Who should bear the cost of the Covid-19 theatre shutdown?

Unprecedented, exceptional – you have heard it all. Each day brings a major new development – tomorrow may feel different to today. On Sunday ACE announced an immediate suspension of grant conditions and a focus on supporting freelancers and individual artists. Darren Henley’s announcement shows more leadership than the Government.

The Prime Minister’s ‘advice’ on Monday was for everyone to avoid theatres. Because this was ‘advice’ it was left up to SOLT and UK Theatre to follow this up by instructing its members to close venues. This prompt announcement on Monday brings certainty and consistency but is an example of a Government refusing to take concrete steps – it wants to stand on the sidelines and ‘advise’. On Monday Matt Hancock stepped up his rhetoric by saying we were ‘fighting a war’ and talked about the Government ‘measures’ but the reality is sadly different. All we have is ‘advice’ without any instructions or restrictions, leaving each sector to decide what steps it should take.

The government’s reaction shows a refusal to take concrete steps - it wants to stand on the sidelines

As a lawyer I feel the distinction is important. If the Government directs a venue to close then it is 100% clear that any performances must be cancelled and related contracts cannot be performed. An instruction from a key industry body such as SOLT or UK theatre has a similar effect in practice but it is not quite as unequivocal. This type of supervening event is commonly referred to as ‘force majeure’ and covers acts of god, riots and strikes. From a legal point of view, the notion of ‘force majeure’ is often uncertain. The original use of the concept was to deal with situations which the parties had not contemplated at the time of entering the agreement. This might be a theatre burning down or war being declared. Nowadays contracts can specifically deal with these sorts of events which are outside the parties’ control, though often they don’t. My advice, not just in the context of Covid-19 but generally, is for agreements to allocate liability for what happens in all situations.

Insurance policies can only cover a party’s risk or liability, so if a party is clear what its risk isn’t then it doesn’t need insurance for that and if it identifies a risk then insurance is a means of offsetting that liability. The initial focus will be on whether cancellation insurance or other insurance that can cover loss of performances due to Covid-19 – each policy wording will be different and will depend on the individual circumstances so there is no absolute generalisation. All we know for sure are that the potential losses are enormous, assuming all venues offer full refunds. Cancellation insurance is expensive so some but not all venues and producers may have full cover.

All we know for sure is that the potential losses are enormous

It may be that insurers will be reluctant to offer new policies to include cover for cancellation due to Covid-19 or premiums will increase so at best theatres may be covered until renewal and producers will be covered for the current production but not future productions.

It looks as though venues may close for months. Given the numbers of people involved in making theatre will new productions be able to start up until sufficient actors have had the virus without running huge risks of subsequent cancellations? Might there be companies of those who have had the virus and therefore have immunity – perhaps fanciful but why not? How are we going to persuade audiences to come back to the theatre again after months away?

The Chancellor’s announcement on Tuesday set out broad ideas with headline financial help intended to soothe markets. Sadly, there is no detail and the Treasury briefing is barely a page. There will be a welcome rates ‘holiday’ for those in hospitality and leisure industries and it is assumed this extends to theatres but it is not explicit. This is extremely welcome for the commercial sector but won’t be much use to the subsidised sector which generally pays no rates anyway. The Coronavirus Business Interruption Loan Scheme is to be launched ‘in a matter of weeks’ but is just a loan guarantee scheme. Its aim is to ease cashflow but sums are repayable. It may be helpful in some instances – such as to tide an organisation over until a theatre tax relief claim arrives or until settlement is received from performances that have managed to take place. If organisations have huge losses due to the effect of Covid-19 this scheme will not help except in the short term and won’t help their mid-term solvency.

The Government’s view at present seems to be that the monumental losses to the performing arts must principally be borne by a combination of insurers, theatres, producers, investors and ticket holders. It sees no need to intervene to help artists, actors other freelancers or staff working in theatres or provide significant support from the public purse. Many regional touring theatres are already on their knees after years of cuts to funding as we have seen from the deterioration of middle scale touring – their position seems bleak. These and smaller venues in London may be the first casualties but without real sustained support the whole industry is incredibly vulnerable.

– This article appeared in the Stage Newspaper on 18 March 2020 –

About the author

Sean Egan is an independent lawyer with over 25 years’ experience providing legal and business advisory services to theatre, film, arts and creative industries.

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