News
At Brave New Workshop, Can Funny Make Money?

At Brave New Workshop, Can Funny Make Money?

How Brave New Workshop went about turning improv’s red ink into a diversified bottom line.

For local theatergoers, the Brave New Workshop Sketch and Improv Comedy Theater, founded by Dudley Riggs in 1958, is perhaps as much a Minneapolis entertainment institution as is Sir Tyrone Guthrie’s enterprise.

But since Riggs’ retirement and the company’s purchase by two of his alums in 1997, the company’s balance sheet, if graphed, would trace the course of a roller-coaster ride whose predominant trajectory was down. For years, improvisation seemed to rule business decisions as well as public performances.

It’s hard to believe that it’s been more than 15 years since Riggs bowed out of the improv troupe he founded, but even more amazing that for at least a decade after the sale, Brave New Workshop couldn’t turn a profit. A panoply of business initiatives and new locations garnered attention but did not return cash to the bottom line. A decade in, the business’ owners, husband-and-wife-team John Sweeney and Jenni Lilledahl, stared down a conundrum: Could funny make money?

Timeline

1958
Dudley Riggs launches Brave New Workshop.

1997
Riggs retires, John Sweeney and Jenni Lilledahl purchase BNW.

1997
Lilledahl becomes executive director of improv school.

1998
Theater moves to Calhoun Square from 2605 Hennepin Ave. S.

2002
Three-year lease signed with Palace Theatre in downtown St. Paul.

2002
Calhoun Square lease ends; operation moves back to 2605 Hennepin.

2002
Creative Outreach (CO) launches, becomes revenue mainstay.

2009
School re-energized with two cast members as co-directors.

2011
Move to 824 Hennepin.

John Sweeney had a flourishing career in corporate real estate and Jenni Lilledahl had earned her chops as a communications exec when the two met in a Stevie Ray’s improv class in 1992 that proved far more appealing than their nine-to-five lives. “This never felt like work. Work,” he attests, “was growing up back on the farm in Wisconsin, milking 168 cows. . . . Early on, I had a conversation with the Farley brothers [Saturday Night Live], with whom I’d gone to school,” says Sweeney. “The upshot was I could be making money for what the nuns used to yell at us for.”

Not long after landing a job with Brave New Workshop, Sweeney prodded Riggs to expand his responsibilities, saying “You’re paying me for nights: How about daytime, too? Where else can we make money?” which begat a trickle of corporate-training gigs.

In 1995 Sweeney, then 29, moved to Chicago, excited to sign on as a performer with Second City Communications, the corporate entertainment and training division of comedy theater The Second City, regarded as the gold standard of improv. Girlfriend Lilledahl joined the company the following year, when she was 31. When Riggs let them know in 1997 that he’d like to sell, they tried to interest the Second City in acquiring a satellite operation in Minneapolis, without success. Not wanting to see BNW fade into oblivion, Sweeney and Lilledahl didn’t hesitate to sign papers to continue Riggs’ legacy. Back in Minneapolis, everyone—parents, siblings, banker, accountant, attorney—reacted with incredulity that the two then-unmarried comics had the know-how to run the business.

During dinners eating ramen noodles, Sweeney sometimes wondered the same thing. “But then I thought of Dudley,” says Sweeney. “He didn’t quit.”

Dudley Riggs, in an email interview, notes that under his tenure “there were profits every year, but no one ever got very rich. [We] operated as a for-profit business supported by ticket sales. For over 40 years [52 weeks a year/about 250 productions] the theater continued on earned income without a dime of grant money.” But the company Sweeney and Lilledahl had just purchased had four full-time employees and annual revenue of $260,000, with 95 percent derived from ticket sales. It was not profitable. There was little revenue coming in outside of performance.

Sweeney set out in search of new revenue. He knew that Disney had just purchased two cruise ships and would be looking for onboard entertainment. He approached Disney with the proposition of providing improv shows on its ships. The entertainment giant bought the idea, offering BNW a three-year, $1.6 million contract. After designing 148-seat theaters where they would stage the shows and conducting a flurry of auditions for talent, BNW set sail, a venture that provided a 105 percent boost in annual revenue.

