Group Members: Chrissy Mudd, Richard Saunders, Dale Marston, Patrick Harris, Terry Tucker, Grandy Peace

Executive Summary

Every entrepreneur has heard the saying "You run a business to turn a profit" many times in their careers, but the University of Georgia Tate Theater seems to have missed this sound business advice. Every quarter the theater does not make a profit, or break-even. Losses estimated at eight thousand dollars have accumulated each of the past several quarters.

The solution to this student funded sinkhole is threefold and lies within scheduling. First, one weekend film could be shown Thursday, Friday and Saturday instead of just Friday and Saturday. Secondly, there could be one weekday film shown on Wednesday and Thursday instead of two different films shown on those days. Both of these solutions would result in the termination of one weekday film per week. Finally, the foreign films shown every Sunday could be shown every other Sunday to cut costs. The Cinematic Arts division of the University Union chose the first option as its preferred solution. No action could be taken to implement the decision because all programming occurs the preceding quarter.



Detailed Analysis

Businesses are established to provide a profit for the owner and the continual loss of revenue seriously jeopardizes the organizationís existence. Certain not for profit organizations, that are subsidized in part by government funding, can operate at a loss over several periods and not necessitate the termination of the business. Such is the case at the Tate Theater. Hoganís Heroes has chosen to examine the quarterly losses and to attempt to cut overspending at the theater.

The Tate Center Theater receives funding from student activity fees paid by students every quarter. This funding is necessary because the theater never earns a profit and very rarely breaks even. A random survey performed by members of Hoganís Heroes accompanied by data supplied be the University Union will be used to try to solve this continuing problem. The results and solution follow in this report.

The University Unionís goal for operation is to show numerous types of movies that are of intrest to the entire University of Georgia student body, faculty, staff, as well as the entire Athens community. The University Unionís film selection committee consists of fifty students who suggest a large number of films each quarter. All members vote on films that they perceive will benefit the aforementioned student and community groups. As a result, the opinions received create a broad listing of movies. Currently five films are shown each week, consisting of one foreign language film played on Sundays, two weekday films Wednesday and Thursday, one week-end film shown Friday and Saturday, and lastly one midnight film played Friday and Saturday nights at midnight. Regular show times are as follows: 3p.m. 5:15p.m.,7:30p.m. and 9:45p.m. with the exception of the midnight movie.

We conducted a survey that would help us determine ways in which to improve the Tate Center Theater. The survey received thirty-one responses. The first question asked: "How may times per month do you go to the Tate Theater?" The responses were: 58% never attend, 29% attend once, 9.7% attend twice, and 3.2% attend three times. The next question asked: "In the past three months, have you missed a movie that you wanted to see because you were busy on the day it was playing?" The responses were: 75% yes and 25% no. The second part to the question asked: "If the same movie were played the following day, would you have gone to see it?" The response was that 75% would have and 25% would not have attended. Question 3 asked: "Currently, new releases are only shown on Friday and Saturday. If there were a Thursday showing, would you be more or less inclined to go to the Thursday showing?" 51% would be more inclined to attend while 49% would be less likely to attend. The last question asked: "What type of film would you be most likely to attend?" The overwhelming answer choice was comedy.

The theaterís average figures for fall quarter 96 were that costs totaled $31,000 and average revenues were $22,000. The Tate Center Theater has operated at a net loss of $9,000. Costs are determined by overhead, shipping, and actual payment made to the distributor. For each film, overhead is set at $200 per day plus an additional $85 per extra day that the same film is shown. Shipping costs vary, but they typically amount to $20-$50 per film. The actual payment made to the distributor varies widely. A minimum fee and terms of 50% are set by the distributor. The minimum fee depends upon the age of the film and other factors decided by the distribution companies. Also, the Tate Theater must pay 50% of ticket sales to the distributor. A combination of low attendance and high costs of operation have resulted in the large losses of revenue for the Tate Theater.

The solution for the Tate Center Theater is threefold. We have concluded that the best possible way to cut costs would be to reduce the total number of films shown per quarter. The weekend film should be shown Thursday through Saturday. By showing the film on Thursday, one weekday film would be cut per week. This alteration would save an average of $255 per week by eliminating all costs associated with the weekday while increasing overhead cost by $85 for the third showing of the week-end movie. Total estimated savings for the quarter would be $1700 {($255-$85)*10weeks}. This figure of $255 is the average net loss from weekday films from fall 96.

Second, a weekday film should be shown on Wednesday and Thursday. Currently one film is shown on Wednesday and another on Thursday. By spreading one film out over two days, the same effect of the aforementioned solution would be achieved. Showing the same film over two days would allow for higher attendance and lower total cost to the theater. Overhead would increase by $85 and the average loss of a weekday film of $255 would be saved. As in the previous solution, the total savings for the quarter would amount to $1700.

Finally, we believe that showing foreign language films every other Sunday would be sufficient to please its customer base while saving an average of $158 per Sunday that a film is now shown. The total saved for the quarter would be $740. $158 is the average net loss for each foreign film from fall 96.

The Cinematic Arts division of the University Union chose the first option as the suggestion that they would most likely implement. The vote was as follows: option 1 22/27 members, option 2 4/27 members, and option 3 1/27 members. We also believe that this solution would be the most beneficial to both the Tate Theater and the University community. If the Tate Center Theater aspires to end its drought of quarterly losses, a change in current operating procedures is emanate.