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Operating & Start-up Budget Projections
Operations
The operating budget projections in this plan are based on a wide variety of factors, including the size and specifics of the museum facility, the scope and nature of exhibitions and interactivity, the cost of operating a Preview Center, and the expenses associated with the initial capital campaign. These projections are preliminary and are designed to give interested parties a sense of the scope of operating funding that will become necessary to realize and sustain the unique destination envisioned in this plan. Invariable, some assumptions will not come to fruition and unanticipated events will occur that may materially effect the operation of the museum. Preliminary estimates are based on analysis of national museum operations and on the actual start-up, development, and design costs by the local Children’s Museum of Phoenix (opened in 2008) and the Musical Instrument Museum (opened in 2010) as reported on their 990 filings during start-up.
Revenue Streams
To accomplish the ongoing goal of being relevant, vibrant, offering a wide variety of public programs, and being self-sufficient, the Museum of Television will generate revenue in a number of areas:
AdmissionA gate fee for entry into the museum will be charged: $15.00 for adults, $13.00 for seniors, $10.00 for children 5-17, and school groups will receive a discount or free admission. This will allow visitors full access to the facility and all of its exhibitions (excepting some special or private events that may be taking place on site). We conservatively anticipate welcoming 100K visitors in our first year of operations (see chart on page 48), though this estimate is considerably lower than what similar local institutions have realized in recent years. It is also projected that admissions will average $12.40 per person, and this is equivalent to a total earned revenue of $1.24M. An add-on fee will also be charged for entry into special events that take place at the museum or its satellite locations including celebrity-attended events, award shows, concerts, festivals, tribute evenings, and traveling exhibits. While our goal is to provide visitors with an indelible museum experience for one reasonable gate fee, higher expenses associated with larger events will most likely need to be mitigated by this additional charge.
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MembershipA membership fee will afford an individual, a family, or a member of a larger corporate group (i.e., Auto Club members, American Express cardholders, Phoenix Teachers Association) entry into the museum for one reasonable annual payment; and other benefits associated with membership will include access to VIP tours, special screenings, exclusive online and retail discounts, and more. We anticipate selling 1.5K memberships in our fist year of operations at an average of $150.00 per membership, which would generate additional revenue of $225K per year.
Add-onsA rental fee will be charged for the use of an audio playback device that enhances the exhibition experience by providing visitors with interesting background information, theme songs, commentary from Hollywood artists, and other behind-the-scenes stories and insights. However, it is the museum’s intent to keep this price down to encourage many or all visitors to partake in this compelling content. While visitors will never be charged to participate in our immersive beats such as flying like Superman or performing a monologue on The Tonight Show stage, we will also charge a fee for providing these special moments on a DVD, printing related video capture images onto souvenirs, etc.
Retail Store RevenueA retail store will comprise of approximately 1K square feet of retail space and will offer visitors an inviting selection of existing licensed TV-themed products (including DVD box sets, retro-style lunch boxes, apparel, coffee mugs, etc.); higher-end licensed collectibles (such as a line of hand-painted Jeannie bottles that range from $199.00-$399.00); as well as “limited edition,” “original,” and/or “autographed” materials selected by The Comisar Collection. Event Networks, who specialize in the area of museum retail (and operated the gift shops for a number of blockbuster traveling exhibits including Titanic: The Artifact Exhibit), expressed that our average ring at retail has the potential to be higher than others due to the “feel good” nature of television and that guests could be “in the emotional frame of mind for impulse purchases.”
Despite early indications that the products in our retail store have a special potential to connect with guests, our projected retail store revenue is a conservative $3.00 per visitor (even though institutions such as the Smithsonian have reported an average ring at retail of as much as $20.00 per visitor as was reported in the Washington Post in 2011). The cost of goods for the store will be equal to approximately 50% of gross sales, therefore generating net revenues of $150K per year; and one could reasonably predict that the online store located at our website would also generate sales, but in the interest of prudence we will not count on said revenue in our opening years.