0513_bravenew_p1.jpgA BNW Creative Outreach event for Capella University.

CO—The Tail That Wags the Dog

The fastest-growing and most lucrative component of BNW’s business offers a stable of services based on analysis of a corporation’s culture and needs. After owner John Sweeney and his team solicit expected outcomes and audience goals—for instance, a motivational or behavioral takeaway, challenges to be discussed, etc., sessions might focus on team-building, communication, or the art of selling.

For instance, team-building—considered the core of improv—is fostered as colleagues learn to share space and create something from nothing. Improv skills help transform the workplace from a restrictive to a collaborative, accepting environment that fosters creativity. Sweeney draws analogies between creating an improv sketch and a business goal, such as the sales process. Improv techniques can improve the sales process as participants learn to define and communicate their point of view.

Speaking and training functions can include Sweeney’s keynote. “Our true differentiation from a typical keynote speaker is our robust information-gathering process,” he tells clients. Breakout sessions dive deeper into the concepts touched on in the keynote, with interactive exercises followed by a facilitated discussion on the topic.

Emceeing, keynote speeches, an executive talk show in a Carson/Letterman-type format, a comedy show at 824 Hennepin, or an improv team portraying specific scenarios start at $7,500 per day.

“The Disney gig made us realize we had an amazing product—not just little Minneapolis anymore. We kicked butt—a great way to start our ownership,” Sweeney recalls. “But we hadn’t factored in the costs. Nor did we understand that the quality of your product doesn’t matter. Revenue matters.”

With the majority of Disney’s fee going to pay actors and directors, the venture proved break-even at best. Meanwhile, Disney was looking at revenue, too—and while customer comments were off the chart, patrons stayed glued to their seats during the show and failed to approach the bar. Looking for alcohol revenue, Disney replaced BNW’s show with a dueling piano act.

Making A Move

In 1998 Sweeney and Lilledahl married, and as they changed their domestic status, they looked for a similar reset for BNW, decamping from the troupe’s tired and leaky home at 2605 Hennepin Ave. S. Propelled by the prospect of expanding the audience base they moved to Calhoun Square, lured by amenities like ample parking, modern bathrooms, and nearby restaurants. They invested $400,000 to renovate the space and expanded to 12 full-time and 15 part-time staff.

They built it, but we didn’t come—at least not enough of us. “We didn’t have a grip on the fact that our style of comedy has a rather limited audience,” Sweeney explains. “We’d hoped, with the move [to Calhoun], to grow from 25,000 tickets sold a year to 50,000, which didn’t happen.”

Concurrently, Lilledahl pushed for a major expansion of another revenue stream. As executive director of what was formalized as a nonprofit school of improv, the Brave New Institute (now called Student Union), she drove student counts from five in 1997 to more than 200 in 1999. But BNW couldn’t sustain the momentum as Lilledahl split her focus between the institute and parenting two young boys. By 2010, student count had plummeted to 78.

Focusing on synchronistic growth, in 2002 BNW added a second venue by leasing and renovating the historic Palace Theatre in downtown St. Paul. There, the company managed two dinner-theater shows, Flanagan’s Wake and Minnesota: It’s Not Just for Lutherans Anymore, requiring new hires that pushed the organization to its largest size (a staff of 64, factoring in a seven-person cast and accompanying bar/dinner/usher staff, divided between the three operations). Sweeney successfully lobbied the Legislature to allow sales of beer and wine at both BNW venues, another revenue driver.

Disney had proven to be an ego-booster but a bad business decision. The St. Paul venture, which had required extensive renovation, proved that spending money did not necessarily make money—Sweeney closed the operation at the end of its lease in 2005.

Calhoun Square fared no better. After three years and a marketing/advertising budget that soared from $600 in 1996 to $150,000 in 1997 but drove only a puny 6 percent increase in ticket sales, Sweeney realized his comedy market was inelastic: “Good reviews don’t translate to revenue,” he notes. “We were spread too thin. The Brave New Workshop’s [irreverent comedy] is not for everybody.”

