CULTURE ORGANIZATIONS EXPERIENCING $3.6 BILLION IN DEVASTATING LOSSES” https://www.americansforthearts.org/news-room/press-releases/federal-economic-stimulus-relief-funds-provide-encouraging-support-to-the-nations-community-based
11) See: N. David Milder .“Bryant Park Part 2: a comparison to other entertainment venues on attracting tourists, user frictions and costs to create or significantly renovate” Downtown Curmudgeon Blog, September 27, 2014 https://www.ndavidmilder.com/2014/09/bryant-park-part-2-a-comparison-to-other-entertainment-venues-on-attracting-tourists-user-frictions-and-costs-to-create-or-significantly-renovate
12) Angela Giuffrida, “Vatican considers limit on museum visitors amid safety fears.” The Guardian, Nov. 2, 2018. https://www.theguardian.com/world/2018/nov/02/vatican-considers-limit-on-museum-visitors-amid-safety-fears?CMP=twt_gu
13) This section is taken from: N. David Milder. “Let’s Get Real About*: The Arts As An Important Downtown Revitalization Tool — Redux. Part 1.” Downtown Curmudgeon Blog, June 18, 2017 https://www.ndavidmilder.com/2017/06/lets-get-real-about-the-arts-as-an-important-downtown-revitalization-tool-redux-part-1
14) Andy Horwitz, “Who Should Pay for the Arts in America?” The Atlantic, Jan 31, 2016. https://www.theatlantic.com/entertainment/archive/2016/01/the-state-of-public-funding-for-the-arts-in-america/424056/
15) Zannie Voss and Glenn B. Voss, “Arts and Culture Are Closer Than You Realize: U.S. Nonprofit Arts and Cultural Organizations Are a Big Part of Community Life, Economy, and Employment —and Federal Funding Enhances the Impact.” National Center for Arts Research, SMU. Pp.7. https://sites.smu.edu/Meadows/NCARPaperonNationalArtsandCultural%20Field_FINAL.PDF
16) Information kindly provided by Trey Sherwood, Executive Director of the Main Street Alliance in 2016.
17) See endnote 8.
18) 2) Roland J. Kushner and Randy Cohen. National Arts Index 2016, p.2; Americans for the Arts. http://www.americansforthearts.org/sites/default/files/2016%20NAI%20%20Final%20Report%20%202-23-16.pdf
They did not look at arts organizations with annual revenues under $50,000 so their finding that larger arts organizations are more prone to having deficits should be treated with caution.
19) See: http://www.americansforthearts.org/sites/default/files/ArtsFacts_ArtsOrganizationRevenues2014.pdf
20) NEA. “How the United States Funds the Arts.” 2012. P 1. https://www.arts.gov/sites/default/files/how-the-us-funds-the-arts.pdf
21) Lisa M. Sontag-Padilla, Lynette Staplefoote and Kristy Gonzalez Morganti. RESEARCH REPORT. Financial Sustainability for Nonprofit Organizations: A Review of the Literature. Rand Corporation, 2012. http://www.rand.org/content/dam/rand/pubs/research_reports/RR100/RR121/RAND_RR121.pdf
22) See endnote 12.
23) See endnote 12
FOR IMMEDIATE RELEASE
Online version available at: www.theadrr.com
Contact:
N. David Milder, Editor
The ADRR — The American Downtown Revitalization Review
718-805-9507 [email protected]
THE CREATION OF THE AMERICAN DOWNTOWN REVITALIZATION REVIEW (THE ADRR)
There currently is no real professional journal for the downtown revitalization field. For many years, that has been strongly lamented by many of the field’s best thinkers. To remedy that situation, a band of accomplished downtown revitalization professionals are creating The ADRR. It will be a free online publication, appearing four times each year. The target date for the debut issue is now set for the June 1-15, 2020 timeframe, with the second issue aimed for the Sept 7-14, 2020 timeframe.
This ADRR is intended to be a lean and mean operation, based totally on the availability of free online resources and the time, energy and elan contributed by its authors, advisory and editorial board members, and its editor.
How to Subscribe to The ADRR
Those interested can now visit The ADRR’s website, www.theadrr.com , where, on the home page, they can sign up to become subscribers. This enrollment places the subscriber on a MailChimp mailing list so that they can receive New Issue Alerts (see below).
How Issues of The ADRR Will Be Distributed.
New Issue Alerts, containing the Tables of Contents of issues and links to their downloadable pdfs of articles are sent to subscribers via a MailChimp email blast and posted to the ADRR’s website. Each issue’s pdf files initially will be stored in a folder in ND Milder’s Dropbox account from which they can be downloaded. Subscribers can download only those articles they want to read and whenever they want to read them. The ADRR also can be found via Google searches.