Exhibit SponsorshipsThe museum intends to develop dignified sponsorship propositions that provide additional revenue to the institution and data mining and hospitality opportunities (including exclusive catered receptions attended by classic TV stars and collection curator James Comisar, who will host VIP guided tours) to national and regional sponsors. An assumption of $600K has been made for permanent exhibit sponsorship, and we anticipate that temporary exhibits will similarly lend themselves to this area with an estimate of $100K. After all, television rose to become the most powerful advertising-driven medium in American history, and as such we believe we will offer a unique sponsorship opportunity to Hollywood studios, production companies, and networks who create the content; the manufacturers of TVs, DVRs, and related technology; cable, signal, and bandwidth providers; and other TV-centric companies including the Academy of
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Television Arts & Sciences, DIRECTV, Nick at Nite, the Nielsen Company, TV Guide, and TV Land (some of whom have already expressed written interest in working with us). The museum will also seek to align itself with a national media partner in order to leverage marketing and advertising budgets; as well as with airline, hotel chain, and other brand partners for an exchange of goods and services, which will also generate as-yet-undetermined values.
Facility Rentals & Special Events The museum further projects earning revenue by hosting private parties and after-hour events, screenings, special ticketed events, and convention-related mixers. While our core objective is for the institution to always be available to its community, meaningful ancillary revenue can be earned without creating much inconvenience to our regular members and visitors; and such special events not only generate revenue, but they also attract people who may not otherwise visit the museum. Ours will be a very desirable place to host community celebrations, school events, industry and corporate meetings (especially those related to the Convention Center); as well as office, holiday, birthday, anniversary,
retirement, and other personal parties. Various options will include renting out the entire facility, our lobby, or an individual gallery that features your favorite original set (such as center stage of The Price is Right, the Peach Pit Diner from Beverly Hills 90210, the Operating Room from E.R., or Donald Trump’s boardroom from The Celebrity Apprentice). Rental rates have been based on analysis of other facilities in Greater Phoenix, and annual gross revenue of $186K for facility rentals and special events is forecasted. The museum will also produce its own ticketed annual events, including a Halloween celebration that raises money and awareness for our costume conservation program and auctions that directly benefit our artifact acquisition fund.
Traveling ExhibitsFor all the same reasons our permanent facility will resonate with visitors of every demographic, so would traveling exhibits of our materials that were packaged to tour to other accredited museums throughout the United States and beyond. In development of this concept we have met with major museums who not only expressed a desire to host such temporary exhibits, but they saw such a bright potential that they also extended top seasonality for scheduling and substantial marketing commitments. In addition to sharing revenue in the form of an add-on gate fee that the venue would charge its guests, traveling exhibits also serve as effective promotional tools for the lending museum by introducing folks to a small sampling of their artifacts, then inviting them to experience thousands more at their permanent location. Top traveling exhibits can attract 3K-5K people a day with an add-on fee of $20.00 or more, and other revenue streams could include audio tour rentals, retail sales, special events, etc. This is a promising area of additional revenue for the Museum of Television, though in the interest of focusing on our opening, we would not likely develop or build traveling exhibits in year 1 or 2 of operations.
Public ProgramsThe Museum of Television will produce free public programs that will allow families to discover and dialogue about how our nation has changed over the years and the role television has played in this process. As mentioned on page 30, the Museum of Television will offer not only a unique outreach programs directed toward the interests of students from The Walter Cronkite School of Journalism and Mass Communications and the Herberger Institute for Design and the Arts
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Programs at ASU, but also curriculum that ties in with K-12 classroom studies. We will offer a range of internships and special classes, workshops, and seminars that introduce students to a wide variety of opportunities within the wonderful world of television; and we anticipate that our sponsorship opportunities will absorb some of the costs associated with these and other quality programs.
Workshops - Conferences - SymposiaWe will also develop a diversified outreach program consisting of classes, seminars, workshops, and internships; and our primary goal in this classification is to make programming accessible to everyone. While these have the potential to generate revenue, we are conservatively forecasting gross revenues of $75K at this early stage.
