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What you need to know about the federal Broadway bailout - Crain's New York Business

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The issue

The entertainment industry had the longest and most restrictive shutdowns of any other city sector, and for months the operators of live music venues, theaters, museums and movie theaters sought money that would help them survive. On Dec. 27, Congress passed the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, which included funding for these businesses under the Shuttered Venue Operators Grant. The more recent American Rescue Plan Act amended and expanded the program's funding to a total of $16.25 billion.

Nearly three months since the law's passage, the U.S. Small Business Administration will begin accepting applications from businesses on April 8. The portal for the application opened on March 19, and information about the program and application are now accessible. The money successful applicants will receive will be free to them in the form of grants: no need to pay it back, ever. Individual businesses can apply for up to 45% of their gross earned revenue from 2019.

The players

New York City organizations eligible to apply include large and small live music venues, performing arts spaces, museums, movie theaters, zoos, and even botanic gardens. Event promoters are also eligible.

The first priority will be given to businesses which have lost more than 90% of their revenue; after that, priority will go to those who have lost 70% or more. All businesses that apply have to have existed on Feb. 29, 2020, and $2 billion is earmarked for employers with fewer than about 50 full-time employees.

The plan, originally called the Save Our Stages Act, has been supported by politicians and business people across the city. Sen. Charles Schumer joined the Broadway League in September to urge Congress to pass the bill, which originally called for $10 billion in relief. A group of live venue operators called National Independent Venue Association lobbied to get the bill over the finish line.

Yeah, but…

As with some of the other recent government aid programs, the bill was passed long before concrete guidance came out, and venues have had to wait to find out if and when they would qualify. And not everyone does: production management companies, talent agencies, wedding venues, sports stadiums, and "secondary service providers" that help hire contractors for events are likely not eligible.

The long list of documentation for applying could also discourage venues from seeking money they badly need. Venues like concert halls need to annotate and submit floor plans and show marketing materials indicating when they would have held events.

There is also some confusion about whether recipients of Paycheck Protection Program loans are eligible. Answers on the FAQ imply that the first round of PPP is irrelevant, but those that received loans after Dec. 27, 2020, would have to deduct the amount of their loans when considering how much to apply for. The city's Department of Small Business Services has created Curtains Up NYC, a resource to help businesses with applications.

Some background

Though federal and local relief has helped bridge the gaps for many firms, most previous programs did not take into consideration the extremely long shutdowns of this sector. While about 60% of companies in the sector received PPP loans, restrictions on how the money got used and the short term of the covered period has meant that companies could still not afford to stay open, and 60% (though not necessarily the same companies) have closed permanently or temporarily since last March.

The economic impact of live venues on New York is enormous. Broadway alone had 14.8 million admissions in the 2018-2019 season, and the Broadway League says it supports 97,000 full-time equivalent jobs while contributing over $12 billion to the New York City economy.

What's next

The money from Shuttered Venue Operator Grants carries fewer restrictions than previous programs. Some might go to encouraging still-shuttered venues to try outdoor performances or experimental shows that they would not have been able to afford otherwise, offering opportunities to both employees and independent contractors who have not been able to find gigs on darkened stages. As of December, the arts industry was the only major city sector still below half of its pre-pandemic employment level, according to a report by the state comptroller. Owner compensation is also permitted.

The money could even flow to consumers in the form of ticket refunds from canceled 2020 events. Under the guidance, "ordinary expenses" are not well defined but seem to include funds for returning money to ticket holders, a move that could build loyalty and even drum up business among audience members on the fence about showing up at live events.

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