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The Small Business Administration recently released granular information about its Paycheck Protection Program loans, which distributed millions of dollars to businesses earlier in the pandemic. The loans were primarily intended for businesses to keep their employees on the payroll; businesses that used them for this purpose (and a few others) would be eligible for loan discounts. Or they could spend the money on whatever they wanted and treat it like a regular low interest loan. Newly released SBA data sheds light on a lesson Covid-19 has revealed about the current for-profit improv theater / training center model: that it’s fundamentally structured to funnel money to owners first and workers second, if all is there.
As you may remember, the big three improv theaters have taken out PPP loans. UCB and Second City received Heat for that, because they obviously did not rehire the workers they made redundant before receiving the money. At iO, Charna Halpern made keep employees on the payroll but finished closing the theater anyway – and bring it to market – citing property taxes and other financial woes. UCB and Second City ended up more or less in the same place: the first has just sold one of its two remaining theaters, while the second is still looking for someone to buy its flagship theater as well as the whole company. .
Of the three, Second City’s fate should be the biggest surprise. While I have often argued (and still believe) that things have not have to be so, UCB and iO were undeniably operating on (relatively) tight budgets, largely because they screwed up in the mid-2000s by spending millions of dollars on real estate. (UCB has million debts on UCB East, never found tenants for most of Sunset’s retail stores, and locked themselves into a 15-year lease at around $ 315,000 per year in Hell’s Kitchen. Halpern spent $ 7 million on a new space in 2014, financed by a small business loan, while managing its location in Los Angeles in the ground.) Second City has long been a highly professionalized cash dispenser. Former CEO Andrew Alexander tell Crain in 2016, the company had annual sales of $ 55 million, almost double its sales of $ 30 million in 2012. In contrast, the New Yorker fixed UCB’s training center revenue for that year at $ 5 million. Some speculative calculations suggest that the theater makes at least a few million a year, at the bottom of the scale (although it does ultimately not enough to cover expenses).
In any event. The thing about PPP loans is that they all follow the same calculation: two and a half months of a company’s 2019 payroll. This means that we can use each theater’s loan amount to reverse engineer their payroll for the year before the crisis. The second city $ 3.22 million loan indicates a payroll of $ 15.4 million in 2019 for 490 declared employees. (I believe this includes all three company locations, even Toronto; my understanding is that the P3 allowed you to use your total headcount to calculate the loan, although you cannot disburse funds to non-employees. Americans.) lend, on the other sidethe two training centers, indicates a 2019 payroll of 5.37 million dollars for 160 declared employees. And the iOs Loan of $ 516,700 indicates a payroll of $ 2.48 million in 2019 for 140 declared employees.
Now, there is little we can extrapolate from these numbers into a vacuum. And it’s important to categorically separate Second City from the other two. It is a dinner theater that pays the artists: this payroll includes actors, teachers, touring artists, company trainers, service staff and a large creative and administrative team. UCB and iO are much smaller operations, largely because they are based on what could be considered salary theft. (This is where the “funneling the money to the owners first” part for them comes in.) Their salaries include teachers, touring artists, corporate trainers, a few cafe workers in Los Angeles and creative / administrative / marketing staff.
Nevertheless, we can make a few observations. To my knowledge, Second City has not experienced any of the difficulties faced by UCB or iO in the years leading up to the crisis. Its total turnover for this year was probably comparable to (or higher than) its 2016 levels. It can therefore be observed that Second City, which canceled a union effort in 2017, spends a relatively small amount of the money she earns on her employees.
Then there is this disparity between UCB and iO. They have comparable business models and roughly the same number of employees: iO had 140 in 2019 while UCB had 160. But UCB’s payroll was more than double that of iO: 5, $ 37 million to $ 2.48 million. It makes sense that UCB has a significantly higher payroll than iO, given the dual management positions on both coasts – artistic directors, directors of training centers, etc. But I don’t know how that would account for a $ 2.89 million difference, unless these people were all getting money for the tech executives.
For a little background: Groundings, the LA theater and training center, received a PPP loan of $ 355,000. This indicates a payroll of $ 1.7 million in 2019 for its 100 reported employees. This is roughly proportional to iO: 71.4% of the workforce and 68% of the payroll.
While we don’t have enough information to see how UCB’s and iO’s salaries fit into their total earnings, we can easily see that it doesn’t make any difference. None of these theaters were prepared for a rainy day. Neither Second City nor UCB went into lockdown for a week before sacking hundreds of people between them. iO lasted three months, slightly longer than the expected life of a PPP loan, before collapsing completely.
$ 60 million a year, $ 10 million a year, it doesn’t make a difference if you have to pay rents and mortgages and loans and taxes and your only sources of income are live, in-person experiences. Let this spell the end of for-profit comedy theater.
Seth Simons is the author of Humorism, a newsletter on work, inequality and extremism in the comedy industry. He’s on Twitter @sasimons.