Leading on finance at the Royal Ballet

 Leading on finance at the Royal Ballet

In this interview recorded before COVID-19 had fully taken hold, Heather Baxter, ACMA, CGMA, administrative director at the Royal Ballet in London, describes the company’s funding model and complex multi-season budgeting process. She also gives advice for management accountants on developing careers in the arts that are interesting if sometimes nonlinear.

What you’ll learn from this episode:

  • About the Royal Ballet’s changing funding model.
  • How its multi-season budgeting process works.
  • The impact of Brexit on the company.
  • When a sideways move can advance your career for the long term.
  • How management accountants can develop careers in the arts.

Play the episode below or read the edited transcript:

To comment on this episode or to suggest an idea for another podcast episode, contact Oliver Rowe, an
FM magazine senior editor, at


Oliver Rowe: Welcome, Heather.

Heather Baxter: Thank you, Oliver.

Rowe: We're here at the Royal Ballet in central London. Perhaps we can start off with an introduction to the company. How does the Royal Ballet fit within London and Europe's performing arts landscape?

Baxter: Well, as you say, we're here at our home at the Royal Opera House, which we share with the Royal Opera and the Orchestra of the Royal Opera House. We're both integral to London and I think also to Europe and to the wider world in terms of the performing arts.

Rowe: How is the Royal Ballet's funding model changing?

Baxter: Well, it has changed quite significantly in recent years. Up until recently, there were three main pillars of funding, which was box office income, philanthropy, and our grant from the Arts Council. Over the last few years the Arts Council grant has been decreasing, along with other companies have also had that same decrease. That's resulted in us having to look to our other areas of box office income and philanthropy, along with also trying to maximise commercial income opportunities.

So it's a quite challenging landscape, because obviously the grant is a known amount, whereas box office and philanthropy and to a certain extent commercial income are much less easy to predict into the future and that makes it a more interesting environment to work in as an accountant, because there are a lot more variables at stake.

Rowe: What are your challenges for accurate financial forecasting?

Baxter: Well, as I've said, because a lot of the parts of our financial model are variable, it’s basically the unknown, and also every season is different. So, in terms of how we budget, we budget about three or four seasons ahead, so we're always working in multiple seasons.

So right now we're in the '19-'20 season, we're just doing final budgets for '20-'21, outline budgets for '21-'22, and '22-'23, and '23-'24. So all of those different seasons have different productions in them, a different matrix of who we're working with and different income models. So our budgeting is complex and multi-season.

Then when it comes to actually the more granular financial forecasting for the current season, we do monthly management accounts and look very closely every month both at our payroll costs which are fixed and below the line and our variable costs, which, of course, is our direct production costs. So that's things like the props and the scenery and the people that we bring in just for one particular production. Then overlaying that, of course, we're always looking at the income, so always looking to see how we can make sure we maximise our box office income and our philanthropy and the commercial, as I've said.

Rowe: How do you strike the balance between contracting sort of superstar performers, composers, designers, and choreographers, and salaried staff?

Baxter: It's quite rare for us to actually bring guest performers in. We'll only do that on specific special occasions. So what happens is the director of the Royal Ballet, Kevin O'Hare, will look at the dancers that he's got available and the productions that he wants to put them in. For each production we'll normally have two or three casts of principal dancers. So it's rare for us to bring superstars in because I think we have some of the starriest and greatest dancers in the world in our company already.

In terms of the creative teams, so that's the composers and the designers and the choreographers, we start normally by, Kevin will start by asking a choreographer if they would like to make a ballet for the company. The choreographer would then talk with Kevin about who he'd like to bring in in terms of the composition and the designs and things like costume design or scenic design.

Rowe: Moving onto Brexit, perhaps you could describe its impacts for the business now and how you see it potentially for the future.

Baxter: I think like every business in the UK the difficulty is uncertainty; it's been uncertain and it's still uncertain. That's the challenge that we all face at the moment. We are an international company. It's very important to us that we can attract the best international talent from across the world. We have dancers from many different countries already who work with us, and that's both from within and outside the EU.

Those dancers who are European Union citizens, and indeed all staff who are, who have wanted to transition or to gain British citizenship we’ve helped them to do that, and a number of them have done that already. We will continue to be open for business to everyone; that's extremely important. But like everyone we're sort of still waiting to see exactly how that will all work. We're in constant contact with the immigration authorities and being updated regularly by them. But I think it's not quite certain yet how that will all pan out.

Rowe: I know in your career you've taken a sideways move at one stage. So I wondered when is a sideways move a good move for management accountants for their careers?

Baxter: I think you instinctively know perhaps when you're in a cul-de-sac in your career and you perhaps need to look more creatively about how you can move forward. In my case I didn't train as a management accountant immediately after I left university. I went and worked in a classical music business for 14 years actually as an administrative person. It was only when I found that I didn't want to be on the road anymore — actually that was mainly it — and I was wondering what else I could do. I had really enjoyed doing the bookkeeping and the accounting, although I didn't really know what I was doing; I'd just been sort of taught it by rote by someone else.

Then I suddenly saw a note in the tube actually, an advert which said that you could train to be an accountant part time. You didn't have to go full time somewhere; you could do it in your weekends and evenings. That's when the penny dropped for me, and I thought, "Actually this is an area that I'd love to do." And I went off and did that. I left the arts to do that, went to work for the film business actually.

So I think you have to know yourself. But I think it's very few people who have progressed in their career have done it in a straight line. Mostly you have to look and think, "OK, I need this skillset and this set of experiences. If I can't get it here then I need to look and be a bit creative about where I might find it." Sometimes that's quite difficult, because it means you're having to leave a company or a group of people that you've worked with for a long time that you really enjoy working with and be a bit brave. Occasionally it might mean that you actually have to take a backwards step in order to then move forwards again.

But it's always worth looking. I think it's always worth having a plan and then always worth being prepared to tear it up.

Rowe: Heather, what advice would you have for management accountants looking to work in the arts?

Baxter: So the great thing I think about being a management accountant and obviously I would say this because I am, but is that you can work in any field that you're interested in. So if you're interested in sport or you're interested in social justice or you're interested in film or the arts. I think within the arts what I would say is that a lot of the smaller companies perhaps don't necessarily have the resource to help you train, because training can be quite expensive and time consuming. You need time to study, and you also need to be in place where you can get enough of the different sorts of experience that will help you to get through the CIMA exams. So the bigger organisations like the Royal Opera House are somewhere that can provide that sort of platform.

What we've seen here actually is a number of people who have come in perhaps at their level one or level two of their accounting qualification go through the system and work with the Royal Opera House for a number of years and then actually go and work for smaller organisations but in a higher role once they have qualified.

So I think that's always something worth looking at, but the great thing, as I say, about being an accountant is that you can work in any genre. So once you have started in the arts you may decide you want to go somewhere else or vice versa.

Rowe: It's been a fascinating conversation. Thank you very much indeed. Thank you Heather.

Baxter: Thank you, Oliver. I've really enjoyed it.