(Bloomberg) -- When ballet dancers wore Burberry-designed costumes at a performance earlier this year, it was a clue to Lloyd Dorfman’s plan to save the Royal Opera House from financial ruin: get luxury brands to pay for an association with the Covent Garden palace.
Next on his list is putting costume designers on TikTok, or the Nutcracker on to Netflix. “We need to be more commercial about what we do,” says Dorfman, the businessman and entrepreneur who took over as chair in July last year.
Dorfman, who made his fortune after founding the money exchange business Travelex, wants to go further. He envisions a future where the facade of the 19th century building itself could help fill the coffers. “Harrods has got scaffolding on the front of their building, and every month they have a different brand,” he says, during an interview. The Royal Ballet or Opera could also be sponsored by brands such as Tiffany & Co or Rolex, should they be interested.
New revenue streams are critical for the survival of the Royal Opera House, which has been left with a £15 million ($18 million) annual deficit after funding cuts and rising costs. It also has to spend £200 million on the historic building over the next decade. The opera house is not alone. Cultural institutions across the UK are suffering from a steep reduction in public funding announced in November last year and are battling for survival.
“For better or for worse, this has fallen on our watch to sort out,” says Dorfman, settling into a red velvet chair in the Royal Opera House’s gilded Crush Room. “Doing nothing is not an option.”
Hauling brand names over the building or turning its ballet dancers into TikTok stars may not be universally popular. But Dorfman, 71, is defiant: “Unless you, Mr and Mrs Die-hard Don’t Want to Change Anything, want to give us another £10 million each and every year, what do you suggest we do?”
For Dorfman, solving the financial puzzle is personal. On a tour of the vast corridors he pauses outside the grand bar on the first floor. “It’s not a coincidence,” he says, of the name: The Dorfman Conservatory.
Refurbishing the space in 2018 likely set Dorfman back several million pounds (he declines to specify how much) but it is the kind of donation the opera house needs if it’s to survive the impending financial crisis. It is not alone in its struggle.
The English National Opera, another opera company based in London and resident at the London Coliseum, is slashing 19 orchestra jobs and putting the remaining musicians on part-time contracts, due to funding cuts. The ENO has been told it will only qualify for future public grants if it moves out of London, as part of a plan to divert resources to other parts of the country.
The Royal Opera House’s funding from the Arts Council was cut by 9%, equivalent to £2.2 million. Dorfman is furious. “You’re not going to achieve leveling up by dumbing-down London,” he says.
Dorfman took over from the banker Simon Robey as chair in July last year. At the time, the building was recovering from the pandemic which left its theaters empty for months. Months later, a rail strike in the run-up to last Christmas forced the Royal Opera House to cancel a performance of the Nutcracker at a cost of £200,000.
“This is a business that relies on selling 95% of 2,200 seats just to break-even. When you can’t sell one seat, it’s not a good day,” he says. The opera house was forced to borrow money from the UK government and cut costs.
Rebuilt after a fire in 1856, the Royal Opera House is home to the Royal Opera, the Royal Ballet and the Orchestra of the Royal Opera House. Each year, it sells more than half a million tickets to performances of shows such as Romeo and Juliet, Giselle and the Nutcracker. Ticket prices range from £11 to £235, according to Stage, the entertainment magazine.
But with ticket sales covering just 40% of costs, the Opera House has long relied on donors and philanthropic support to keep the lights on. That too is an area coming under increasing pressure.
A decision to end its partnership with BP, after fellow institutions including the Royal Shakespeare Company cut ties with the oil and gas multinational, was right, says Dorfman, although it added to the financial pressure. “We can’t exist outside of the world’s sensitivities,” he says. BP had funded the opera house for 33 years, and without its donation, the organization will have to look elsewhere for cash at a time when companies are tightening their belts.
There have been some issues beyond the Royal Opera House’s control. Brexit-related constraints on visas for dancers and musicians caused “huge complications,” he says. “It was a political ping pong match at the time with all the benefits that the Brexiteers told us we could be getting. I’m not sure anybody is aware of any benefits that we’re enjoying as a result.”
Dorfman has led by example. At the National Theatre, where he donated £10 million toward its £70 million redevelopment, the Cottesloe auditorium was renamed the Dorfman Theatre. There, he pioneered the Travelex £10 ticket initiative that encouraged young people to see shows. He has also been involved with the Roundhouse, Bafta and the Royal Academy.
Growing up in the West End, Dorfman shunned university in favor of a job in the City after studying at St Paul’s School. He worked at First National Financial Corporation for three years until quitting to launch Travelex, the foreign exchange company, in 1976. The business pushed into British airports, and into America and Australia.
In 2014, Dorfman defied consistent rumors he would list Travelex on the London Stock Exchange and, with his private equity partners, sold to the Indian businessman BR Shetty for £1 billion. “I wasn’t looking to found a dynasty,” he says, of the decision to sell. “I was always told: don’t fall in love with your business.” The latest Sunday Times Rich List estimated his fortune at £712 million.
Today, Dorfman’s business interests stretch from property to Dorfman Media Holdings, which has financed films such as Untouchable, the documentary about the rise and fall of Harvey Weinstein.
It is this experience that Dorfman wants to bring to the Royal Opera House. He wants to take the story online — beyond its own streaming site which was watched by 60,000 people last year — and create shorter content for a younger audience. “Do they want to watch a three-hour opera or ballet on their phone? Well probably not,” he says. Instead, Dorfman wants to exploit the “gold mine” of stories buried inside the Opera House’s walls. “We’re going to look at the lady who made Madam Butterfly’s costume, or who does the Nutcracker,” he says. Could ballet dancers be on TikTok? “Totally,” he says. “They’re all great stories.”
Another option could take inspiration from Paris’s Opera Garnier, which has seen its facade transformed by an installation by Tiffany & Co. A giant picture of a Tiffany ring is plastered over the front of the building. Dorfman says there would be planning sensitivities to such a move, but says there are “all sorts of possibilities” on the table.
©2023 Bloomberg L.P.