Project 824

Believing that doing well also mandates doing good, BNW’s owners have launched Project 824, which offers its downtown space to community organizations for free, waiving the customary $3,000 rental fee. Since its inception in 2011, organizations like Courage Center, the Aliveness Project, Cancer Kids Fund, and Heifer International have taken advantage of the offer. “It’s a chance to be generous with what we’re good at,” says co-owner Jenni Lilledahl. “Our city financing felt like a gift to us; plus, it’s a benefit for employees who might not be able to donate money but feel they’re making a civic contribution.”

Figure in, too, the events of 9/11, with its cocooning effect, and the ensuing recession, which dragged down theater revenue nationwide. (The National Endowment for the Arts reported a nearly 12 percent ticket revenue decline overall in 2002, the sharpest in the 1990-2005 period.)

In 2002, BNW cried uncle and decided to retrench back to 2605 Hennepin. With debts of more than $960,000, in part accrued from customizing Calhoun and renovating St. Paul, Lilledahl and Sweeney were relying on loans from family and deferring their salaries. They had yet to have a profitable year. It was high time for Sweeney to act on that advice he’d offered Riggs way back when: Make money in the daytime.

A Corporate Market

The improv school’s death knell was averted by hiring two BNW cast members as co-directors; they revitalized the curriculum, dividing it into professional and avocational tracks, and grew it back to 250 enrollees. Today, with annual revenues of $250,000, it’s holding its own.

And one of Sweeney’s brainstorms had legs. Focusing anew on serving business through speeches and training sessions, in 2002 he formed a division—today BNW’s cash cow—called Creative Outreach (CO). He hired a salesperson to market speeches and training to corporations and invested $16,000 in new studio-caliber equipment for taped corporate videos, of which the company presently does 75 to 100 a year. (Capabilities have since expanded to include long-distance training sessions via webcast.)

Beyond keynote speeches, which start at $20,000 and can reach a corporation’s highest echelons, CO offers training in half- or full-day sessions to groups of 100 or fewer; it does emcee work for larger, multiday events, such as Ingersoll Rand’s recent gathering in Orlando, Florida; and can facilitate a panel of company execs on topics such as ethics in the workplace. Fees for most services run at least $7,500 a day.

Sweeney had set a goal of $1 million in corporate revenue with a 65 percent profit margin to subsidize the theater and school. That would prove a full-time job, so in 2001 he handed over the operational reins to actor Caleb McEwen, who was promoted to artistic director. Ticket sales, at their nadir of 14,000 in 2003, began to grow steadily, reaching 27,000 in 2009, but performances still posted annual losses; costs outstripped revenue by more than 10 percent a year, although they were subsidized by BNW’s growing corporate business.

Though improv gives BNW a cachet that makes it stand out in a crowded business-to-business marketplace, the genre is not inherently a loss leader. Andrew Alexander, CEO and executive producer of Chicago’s The Second City improv company says “comedy and improv are doing enormously well. We tour worldwide, and our prospects have never been better. There are four or five competing improv companies in Chicago, too, but that adds to the fabric and is good for the whole community.”

0513_bravenew_p2.jpg

Haven’t I Seen You Somewhere?

BNW alums are myriad, including Numb3rs actor Peter MacNicol, Mad Men’s Rich Sommer, Naked Gun screenwriter Pat Proft, MAD TV’s Mo Collins, writer Peter Tolan of Analyze This, Reno 911’s Cedric Yarbrough, Reba’s Melissa Peterman, comedian Louie Anderson—and who’s that Minnesota senator again?

Striking Gold Downtown

Lacking Second City’s iconic brand and Chicago’s steady flow of tourists, Sweeney needed a different solution. In 2010, still dissatisfied with the 26th and Hennepin location, and convinced that a move could provide a larger audience for BNW, Sweeney answered an RFP from the City of Minneapolis, which owned the defunct Hey City Stage at 824 Hennepin Ave. downtown. Thanks to a favorable lease, BNW moved its performance stage in 2011 (the school remains at 2605), which seems to have provided the magic those earlier moves missed.

