Business analyst Mark Lacter joins KPCC once a week for an in-depth look at economic issues in Southern California.
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Why Cirque du Soleil didn't work in Los Angeles

KPCC's business analyst Mark Lacter explains why Cirque turned out to be a flop in LA.

Steve Julian: We mentioned yesterday that Cirque du Soleil is closing "Iris" at the Dolby Theatre in January.  Mark, what happened?

Mark Lacter: What happened, Steve, was they couldn't fill up the theater night after night, which is quite a turnaround from what Cirque had been promising when it first signed on for that 10-year commitment (turned out to be just 16 months).  You might remember this was supposed to have been a game changer for Hollywood - a huge economic infusion for the area, largely because of the potential ripple effects: so, if you went to see Cirque du Soleil, you might have chosen to have dinner nearby, or shopped in a store.  That sort of thing.

Julian: Why didn't it click?

Lacter: Could have been the high ticket prices, the good - but not spectacular - word of mouth, or the fact that Hollywood remains a work in progress as far as being a true cultural destination, or maybe the whole idea of having a permanent show in L.A. was unrealistic in the first place.  You know, there have been big stage events that came to L.A. and stayed a long time ("Phantom of the Opera" was here for four-and-a-half years), but the Cirque du Soleil production hadn't come from Broadway - hadn't come from anywhere.  Everyone was just assuming that because other Cirque productions had been so successful elsewhere - especially in Las Vegas - this one would be successful here.

Julian: The L.A. City Council certainly assumed as much…

Lacter: That’s right.  It signed off on a $30 million loan to the CIM Group, which owns the Dolby Theatre, formerly the Kodak Theatre.  Taxpayer money was not involved - funding came from private investors who had bought federally guaranteed notes.  And, we should point out that CIM has promised to repay the loan.  But clearly, this is a huge disappointment.  For the Hollywood business community, it's another reminder that the place remains a tough sell.  For L.A. City Councilman Eric Garcetti, who basically masterminded the federal loan package, it's certainly a political embarrassment.  Garcetti, of course, is running for mayor.

Julian: Does this give his opponents any ammo?

Lacter: I’m not sure the extent by which this becomes a political problem.  It’s mostly a financial problem for CIM, which must figure out how to fill the Dolby Theatre.  The whole reason that Cirque had been approached about a permanent show is that the theater had been dark for much of the year (aside from the six weeks when they prepare the place for the Academy Awards).  The one consolation is that Cirque du Soleil had invested millions of dollars to enlarge the backstage so it could accommodate its show.  Presumably, those additions might entice production companies to take a look at the Dolby Theatre.

Julian: We know how to measure failure and success, but how does one measure creativity in Southern California?

Lacter: Well, it’s a lot more than movies and TV – that’s according to a new report by the Otis College of Art and Design in concert with the Economic Development Corporation.  This study groups all creative industries into a single unit - and that includes video games, fashion design, home furnishings, the visual and performing arts - as well as entertainment.

Julian: What did the Otis report find?

Lacter: First off, that L.A.'s creative community employs more than 300,000 people, and generates revenue of $120 billion.  Those numbers top most any other place in the nation.  Besides movies and TV, the work could involve producing videos or designing websites or creating fashion lines or conceiving ad campaigns - pursuits that all require large amounts of creativity, and which don’t have much to do with Hollywood.  That’s really what this report is about – local creativity can mean lots of things.  The good news is that it’s likely to stay here: creative people usually don't live in places based on the kind of tax breaks they can get.  They live in places where other creative people live…

Julian: Which just happens to be where the weather is nice…

Lacter: …and on that score, Southern California is in pretty good shape.  The question is whether more can be done to nurture all that talent.

Mark Lacter is a contributing writer for Los Angeles Magazine and writes the business blog at LA