Benefactors throw financial lifeline to Carriageworks

Benefactors stump up $1.65m in donations that will be used to revive operations at ailing Sydney arts venue.

Carriageworks in Sydney.

A philanthropic lifeline of $1.65m will be used to revive operations at Carriageworks under a deal brokered by administrators over the future of the ailing Sydney arts venue.

In their administrators’ report, sent to creditors on Monday, KPMG’s Phil Quinlan and Morgan Kelly have detailed the financial problems at Carriageworks that stunned the nation’s arts community last month.

While coronavirus restrictions led to an immediate collapse in revenue, the administrators also identified three underperforming creative projects from last year that had already eroded the bottom line.

Carriageworks appointed voluntary administrators on May 4, saying the sudden cancellation and postponement of programs during the coronavirus pandemic had led to “an irreparable loss of income” at the venue in the inner-city suburb of Eveleigh.

The Carriageworks arts precinct. Picture: AAP

As well as providing a home for eight small arts companies, Carriageworks hosts major events such as the Sydney Writers Festival, Fashion Week and the Sydney Festival, as well as a popular farmers markets. Spread across 8000m, the venue generates about 75 per cent of its revenue from commercial activity.

In an attempt to recapitalise operations, maintain employment and allow artistic programs to resume, Carriageworks directors have proposed a deed of company arrangement backed by $1.65m from benefactors.

Carriageworks director Geoff Ainsworth, along with Johanna Featherstone, will donate $1.1 million to help keep the arts venue alive. Picture: James Croucher

The proposed funding consists of $1.1m from Geoff Ainsworth (a Carriageworks director) and Johanna Featherstone; $500,000 from the Neilson Foundation; and $50,000 from the Gonski Foundation.

Another $1.29m in contributions have been secured separately, including $900,000 from Mr Ainsworth and Ms Featherstone, and $240,000 from the Packer/Crown foundations, the latter tied to an indigenous training and education program called Solid Ground.

Under the deal, which needs to be approved by creditors at a meeting on June 9, control of the company would return to directors later this month. From that point, notwithstanding health restrictions across NSW, Carriageworks would be able to resume artistic programs.

The administrators recommend that creditors accept the proposal, but add two conditions: that directors obtain a longer lease term for the premises and the renewal of state funding beyond next year.

The report says the company’s financial performance has been historically stable, generating a “modest but sufficient” operating surplus.

But, as with other cultural organisations, Carriageworks had only a “limited buffer” to respond to a severe financial shock such as COVID-19. That vulnerability was then enhanced by net negative earnings of $525,000 last year.

Nick Cave at Carriageworks in late 2018. Picture: John Appleyard

The report identifies three projects that cost more than expected: a project by American artist Nick Cave; the annual Vivid festival; and the National, a partnership with the Art Gallery of NSW and the Museum of Contemporary Art.

“Despite consistent commercial activities,” the report says, “the company’s performance was significantly impacted in 2019 due the underperformance of some key artistic projects and an inaccurate projection of the timing of revenue on the Public Art program.”

Losses of $292,000 this year were attributed to ongoing costs from last year, a softening of commercial events as the COVID-19 pandemic evolved, cancelled events and $100,000 in revenue lost from cancelled events in March.

Carriageworks receives annual funding of $2.5m from Create NSW and $300,000 from the Australia Council. The latter has been confirmed through to 2024, though the Create NSW funding expires next year.

Carriageworks operates on a month-to-month lease with Create NSW, though a draft agreement recently has been drawn up for a 45-year lease.

Carriageworks, situated in the Sydney suburb of Eveleigh. Picture: Getty Images

When the lockdown came into force, Create NSW extended a six-month waiver of rent and outgoings to Carriageworks, which then extended the same deal to its resident companies and artists.

The Carriageworks board called in administrators at the start of last month after it suffered an “immediate loss of revenue” during the government-mandated shutdown.

According to the report, the shutdown came “when the company was approaching a critical period for commercial events”. Directors also were confronted with “significant uncertainty” about when restrictions would be lifted and when the company would resume operations, especially large commercial events.

“Our preliminary assessment concurs with this view, indicating a lack of liquidity from the suspension of all operations for an unknown and still to be determined period of time,” the report says.