Expenses
Administrative OverheadThe museum will require 4 full-time administrative staff members and some contractual staff with annual salaries totaling $427K. Their benefits are calculated at 25% for full-time and 14% for part-time workers. Our estimates for administrative costs are $288K annually, and they are based on analysis of other local institutions and their actual operating costs.
Permanent ExhibitsThe Museum of Television will have 7 main galleries and 3 satellite galleries that will exhibit many hundreds of original artifacts ranging from small hand props to full-sized spaceships to even entire homes or set environments; and we are budgeting $500K per year for permanent exhibit materials, which will be subject to annual review by the Board of Directors. A budget for related staffing is estimated at $321K per year and a renewal and maintenance budget is $100K.
Temporary ExhibitsTo sustain attendance, we will continually look for new temporary exhibits that compliment the museum’s cultural mission, and we anticipate acquiring 1 or 2 temporary installations per year at an average cost of $50K each. We do not anticipate the need for such supplementary exhibits during our first year of operations, and our goal is to create sponsorship opportunities that mitigate some or all of their related costs.
Traveling ExhibitsThe stellar potential for traveling exhibits is limited only by our own ability to staff and fund their development and building. As previously stated, our initial goal is to focus on the successful opening of our permanent facility, and determining accurate expenses for something as important as traveling exhibits would require considerable additional input from our Board, potential sponsors & promotional partners, third party vendors, etc.
Building OperationsThe museum’s building operational costs will be dependent on the size of the building, its required staffing, and other factors. While it is our goal to acquire a donated building or to negotiate discounted rent, we are initially projecting a 45K sq. ft facility with rent at $1.25 per sq. ft. Furthermore, we are projecting $8.50 per sq. ft. per year for occupancy including utilities, maintenance, security, and property insurance. Building operations staffing has been estimated at $153K and related supplies at $10K.
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Development - Marketing - FundraisingMuseums are rarely self-sufficient and therefore a Development and Marketing staff of 3 will be tasked with the promotion of the museum, generating membership revenues, and fundraising to meet a forecasted operating shortfall. Staffing has been budgeted for $208K with a department budget of $310K for supplies and expenses associate with these tasks.
Visitor Services and SecurityThe Museum of Television will be open for an average of 8 hours per day for 364 days per year. This department will consist of a full-time manager, part-time ticket sales and security personnel, and a volunteer program, which are budgeted at 219K
Public ProgramsPublic programs such as our This Just In lecture series, Stay Tuned screenings, vocational internships, workshops, seminars, and other public programs will vary from year to year; and we will foster this program to grow significantly to satisfy the outreach goals defined in this plan. This program has only begun to be developed, and initial expense are budgeted at $207K.
Classes, Conferences and SymposiaThe Museum of Television is committed to offering classes, conferences, and lectures (see page 30) that are affordable to everyone and as such will absorb many of the hard costs (including fees for lecturers and teachers, their traveling expenses, materials, and marketing) associated with such programming. Our baseline year cost estimates for these programs is estimated at $57K, though as the museum becomes more established we anticipate this area will grow significantly alining us with our outreach mission.
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Operating Budget Breakdown
We are presenting a baseline operating budget based on the assumption that the museum will be built as described in this plan and with an estimated operating budget of $4.8M per year this is including approximately $675K for rent which we hope to acquire donated space to eliminate this cost. This will break down to approximately 15% of our costs being administrative, 32% being exhibit related, 12% being associated with marketing, 8% connected to community outreach, and 28% being related to operations expenses. However, ultimately, should the baseline budget be less than that, paid attendance and other visitor contacts (and their associated revenues) would likely decrease while operating costs would remain about the same.
The baseline year is generally established during the third year of operations and ours has been based on similar area institutions’ operating costs. However, we anticipate that durning our first year of operations some expenses will be higher while certain revenues will not be fully realized due to ours being a nascent museum.
