How to Manage Financial Hardship

[Pete Freedman]

Hi there.

The purpose of this thread is to provide a home for this important but controversial topic, and essentially to try to clear it out of those threads that tend to become hijacked by it, if that makes sense. My hope is that when the issue comes up in a thread people can just put a link to this one and save that one from being hijacked.

So let's start with an example. Let's say you run a touring drum corps. Like most corps, you survive on a combination of tour fees, fundraisers, and appearance fees. That word 'fundraisers' is large and vague, in that a critical amount of your funding comes from some 'special' source, such as bingo, a government program, a wealthy patron, or something else. This seems to be the case with most corps.

Now the bad news: this special source is drying up quickly. You no longer have the funding to make it all work.

Now the options:

1. If you cut back on touring, you can't collect as much in tour fees! So you would still be in the same boat, and maybe worse. Also, some of your members will leave if you do this (and you don't know how many, but you know it's a lot), so that's a dramatic cutback in funding.

2. If you cancel touring completely and become a 'local' drum corps (one that provides no transportation and therefore only performs locally) you will probably go bust, since even at that scale the economics of drum corps don't really work. (Notice there are extremely few local corps in existence anymore. Apparently, you can't collect much from the members, and small scale fundraisers don't pay enough even for the practice space.)

3. If you decide to tour more than your funds will allow, you must borrow money from a lender. Presumably you hope that in the meantime you will find a new 'special' fundraising source. You risk defaulting on that loan if that source doesn't materialize.

4. If you go 'inactive' you lose all your members. And 150 more kids won't have that drum corps experience each year, which is the reason you went into this in the first place. Also, you'll never know whether a funding source might have materialized in a year or two (if you had borrowed), allowing the corps to continue. But this way you won't risk defaulting on a loan.

As far as I can tell from these forums, 1 and 2 don't seem to work well, so it's choice of 3 or 4. Or other options I didn't think of. I've never managed a corps, so that's entirely likely. (In fact I may edit this post to improve these choices based on your input.)

On DCP we hear horror stories of when a corps chose the borrow option, and it didn't work out. Of course, we don't hear the cases when it did work out, which may be many corps each year.

If you have any experience in this area, or in management or accounting, etc. please let us know! Maybe we can compile some good advice for corps in the future.

[Michael Boo]

Very good analysis and expression of your concerns, and something that may not be any less pressing for the time being.

[Paul Milano]

It's been a long time since I was the manager of a drum corps, and my experience included managing a very well-funded touring corps and a touring corps that was broke (same corps . . . in back-to-back years!).

But, I think I am "in tune" enough, through friends who are directly involved in managing current touring corps, that I think some of my comments to follow are reasonably accurate. If not, I'm sure I'll politely find out soon enough.

Is touring really the main cause of these financial problems corps are running into, and would cutting back the tour really help?

If most corps have 12 vehicles on the road (semis, souvie trucks, vans, cars, buses, etc.) and they collectively get 8 miles per gallon, at $3.70 a gallon, traveling 10,000 miles a year each (pretty sure these are "good" estimates) then total fuel costs = $55,500 for fuel. Let's round it up to $75,000 just to be safe.

If most corps feed 175 people, four times a day, for 70 days of pre-tour and tour, at $7.50 per person per day - that would equate to about $100,000 for food.

And you'd have 70 days of housing costs at $1,500 per day, let's say that's another $100,000 (I don't actually pretend to know what corps pay for housing these days).

So, let's say a corps reduces touring by 25%. That is to say 25% fewer miles and 25% fewer days on the road (food, housing, staff pay, etc.). That would save about $20,000 for fuel, about $25,000 for food, and about $25,000 for housing. That would assume the corps is either not together for approximately two weeks (25% of 70 touring days = 17 days), or they are rehearsing without traveling, housing (for any cost), or feeding the members and touring entourage. Thus a savings of $70,000.

Now, you would likely have to reduce dues by about $250 (from the average dues of $1,500). That is less than a 25% reduction (closer to 17%), but touring isn't the only "value" factored into belonging to a corps. 150 members x $250 = about $35,000. Lost souvenir profit (two weeks of tour = 8 shows x $2,000 net profit per show) would likely be around $15,000. Factor in lost appearance fees for removing 8 shows (another $20,000 for a World Class corps?) and you have "lost" $70,000 in revenue . . . and are now no better off than if you actually did NOT cut back 25% on your touring. It's a break-even.

Even if you saved some money on staff expenses (flights in and out of towns as you add/subtract/swap out part-time staff who come and go during the summer) most of the money spent on staff goes to designers and caption heads who are not always on tour anyway. The techs who are there most of the summer get paid very modestly so cutting back tour doesn't save much staff money. But let's say it saved $25,000.