The Content We Are Aiming For.
Only manuscripts about major downtown needs, issues and trends will be considered for publication. They will be thought pieces and not just reports about a downtown’s programs and policies that its leaders want to brag about. Articles must have broad salience and their recommendations broad applicability within the field. The “voice” of The ADRR will be anti-puff, and very factual, evidence driven, though not dully academic. Discussions of problems and failures will be considered as relevant as success stories if, as so often is the case, something substantial can be learned from them. The ADRR will not avoid controversial issues.
Also, the focus of The ADRR will not be overwhelmingly on our largest most urban downtowns, but also provide a lot of content and relevant assistance to those in our small and medium sized communities, be they in suburban or rural areas.
Who Will Write the Articles?
Hopefully, they will be from people in a broad range of occupations – downtown managers and leaders, municipal officials, academics, developers, landlords, businesspeople, consultants, etc. — who have significant downtown related knowledge and experience.
Curated Articles and Wildflowers. Initially, the ADRR will solicit articles to prime the content pump. Once The ADRR is up and running some articles will continue to be solicited on topics deemed a high priority by the editorial board members. Each board member can select a topic to curate an article on and seek the author(s) to write them. However, there still will be a continual traditional general call for submissions (wildflowers) focused on subjects selected by their authors. All submissions, curated or wildflower, must demonstrate sufficient merit to warrant publication in The ADRR. All submitted articles will be reviewed by board members. We hope to see many submissions!
Article Length and Author Responsibilities.
There will be short reads and long reads. Articles of 1,500 to 5,000 words will be considered. Multi-part articles of exceptional merit and salience will also be considered. What counts is their quality, not their length. Authors must have their articles thoroughly proofread prior to submission. Poorly proofed manuscripts will be rejected. Guidelines for submissions may be found on The ADRR website.
Publication Schedule:
Published four times per year, with a minimum of 5 articles in each issue. Given that this is an online publication, from a production perspective, the number and length of the articles is not a particular problem. However, from an editorial and content management perspective, the number of articles and their lengths can quickly become burdensome.
How It Will Be Organized.
The ADRR will be published by an informal group for its first year, with no person or group having ownership.
Editor. During the ADRR’s first year, N. David Milder has volunteered to serve as its editor.
The Advisory/Editorial Board :
Articles in our first issue that will be published in June 2020
By N. David Milder
I have been working in the field of downtown and urban revitalization since 1974. Back then, the riots of 1968 had brought considerable attention to our urban distress. Many civic and business leaders became much more aware of the cascading erosion their downtowns were facing. The white flight of shoppers and residents living in the downtown and close-in neighborhoods, disinvestment by landlords and businesses, spreading physical decay, soaring fear of crime, badly tarnished public images, and widespread frustration about not knowing how to reverse this situation were common problems in downtowns across the nation. Today, many of our downtowns have been thoroughly revitalized and become very popular places for people to live, play and work. Scads of other downtowns are in the process of doing so. These days, the expectation that downtowns can and will be revitalized has replaced the fears of the 60s, 70s, 80s and early 90s that downtowns were doomed to be places of failure, despair and decay. Downtown leaders now can tap a large and growing knowledge base that includes an array of tools and techniques they can use to solve the problems that had previously plagued our downtowns. Among them are: place-making, improving walkability, transit-oriented development, mixed-use residential development, niche marketing, BIDs, TIF, PILOTs, community policing, etc. This success — both actual and expected — and the knowledge base and leadership pool that support it, are some of the defining characteristics of the New Normal for Our Downtowns.
Successful downtowns, however, are not stagnant socio/economic/geographic organisms. Indeed, some of the factors that explain their success have also both changed the way they operate and generated a new set of problems that now need attention and solutions. For example, though it is generally agreed among downtown revitalization experts that the significant growth of housing in and near our downtowns has been a primary engine for their recent rejuvenations, questions recently have emerged about downtowns being turned into ghettos for the affluent. Still, the significant presence of these residential units are themselves an important and new phenomenon. Moreover, these new residents have created a significant new demand for services, amenities and merchandise that are not typically associated with the Central Business District (CBD) functions and venues that dominated our downtowns in decades past. These CBD functions and venues also have long dominated our understanding of how successful downtowns should operate and been the focus of most downtown revitalization strategies (e.g., retail growth, office development, job creation, transportation improvements). While many of these new downtown residents may also work in the district, their demand for and consumption of opportunities to socialize, relax and be entertained has driven the development and/or use of strong restaurant and bar niches, public spaces and parks, libraries and community centers, movie theaters, museums, PACs, churches, senior centers, etc. These venues are associated with a downtown’s Central Social District (CSD) functions.