AdministrationExhibitsDevelopment & MarketingOutreach OperationsRetail
5%
28%
8%12%
32%
15%
Expenses
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Summary Operating Statement 100K Visitors
Baseline Year
Revenues
Admissions Income $1,240,000
Membership Income $225,000
Retail Store (Gross) $300,000
Exhibition Sponsorships $600,000
Temporary Exhibition Sponsorships $100,000
Traveling Exhibition (TBD) $0
Special Events/Facility Rental (Gross) $186,000
Revenue from Classes/Workshops (Gross) $75,000
Public Programs $0
Misc. Revenue $10,000
Total Earned Revenue $2,736,000
Expenses
Administration
Administrative Personnel $427,500
General Administrative Costs $288,000
Sub-Total - Administration $715,500
Programs & Education
Personnel $120,000
Workshops/Classes $57,000
Public Programs $77,000
Additional Supplies $10,000
Sub-Total - Programs & Education $264,000
Development & Marketing
Personnel $243,750
Fundraising Expenses $50,000
Marketing & Advertising $200,000
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Printing and Publications $50,000
Membership Services/Events $10,000
Sub-Total - Development $553,750
Exhibits and Collections
Personnel $416,808
Curatorial Supplies/Materials $75,000
Technology Enhancements $50,000
Exhibits Maintenance $100,000
Temporary Exhibits $100,000
Permanent Exhibits $500,000
Artifact Insurance $50,000
Rights and Clearances $50,000
Off-site Storage $72,000
Artifact Acquisitions
Sub-Total - Exhibits and Collections $1,413,808
Building Operations
Personnel $207,567
Supplies $10,000
Facility Rentals $46,500
Occupancy $382,500
Rent $675,000
Sub-Total - Building Operations $1,321,567
Museum Store
Personnel $107,424
Cost of Goods Sold $150,000
Sub-Total - Store $257,424
Total Operating Expenses $4,526,049
Total Operating Income $2,736,000
Operating Shortfall -$1,790,049
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Supporting Schedules
Assumptions
Building Size 45,000
Daily Operating Hours: 260 Weekdays (10 am - 6 pm) 8 Hrs
104 Weekend days (10 am - 6 pm) 8 Hrs
Total Public Hours 2,912
Average Admissions Revenue $12.40
Retail Sales per Capita $3.00
Retail Cost of Goods Sold 50%
Conference Room Capacity 40
Utilities and Maintenance Annual Cost per Sq. Ft.
$8.50
Monthly Rent Cost per Sq. Ft. $1.50
Benefits Rate (Full-Time Staff) 25%
Benefit Rate (Part-Time Staff) 14%
Projected General Attendance 100,000
School Group Attendance 5,000
School Fees Per Student TDB
No. of Members 1,500
Average Membership fee $150
Ticket Prices and Admission Revenue Dist’n No. of Visitors Revenue
Adults $15 50% 50,000 $750,000
Seniors $13 20% 20,000 $260,000
Children $10 15% 15,000 $150,000
Students $8 10% 10,000 $80,000
Under 5 Free 5% 5,000 $0
$12.40 100,000 $1,240,000
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Public ProgramsExpenses and Revenue
Expenses # Programs Av. Cost
Lecture/Gallery Talksw. staff speakers
12 $500 $6,000
Stay Tuned ScreeningsThis Just In Seminars
12 $500
K-12 School Group Events 52 $500 $26,000
Educational/Vocational Events w. special guest(s)
6 $7,500 $45,000
Total Public Program Expenses
$77,000
Revenue
# Rentals Avg. Attend
Avg. Ticket
Total
Lecture/Gallery Talksw. staff speakers
50 $0 $0
Stay Tuned ScreeningsThis Just In Seminars
100 $0
K-12 School Group Events 50 $0 $0
Educational/Vocational Events w. special guest(s)
250 $0 $0
Total Public Program Revenue $0
Net Public Programs -$77,000
Facility Rental Expenses and Revenue
Expenses # Per Yr.
