For the first time in its 11-year-history, the Esplanade has posted a loss.
Singapore's premier performing arts centre suffered a $2.3 million deficit in its last financial year ending March, even as its box office takings grew by almost 40 per cent to $6.06 million from $4.35 million.
In the previous financial year, it had a modest surplus of $137,000.
The deficit, announced in its annual report today, is due to competition from new venues, as well as higher operating costs.
Increased competition took a toll on sponsorship, which plunged by 27 per cent. In the previous financial year, 113 sponsors gave almost $6.04 million. Last year, however, the number of sponsors fell by more than half to 49, and the centre received just $4.39 million in sponsorship.
Explaining the sharp drop, Esplanade chief executive Benson Puah, tells Life!: "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."
In recent years, the Esplanade has faced competition from theatres at Marina Bay Sands and The Star Performing Arts Centre in drawing commercial shows.
Venue hire, another source of income for the centre, also slipped to $6.24 million from about $7.43 million the year before.
Mr Puah says: "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.
Nonetheless, ticket sales climbed in part because of blockbuster shows such as the 3 Titans Of Theatre, a series of plays by iconic international directors presented last year by the Esplanade and the Singapore Repertory Theatre, and six sold-out performances by the Bolshoi Ballet last November. "These blockbuster presentations were well-received by audiences and boosted our overall ticketing income," says Mr Puah.
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".
One area of rising costs is maintenance. The arts venue depends on external contractors for this service and the authorities' tightening of the foreign worker quota has led to higher labour costs and in turn, maintenance fees.
Mr Puah, however, says: "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 rosy, industry players are not worried about its future.
Impresario Robert Liew, founder and director of Arts Management Associates, says: "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, adds: "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."