IF dues remained the same regardless of the 25% cut back in tour, and souvenir sales did NOT decrease because of better on-line marketing efforts, and appearance fees were somewhat made up by doing some local paid exhibitions - the corps would still only have saved about $100,000 from the typical top 12 budget of $600,000 - $1.2 million. And this scenario is a BIG "if."

I suspect this reduction in costs would not make a game-changing difference long term.

Would cutting tour even more drastically make the numbers add up somehow? Or do members have to be 75% local with mainly local shows (that require less housing, less meals, less fuel, but the same amount of souvenir sales and appearance fees), topped-off with two-week tour on the ways to Finals weekend? Or in other words, the drum corps summers of the 60s and 70s (for many corps - though NOT California and Casper of that era!).

So, the original poster's first and second statements above (#1 and #2) seem to be valid. The answer is not necessarily less touring. The answer is more revenue from non-touring sources.

Edited October 23, 2012 by Paul Milano

[JimF-LowBari]

Great inside analysis from Paul and Pete.... After I saw the Glassmen thread and thinking about previous threads about both Jr and All Age corps problems with expenses the back of my mind started thinking time to re-evaluate how how things are done. Don't have a clue and got the feeling there will be problems what ever is done but... can the activity continue the way things are going? Honestly feel this is just the start with the way expenses are going up but might be me as I just guess-ta-mated my fuel oil bill for this winter at near $4 a gallon. Not to mention seeing local corps killed buy the 70s gas price jumps.

Edited October 23, 2012 by JimF-LowBari

[Michael Boo]

Great inside analysis from Paul and Pete.... After I saw the Glassmen thread and thinking about previous threads about both Jr and All Age corps problems with expenses the back of my mind started thinking time to re-evaluate how how things are done. Don't have a clue and got the feeling there will be problems what ever is done but... can the activity continue the way things are going? Honestly feel this is just the start with the way expenses are going up but might be me as I just guess-ta-mated my fuel oil bill for this winter at near $4 a gallon. Not to mention seeing local corps killed buy the 70s gas price jumps.

Agreed. Both make pretty clear arguments about why there are economic concerns that must always be addressed, and yet both come up with diametrically different conclusions. I don't know the answers. I wonder if the answers are even attainable. (?) But we can't afford to not keep looking and considering options that work for ALL corps.

[Buick Dad]

1350995468[/url]' post='3224555']

Agreed. Both make pretty clear arguments about why there are economic concerns that must always be addressed, and yet both come up with diametrically different conclusions. I don't know the answers. I wonder if the answers are even attainable. (?) But we can't afford to not keep looking and considering options that work for ALL corps.

I thought they came up with the same conclusions.

[3rd Glasgow BB]

What if you charge the same or slightly less for fees but don't tour as much?

The kids are with the corps from move ins to finals so they spend the same amount of time with the corps but they spend more time rehearsing than touring?

2 weeks touring, 2 weeks at base, 10 days touring, 10 days at base etc.

Would save a small fortune on fuel if nothing else.

[Northern Thunder]

It would probably surprise many people that there were 76 active junior corps in North America this summer. We know there were nowhere near that many on the field, so that means there were quite a few that have found a place

to exist in the "nether" world of local parades and standstill exhibitions.

[cixelsyd]

So, let's say a corps reduces touring by 25%. That is to say 25% fewer miles and 25% fewer days on the road (food, housing, staff pay, etc.). That would save about $20,000 for fuel, about $25,000 for food, and about $25,000 for housing. That would assume the corps is either not together for approximately two weeks (25% of 70 touring days = 17 days), or they are rehearsing without traveling, housing (for any cost), or feeding the members and touring entourage. Thus a savings of $70,000.

Now, you would likely have to reduce dues by about $250 (from the average dues of $1,500). That is less than a 25% reduction (closer to 17%), but touring isn't the only "value" factored into belonging to a corps. 150 members x $250 = about $35,000. Lost souvenir profit (two weeks of tour = 8 shows x $2,000 net profit per show) would likely be around $15,000. Factor in lost appearance fees for removing 8 shows (another $20,000 for a World Class corps?) and you have "lost" $70,000 in revenue . . . and are now no better off than if you actually did NOT cut back 25% on your touring. It's a break-even.

That analysis suggests that if a corps cut back the most travel intensive part of their tour (where a 25% reduction in days on the road netted more than 25% reduction in fuel costs), they would achieve some savings.

The answer is not necessarily less touring. The answer is more revenue from non-touring sources.

Please continue.

No, really - continue. Tell us where this additional revenue is. That would solve everything.

[Michael Boo]

I thought they came up with the same conclusions.

I no longer know anymore.