# Rentals Av. Cost Total
12 Entire Museum $1,000 $12,000
48Satellite Set Gallery
(3 available)$250 $12,000
24Lobby, Front End
& Theater$750 $18,000
12 Lobby & Front End $375 $4,500
Total Expenses Facility Rentals $46,500
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Facility Rental Expenses and Revenue
Revenue # Per Yr.
# Rentals Av. Fee Total
12 Entire Museum $4,000 $48,000
48 Satellite Set Gallery (3 available)
$1,000 $48,000
24 Lobby, Front End & Theater
$3,000 $72,000
12 Lobby & Front End $1,500 $18,000
Total Gross Revenue Facility Rentals $186,000
Total Expenses Facility Rentals $46,500
Total Net Revenue Facility Rentals $139,500
Classes, Conferences & SymposiaExpenses and Revenue
Expenses # of Programs Avg. Enrollment Cost Total
Workshop (1-2 days) 6 25 $5,000 $30,000
Classes (2-4 hours) 12 50 $1,000 $12,000
Supplies & Materials $5,000
Promotion & Marketing $10,000
Total Revenue $57,000
Revenue Avg. Enrollment FeeTotal
Workshops 6 50 $150 $45,000
Classes 12 50 $50 $30,000
Total Gross Revenue Conference-Symposia $75,000
Total Classes-Conference-Symposia Expenses $57,000
Net Revenue Conference-Symposia $18,000
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General Administrative Expenses Assumptions
Legal $10,000
Accounting $30,000
Information Technology $45,000
Membership and Dues $8,000
Postage $25,000
Supplies $75,000
Equipment Rental and Maintenance $45,000
Telephone $10,000
Banking $15,000
Travel and Transportation $25,000
Total Administrative Costs $288,000
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Start-up Cost Projections
Start-up expenses projected for this faceted museum are defined below and will include Design and Creative Services (design, production, hard costs, labor, scenery, sound, lighting, show control, etc. associated with the physical build of the opening exhibitions and related creative expenses); Museum Personnel (the staff required for start-up, design & develop, and build & open stages); Operating Expenses (for start-up and beyond); and Fundraising (the consulting fees paid to an outside fundraising company). In total, the estimated cost of the project will be just below $34M, and as the project moves forward, more detailed analyses will be conducted and estimates will be further refined.
We are anticipating 3 years of planning and implementation based on the analysis of this plan:
Year 1 will include silent fundraising; relocation of loaned collection assets; locating, designing, and installing the preview center; and the development and commencement of our Capital Campaign.
Year 2 will include continued operation of the preview center, our capital campaign, locating and securing our permanent Museum facility, related design and development, and object prep.
Year 3 will include 6 months operation of the preview center, a continuing capital campaign, and the building and opening of our museum.
Expenses! Design and Creative Services
Design work by Thinkwell Design Group is highlighted throughout this plan, and their detailed breakdown of costs follow in the supporting documents. However, it should be noted that the 30,000 sq. ft. of exhibition space envisioned in this plan is larger than what they originally contemplated on our behalf, and therefore assumptions and adjustments have been made herein to account for this change in scope. Design costs include: design, labor, lighting, production, scenery, show control, sound, and other elements associated with the build of the opening exhibitions and related creative services.
! PersonnelDuring our implementation phase in year 1, personnel will consist of the Museum President-Director; and in year 2 the Collections Director-Exhibit Director, Operations Director, Technical Director and others will join the team. We have also budgeted for additional freelance personnel to be brought in on an as needed bases.
! Operating ExpensesDuring our capital campaign, design, and building & opening phases we will maintain offices within our preview center, which will be comprised of an exhibit area, a mixed use area for conservation, mount fabrication & larger meetings, and an artifact storage area. The Comisar Collection cultural objects will be moved from Southern California to this location to help facilitate measuring, mount making, conservation, photography, and other aspects of object prep, as well as to ensure that any object can be displayed in real time to build excitement amongst potential donors, the media, marketing partners, and the community at large. This facility will require up to 12K sq. ft. at an anticipated rate of $.75 sq. ft. While it is the eventual goal for our museum to acquire a permanent building that is either donated or city-owned (or otherwise at a greatly reduced cost), we will initially budget $1.25 per sq. ft. for rent until this can be realized.
