Circus 2010 from the Numbers
Between football bowl games the enforced leisure time of the holidays is always a fine time to wade knee deep into economic data and try to get some picture, a snapshot of what might happen in the coming year. Of course nobody ever gets it all right, but in the circus business it’s nice to at least have a clue as to where the potential downsides are hidden. In 2007 looking at 2008 it was easy enough to look at the data and see problems in Michigan, where the job loss was already great and to see fuel prices on the rise. But it was harder to see how significant the “bubble” in crude oil speculation really was. When crude hit $150 and diesel at pump climbed over $5 in many markets it was tough time to be in show business, even if tickets and per caps were relatively robust. A year ago looking at 2009 I know that I completely missed just how bad unemployment in the mining towns in the west was, or the extent to which “thrift” would impact per caps in the upper Midwest. On the other hand, despite relatively high unemployment in agricultural areas in the west, demographics still delivered great audiences to circus. Why? Because even with 12% unemployment Hispanic families that were employed, and that rented rather than owned homes saddled with toxic mortgages had money for reasonably priced entertainment. Reasonably priced entertainment was the story of 2009 – and many circuses prospered as a result.
Now it’s early 2010. In Washington the party in power is talking about a “recovery” from the recession of ’08-09. Parties in power – either one – are always a bit too optimistic when it comes to recoveries. Unemployment is still in the double digits nationally, and two months of slightly lower unemployment doesn’t mean the jobs are coming back yet. Here in my county in upstate New York 2009 saw more jobs lost than at any point since government has tracked that data. Retail sales may not be falling, but they’re still flat. The housing market doesn’t look as grim as it did a year ago, but there are few new housing starts, houses being sold include vast numbers that have been foreclosed upon, and though mortgage rates are very low, the credit market is still too tight to prime the pump for a real housing recovery… and let’s not talking about the problems in commercial real estate. In parts of southern California, Arizona, and Nevada real estate continues to lose value, and in places like the Imperial Valley in California or San Bernadino or Riverside Counties unemployment is as high as 30%. We aren’t out of the woods yet. There may be real recovery in places like the inter-mountain west, or even Florida, but Michigan and northern Indiana remain ugly, and the wet autumn and harvest problems could mean cash flow is impacted this spring in southern IL, or MO.
But doom and gloom isn’t the way that 2010 looks like it might play out for circus. The same “stay-cation” scenario that played as a positive for shows in 2008 and 2009 (that affordable entertainment thing again) should continue in 2010 except in places like Michigan and desert CA. (The entire California economy is such a disaster, the biggest factor there may be increased taxes and fees driving up the cost of doing business.) After three years of “affordability” it might be time for smaller shows to trot out the catch phrase “a whole new show” to bring back the same circus-goers who saw us last year or the year before, even if what’s “new” is mostly the costumes and the running order or the performance. Fuel prices will certainly continue rising in 2010, but there’s no reason to believe that a new bubble is forming. Prices at the pump went up around 60% in ’09. If they go up another .70 cents a gallon in ’10 that’s still well below summer ’08 costs. If we really do see some job growth with unemployment dropping by a couple percentage points, “thrift” may be a bit less of a concern, pumping up per caps. (On the other hand if we shed more jobs per caps will likely decline or remain flat.) Clearly it’s not time to raise ticket prices yet, but should the credit market loosen enough to spur new home sales, by ’11 the theme parks may see some recovery and then we can look at ticket increases while remaining “affordable.”
Assuming inflation stays in check and 2010 plays out for many circuses much as 2009 did, by midseason it might not be a bad time to make equipment purchases before a more robust rate of growth does drive up prices. In ’09 there were bargains to be had and that likely won’t change in the next 6 months.
Of course Washington can always muck things up. Health care legislation may not impact small circuses, but it could impact medium sized shows. And the enormous debt taken on to provide stimulus and bailouts over the past couple years potentially means either higher taxes, or inflation, or both. Likewise overseas adventures in Iraq can impact oil. As is almost universally the case, politicians of any stripe are far more dangerous than elephants or tigers when it comes to what’s good for any of us. And there may be reason for concern on the labor front for shows employing H2B workers. The political situation in Mexico looks ugly, and violence associated with the drug trade continues to escalate. Should Mexico sink into widespread political violence, seasonal workers from Mexico will naturally worry about loved ones back home. And worried, unhappy workers aren’t good for shows. Moreover given the high domestic unemployment rate, we’re fortunately that the party in power owes a debt to the Congressional Hispanic Caucus, or we might have seen H2B Visa numbers slashed by now. If unemployment remains over 8% and there is a realignment in Congress this autumn, I wouldn’t be sure that H2B numbers won’t decline in 2011/2012. So we watch and wait.
In the meantime there’s reason to believe 2010 will be okay.