Help Is on the Way for Shuttered Venues and Museums, Talent Representatives

January 26, 2021Alerts

Signed into law at the end of 2020, the Consolidated Appropriations Act (CAA) — often referred to as the COVID-19 stimulus package — earmarked $15 billion in federal grants for certain live venue operators and other arts-related entities that have been affected by the economic fallout from the pandemic.

Qualifying individuals or entities may be eligible to receive grants of up to $10 million each, capped at 45% of gross earned revenue in 2019 or a prorated amount for companies that were started after January 1, 2019.  Additional limitations may apply for applicants that have affiliated entities. At least $2 billion is reserved for small operators with no more than 50 full-time employees.

Details remain scarce. To date, the only formal guidance related to the grants is found in Section 324 of the Economic Aid to Hard-Hit Businesses, Nonprofits, and Venues Act (a subpart of the CAA). However, the Small Business Administration (SBA) is expected to issue additional guidance soon. The SBA recently held a webinar in which it elaborated on certain items in Section 324, answering some questions related the program and noting that entities owned by state or local governments may be eligible under certain circumstances, to be clarified later on the SBA’s website.

Certain requirements apply across the board to all types of grant applicants, while others are specific to the type of operator that is applying. Below is a summary of the key requirements to qualify. One nuance worth noting is that Section 324 is often referred to colloquially as the “Save Our Stages Act,” which was an earlier piece of legislation. Many elements of the Save Our Stages Act were included in Section 324, but they are not identical.

General Grant Eligibility Requirements – All Applicants

  • Must have been fully operational as of February 9, 2020
  • Must not have received a Paycheck Protection Program (PPP) loan on or after December 27, 2020
  • Must have earned gross revenue during at least one quarter in 2020 that is at least 25% less than it was for the same quarter in 2019
  • Must not be a publicly traded entity
  • Must not be an entity that received more than 10% of gross revenues from federal funding in 2019 (excluding certain disaster/emergency relief grants)
  • Must not be an entity that has all three of the following characteristics:
    • owns or operates businesses in more than one country
    • owns or operates venues or businesses in more than 10 states
    • employed more than 500 full-time equivalent employees as of February 29, 2020
  • Does not present live performances of, or derive more than de minimis revenue (whether directly or indirectly) related to depictions or displays of, a prurient sexual nature.

Requirements Specific to Live Venue Operators, Theatrical Producers or Live Performing Arts Organizations

  • Has resumed or intends to resume organizing, promoting, producing or hosting future “Eligible Live Events.” Eligible Live Events are events in which:
    • There is a cover charge through either ticketing or front door entrance fees
    • Performers are paid an amount that is based on some mutually beneficial formal agreement (such as percentages of sales or guaranteed amount). 
  • One of its principal business activities is operating or using venues for Eligible Live Events.
  • Either of the two following thresholds is met:
    • As a principal business activity, the entity organizes, promotes, produces, manages or hosts live concert or other events by performing artists, and at least 70% of earned revenue is generated through cover charges or ticket sales related to the Eligible Live Event, production fees or production reimbursements related to the Eligible Live Event, nonprofit educational initiatives related to the Eligible Live Event, or the sale of event beverages, food or merchandise
    • One of the principal business activities is making tickets to concerts, comedy shows, theatrical productions or other events by performing artists available for public purchase an average of at least 60 days before the event.
  • Has a defined performance and audience space. 
  • Has each of the following: mixing equipment, a public address system and a lighting rig.
  • Employs individuals in at least two of the following roles:
    • Sound engineer
    • Booker
    • Promoter
    • Stage manager
    • Security personnel
    • Box office manager
  • Requires a paid ticket or cover charge to attend most performances.
  • Markets performances in print or e-publications, on websites, by mass e-mail or on social media.

Requirements Specific to Motion Picture Theater Operators

  • Has at least one auditorium including a movie screen and fixed audience seating.
  • Has a projection booth or other space that contains at least one movie projector.
  • Requires a paid ticket to attend screenings.
  • Markets screening showtimes in print or e-publications, on websites, by mass e-mail or on social media.
  • Owns and operates at least one location that is open to the public for the purpose of motion picture exhibitions for a fee.

Requirements Specific to Talent Representatives

  • Currently represents or manages artists and entertainers.
  • At least 70% of operations are based on representing or managing artists and entertainers.
  • Books or represents the following types of artists at live venues or at festivals: musicians, comedians, actors or similar performing artists.

Requirements Specific to Museum Operators

  • Is a nonprofit entity.
  • Principal business activity is acting as a relevant museum, which requires the museum to meet the definition of “museum” under Section 273 of the Museum and Library Services Act. That statute sets forth numerous requirements, including that the museum:
    • Must be organized on a permanent basis for educational, cultural heritage or aesthetic purposes
    • Has a professional staff
    • Owns or utilizes tangible objects and cares for those objects and exhibits them to the public on a regular basis.
  • The definition of museum under Section 273 also includes a number of organizations that might not be what first comes to mind as a museum, such as botanical gardens, nature centers and zoos.

Applying for a Grant

The SBA is not yet accepting grant applications, but the portal is expected to open soon. There will be three phases of disbursement. During the first 14 days of the application period, only those applicants that saw a 90% or greater decline in revenue for the nine-month period between April 1, 2020 and December 31, 2020 as compared to same period in 2019 may apply. During the next 14 days of the application period, only those applicants that saw a 70% or greater decline in revenue for the nine-month period between April 1, 2020 and December 31, 2020 as compared to same period in 2019 may apply. After the 28-day period for priority grants has passed, any eligible person or entity may apply. 

Use of Funds

Funds may be used only for limited purposes. Those purposes are slightly broader than allowable uses for PPP loans. Notably, funds can be used to pay independent contractors as long as no employee of such contractor receives more than $100,000. 

Next Steps

Although application portals are not yet open, the SBA suggested in its recent webinar that potential applicants can prepare by pulling together information about monthly revenues and preparing a list detailing the proposed use of funds.

For more information on federal assistance for arts and entertainment related entities, contact Melissa Sanders at [email protected] or 310.598.4150 or Wei Li at [email protected] or 415.651.1497 or any member of the firm's Corporate Department.