When the pandemic shuttered businesses and the lights on Broadway went dark, it also triggered a free-fall in tourism to New York City, one of the world’s most popular destinations. Tourism has been an engine for the NYC economy, bringing in $45 billion annually, drawing a record 66 million visitors in 2019 and supporting hundreds of thousands of workers from all five boroughs across a range of industries, from hotels to restaurants to Broadway.
New York City’s economy relies, in large part, on tourism, and tourists are attracted to New York’s entertainment venues such as Broadway, as well as the creative vitality of NYC’s music venues and live performances. Times Square Alliance, with whom Capalino has worked on a wide range of issues, published an extensive tourism report “Destination New York” in 2018 that highlighted the importance of the tourism economy, a finding that is still very relevant today as we plan NYC’s recovery from the pandemic.
Assisting the entertainment and live venues through this difficult time is critical so that when the public is ready to return to live venues, these venues are in the financial position to resume operations immediately. Since many believe that theater openings will be the best indicator of NYC’s comeback, the new SBA Shuttered Venue Operators (SVO) Grant program will be an important resource to theaters, concert halls and other venues. Established by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, signed into law on December 27, 2020, the Act provides help for theaters, music venues, museums and other companies in the live events business, as well as entertainment (booking) managers.
The program launch is imminent and includes $15 billion in grants to shuttered venues, to be administered by the SBA’s Office of Disaster Assistance. These grants provide another funding tool for the entertainment sector, which has been severely impacted by the pandemic, in addition to the PPP program.
Applications are expected to open soon with grants up to $10 million per recipient. Even though the SBA is still in the process of setting up the grant program, Capalino is advising clients to start organizing their applications now. The program is focused on smaller venue owners (less than 500 employees) as opposed to larger businesses with operations across numerous jurisdictions. During the first 59 days of the program, funding awardees will be limited to entities with 50 employees or less. There is also a potential for supplemental grants after the initial round of grants is disbursed.
In order to be eligible, applicants must demonstrate a reduction of quarterly income in 2020 of at least 25% less than the corresponding 2019 quarter. In addition, for live event venues the following eligibility criteria apply: 70% of revenues must come from ticket sales, production fees, or the like; venues must have defined performance space and specialized lighting/sound equipment; and venues must employ one or more employees who perform typical event space job functions, e.g., sound engineer, security, box office, or booking manager.
Those businesses which have suffered the greatest economic loss will be the first applications processed under the following schedule:
Capalino is launching a new Theater and Entertainment Advisory team leveraging all our practice areas to help venue operators secure grant funding through this new Shuttered Venue Operators program. We have been a key leader driving growth and raising funds for theaters, live venues, and museums, as well as transforming the landscape of the Times Square area. Leveraging our experience advising entertainment-related businesses (event space operators, theatrical producers, venue owner/operators), raising funding, accessing economic and business assistance programs, as well as securing approvals for live/outdoor events, we will assist organizations in determining eligibility for the SVO grant program and the application process to secure funds.
Our firm has a deep track record of working with organizations in the theater and entertainment sectors. After a year of being dark, without ticket sales and their usual donations, Capalino client Manhattan Theatre Club (MTC) will be taking advantage of the SVO program in order to bolster finances while the entertainment sector is still recovering. Capalino has successfully worked with MTC in the past: we helped secure $1 million in capital money from New York State (REDC) for renovations to their Samuel Friedman Theatre, and we are also assisting them in applying for capital monies from New York City. Capalino has also worked with other theatrical and entertainment organizations, including Terminal 5, Metropolitan Pavilion, Second Stage (which our team assisted in securing funding) as well as movie theaters such as AMC and Alamo Draft House.
Besides traditional theater organizations, Capalino has also worked with companies like Founders Entertainment, producers of the popular three-day Governors Ball music festival, and helped secure its reputation as New York City’s premier music festival that supports the local community as well as showcasing great music. We have also successfully worked with world-class arts and cultural institutions (which also qualify for the SVO program), and our team of professionals has helped secure funding for museums such as the Frick Museum, Guggenheim Museum, New Museum, and the Museum of the Moving Image. In addition to our work with cultural institutions, Capalino’s economic development, public space management, and strategy work with key place-based organizations such as Times Square Alliance has helped ensure that Times Square remains an exciting draw for visitors and NYC residents alike.
The opening of Broadway theaters and the entertainment sector will be a critical barometer in determining New York City’s and our nation’s comeback. The SVO program is an important step in our country’s efforts to enable theaters and other venues that have been forced to go dark to recover from the pandemic. We learned from the PPP application process that those who applied quickly were most likely to get funds—the first pot of funding ran dry in 13 days.
For assistance in assessing eligibility for the SVO grant program, or to learn about other ways Capalino can get it done for you, contact Jeffrey Lee at email@example.com.
Update, March 11, 2021: In its original form, the SVO grant program forbade eligible entities from applying for both a grant and a Paycheck Protection Program loan. The American Rescue Act that was just signed into law contains an amendment which eliminates that provision, allowing companies to apply for a PPP loan since the Small Business Administration has yet to launch the SVO grant program. Should a business take out a PPP loan, the amount they receive will be reduced from the total they would receive from an SVO grant.