Another defining characteristic of the New Normal is that successful downtowns have very strong CSD venues and, with increasing frequency, they are as important or even outshine those associated with its CBD functions. Some types of CSD venues have long been present in some downtowns, but the appearance of a bolus of downtown residents has generally sparked their significant growth while broadening the kinds of venues present. In turn, by strengthening these venues, the downtown residents have helped them be stronger magnets for people working in the district as well as daytime visitors from the district’s largest trade areas and for tourists from even more distant places.
The presence of these residents and the strength of these CSD venues also has changed the way a downtown operates. Most importantly, they widen the range of a downtown’s multi-functionality, increasing the reasons why people will use the downtown. By doing so, they also provide a steady and significant flow of pedestrians and customers that helps assure the district does not close down on weekends or weekdays after 6:00 pm. Strong CSD venues also make the downtown “stickier,” keeping visitors in the district for longer periods of time.
Strong CSD venues also make working in a downtown more appealing. In a labor market where many job offers now find no takers, firms located in strong CSDs are likely to find it easier to recruit quality employees. Moreover, many of the quality of life needs of creatives/knowledge workers are met by strong CSD assets. In smaller towns, strong CSDs can help attract quality independent retailers and Lone Eagle business operators.
Nevertheless, CSD development and growth does not always have clear sailing. Many communities may opt for CSD development projects that are ill-suited for their demographics, geographic locations, or industry trends, while they could have instead undertaken projects that were cheaper to build and operate and capable of attracting many more users. For example, advocates for new arts events venues such as PACs, theaters, and museums as well as for arenas and stadiums often badly over-estimate their potential economic impacts on the downtown, while underestimating construction and operating costs. In larger cities, major organizations in the opera, ballet, symphony orchestra and nonprofit theater fields are badly stressed having to cope with significant declines in paid attendance and financial contributions. In smaller communities, the impacts of new arts events venues on their downtowns are too often grossly exaggerated, and operating costs badly underestimated. Consistently, between 40% and 50% of arts nonprofits are financially in the red.
The most effective strategic path is to first focus on the strengthening and/or development of well-activated parks and public spaces, restaurants and watering holes, and movie theaters. They are usually the easiest to create and operate and have the fewest user frictions or are asset treasures that need to be improved and saved.
Though a lot of strategic planning is done for CBD functions and venues, strategic plans for CSDs are rare, but equally needed. While attention may be given to individual CSD projects, too many of such studies are marred by advocacy induced puffery. Very unfortunately, little attention is being paid to the CSD as whole entity.
The impacts of technology are also strongly defining the New Normal. This is most apparent in the way the Internet is forcing the whole retail industry to search for a new operating paradigm and electronic consumption has reduced the brick and mortar consumption of the arts. How and when people shop is consequently changing in significant ways. They first research online and then shop the store for the targeted item(s). Strolling and browsing shoppers subsequently are on the decline. Many Americans are time-stressed, so many shoppers want quick, convenient retail transactions. Yet, many others want more interesting, more meaningful and more socially appealing shopping experiences. Shoppers have also become much more careful and deliberate when making purchases. While this is most strongly apparent among middle-income consumers, affluent shoppers are also showing signs of greater caution.
Changed consumer behavior, combined with growing online sales, have reduced the demand for downtown store locations and the amount of space retailers want for their new stores.
While downtown retail shops will not disappear, they almost certainly will change in the way they operate, the amounts of space they each need, as well as the types of locations they will want.
Yet, as my discussions with potential clients demonstrate, many downtown organizations still see retail as a key element in their downtown’s future, while largely disregarding improvements to their CSDs.
The appearance of app-driven car services such as Uber and Lyft have already impacted on traffic congestion and the use of public transportation in several large downtowns. The imminent use of automated vehicles – e.g., by Waymo soon in Phoenix – will likely have important impacts on traffic congestion in a host of additional downtowns. What these impacts will be remains uncertain- as do the possible remedies to those that are harmful. The transition to automated vehicles will probably take 20 to 40 years, with different issues dominating downtowners’ concerns at each stage of its progression.
The very success of our downtowns also has created its own set of problems. For example:
This is part of book proposal I am writing. I’d appreciate hearing if you would be interested in a book that expanded upon the above content. Please let me know at [email protected] .