! Operating ReserveA reserve equal to 6-months of operating expenses will be raised prior to opening to offset costs incurred during this period, if necessary.
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! FundraisingThe museum will hire outside fundraising consultants to manage our capital campaign of approximately $34M. Historically, fundraising consulting fees can run between 2-6% of the amount of capital raised (though they are not charged per se as a percentage of capital raised) and therefore we are budgeting 5%.
Year 12013
Year 22014
Year 32015
Preview Capital Campaign
Preview Capital Campaign Design & Develop
PreviewCapital Campaign
Build & Open
Expenses
Design and Build $325,000 $11,915,061 $10,214,211
Museum Personnel $387,500 $827,875 $1,092,900
Design and Build Operating Expenses $378,000 $1,863,000 $2,676,000
Operating Reserve (first 6-months of operations) $2,260,000
Sub-Total $1,090,500 $14,605,936 $16,243,111
Fundraising Expenses (5% of Total) $54,525 $730,297 $812,156
Total Funding Needed $1,145,025 $15,336,233 $17,055,267
Design & Creative Expenses
Design & Creative (Breakdown in supporting documents) $25,000 $1,432,918 $1,432,918
Project Management and Production Staff $1,146,334 $1,146,334
Technical, Scenic and Assets(Breakdown in supporting documents) $200,000 $5,731,671 $5,731,671
Media Production $321,000
Audio Tour - Oral Histories $150,000 $150,000
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Audio Tour - Technology and Equipment $400,000
Retail Fixtures $100,000
Leasehold Improvements $100,000 $2,000,000
Artifact Conservation Supplies $50,000 $150,000
Artifact Acquisitions
Sub-Total $325,000 $10,360,923 $8,881,923
Contingency at 15% $1,554,138 $1,332,288
Total Design and Creative $325,000 $11,915,061 $10,214,211
Personnel
President/Director $150,000 $154,800 $159,720
Collections/Exhibit Director $0 $85,000 $87,550
Project Director $0 $70,000 $72,550
Operations Director $0 $75,000 $77,250
Technical Director $0 $77,500 $77,250
Support Staff and Contracted Services $200,000 $250,000 $500,000
Sub-Total $350,000 $712,300 $974,320
Fringe benefits $37,500 $115,575 $118,580
Total Personnel $387,500 $827,875 $1,092,900
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Operating Expense Assumptions
Accounting Fees $10,000 $30,000 $35,000
Payroll Services $4,000 $7,000
Legal $10,000 $30,000 $25,000
Dues & Memberships $5,000 $8,000 $8,000
Office Furniture and Equipment $15,000 $35,000 $35,000
Supplies $20,000 $50,000 $75,000
Telephone $4,000 $10,000 $15,000
Postage and Shipping $6,000 $10,000 $50,000
Occupancy (Permanent Museum Facility) $382,500 $382,500
Occupancy (Preview Center) $52,500 $52,500 $52,500
Equipment, Rent & Maintenance $10,000 $25,000 $35,000
Print & Publications $10,000 $50,000 $275,000
Advertising, Promotions & Marketing $50,000 $250,000
Travel $10,000 $40,000 $40,000
Conferences, Conventions & Meetings $20,000 $20,000 $20,000
Website Design $60,000 $60,000
Artifact Insurance $30,000 $30,000 $30,000
Banking $5,000 $15,000 $30,000
Professional Services $50,000 $50,000
Security (Monitoring) $12,500 $25,000 $25,000
Rent (Museum Facilities) $675,000 $675,000
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Rent (Preview Center) $54,000 $108,000 $108,000
Taxes (Property) $100,000 $100,000
Artifact Relocation - Fine Art Transportation $25,000
Artifact Relocation - Fine Art Packing $75,000
Artifact Licensing $200,000
Clip and Image Licensing $100,000
Total Operating Expenses $378,000 $1,863,000 $2,676,000
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