“If they found us in Uptown, they loved us, but it’s easier to be here,” says Lilledahl. “We’re seeing [customers] we’ve never seen before, and that’s exciting. Now, we’re grown-ups. Just being downtown takes away a lot of obstacles for audiences. We’ve learned that relationships help, too—like a [hotel] concierge or a Twins ticket offer.”

The downtown location has proven the windfall that BNW has long been searching for: rentals of the space brings in $400,000 a year, bar sales have leapt from an annual $125,000 to $450,000, and CO events based downtown are increasing steadily. “Now we’re making money!” Sweeney says.

BNW’s performance side may be feeling some wind in its sails as well. The 2012 Christmas show (50 Shades of White) sold at 97 percent occupancy, BNW’s best-selling show to date.

“Our secret sauce is a marriage of all the facets,” Lilledahl explains. “We need the theater, because John couldn’t get $20,000 for a speech if this weren’t the oldest satirical sketch comedy theater in the U.S.”

Local improv guru Stevie Ray, who founded his troupe in 1989, validates BNW’s approach. “To stay viable, it takes a diversity of income streams, a number of ways to balance things out. For us, corporate training is 53 percent of our income, ticket sales 35 percent, and the rest derived from classes. Last year was very good, almost up to our record year of 2007.”

CO’s clients—more than 100 a year—include 37 Fortune 100 companies. Repeat business constitutes 80 percent of sales, and it’s almost self-renewing, says Sweeney. “You address 350 leaders, and they each run $500 million companies, so it’s not hard to figure out where our next sale will come from.”

But they don’t come from Minneapolis, much. “It’s that hometown mentality; they spend their money on out-of-town talent,” Sweeney notes. Still, with expected revenues for 2013 amounting to $1.2 million from CO, $675,000 from BNW ticket sales, $470,000 from liquor sales, $400,000 in space rental, and $255,000 from classes, it looks like the couple’s days of ramen noodles are over.

Carla Waldemar is a longtime chronicler of the Twin Cities’ arts and cultural scene.

 

Creative Outreach

Case studies from Brave New Workshop’s CO division, which offers corporate clients a creative approach to training and motivation.

Client: Thermo King division of Ingersoll Rand
Audience: Dealer channel partners
Goal: Driving focus and productivity during a time of chaos and challenge
Comments: “We used John [Sweeney] and Brave New Workshop during our annual dealer conference in January. Our business is undergoing a period of extraordinary change due to new government regulations. We’ve had to revamp all product lines to be in compliance, bringing with it major changes in technology and pricing. Our dealer channel partners have been struggling to keep pace with everything. John was able to get our participants out of their comfort zone using improv techniques and open their minds to new ways of approaching markets and preparing for the new normal.”
Ken Hartman, director, dealer development, Thermo King, Ingersoll Rand

Client: UnitedHealth Group
Audience: Senior executives; various programs for wider staff
Goal: Make processes and approaches to innovation more accessible
Comments: “We’ve had the chance to work with John and his team at Brave New Workshop several times over the last three years. They have been a thoughtful, strategic partner. John and the team have participated in diverse ways: conducting workshops for senior leaders, partnering with us to host our annual Innovation Day, running learning sessions for our associates on critical aspects of innovation like storytelling, and so on. The humor that Brave New Workshop brings to [its] engagements with us makes it an easy—and fun—way for people to learn. One of the first things they did with us was to create a series of short videos to advertise our first Innovation Day in the style of a monster- truck commercial. It was so unexpected and funny that it immediately caught people’s attention and made a deeply memorable impression.
Meredith Baratz, vice president, strategic insight and innovation, UnitedHealth Group

Client: Hilton Worldwide
Audience: Hampton Brand Division general managers
Goal: Use improv techniques with hotel general managers to improve quality of staff interactions with customers.
Comments: “Brave New Workshop and Creative Outreach have been truly outstanding and very impactful for us. They really got to know us and our culture.”
Scott Schranck, Hilton Worldwide, vice president, Hampton brand performance support