In an annual report released yesterday, the Esplanade posted a loss for the first time in its 11-year-history. It said the deficit was due to increased competition from new venues as well as higher operating costs.
For the last financial year which ended in March, Singapore's leading arts venue incurred an overall loss of $2.3 million. In the previous financial year, it was in the black with a $137,000 surplus.
One of the most significant factors in this year's poor performance was a drop in sponsorship, which plunged by almost a quarter from around $6 million in the previous financial year, to $4.4 million in the last financial year.
Mr Benson Puah, chief executive officer of the Esplanade, said: "Last year, we had the benefit of our 10th anniversary celebrations to attract more sponsors. Moreover, corporations are increasingly tightening their expenditure, while we are also facing increased competition from other charitable causes and new venues."
Another sharp drop was seen in the income from venue hire and event services, which sank from more than $7.4 million last year, to about $6.2 million this year.
Mr Puah explained: "More local arts, community and school groups are hiring our venues with Esplanade's support, but these bring lower revenues compared to the commercial musicals and entertainers that are now presented at the more commercial venues."
Usually, such home-grown productions have shorter runs, smaller inventories, lower ticket prices and sales. In recent years, the Esplanade has faced competition from theatres at Marina Bay Sands and The Star Performing Arts Centre in drawing commercial shows.
While income from sponsorship, venue hire and event services has plummeted, earnings from ticket sales have remained strong.
Ticketing revenue has increased from $4.3 million to $6 million in the last financial year, which is partly due to the appeal of blockbuster performances such as six sold-out performances of the Bolshoi Ballet last November, and the 3 Titans Of Theatre, a series of plays by iconic international directors presented last year by the Esplanade and the Singapore Repertory Theatre.
"These blockbuster presentations were well received by audiences and boosted our overall ticketing income," said Mr Puah.
The Esplanade is a state-funded institution and received $27.3 million in grants from the Government in the last financial year, compared to $30.6 million the year before.
Going forward, the report is not optimistic. It notes that "the next phase of Esplanade will see us operating in a scenario where income is flat and will lag behind cost increases".
The change in hirer profile to more local groups and schools is not something which will be easily reversed and sponsorship will continue to face "intense competition from new venues and other sectors of interest".
However, Mr Puah said that it is "not our place to compete with others in the industry... Looking ahead, we will continue to evolve and deepen our programming to reach more audiences and to encourage lifelong engagement with the arts among our community."
While the Esplanade's financial prospects are not too hopeful, industry players are not worried about its future.
Impresario Robert Liew, founder and director of Arts Management Associates, said: "Hopefully, it is an indication of a greater investment in artistic development. Is it not better to incur a financial deficit than an artistic deficit?"
Mr Venka Purushothaman, provost of Lasalle College of the Arts, added: "While this might be disconcerting and newsworthy, as an arts business, it is important that deficits are part of strategic considerations and not determined by the vagaries of the external world. It is heartening that they do have a healthy cash flow. As such, I would not fret too much."