Cultural Venues’ Quest for Billions in Federal Aid Is Halted by Glitch
On the first day nightclubs, movie theaters and other arts organizations hurt by the pandemic could apply for $16 billion in federal aid, the system malfunctioned. No applications got through.,
As the government prepared on Thursday to start taking applications for a $16 billion relief fund for music clubs, theaters and other live event businesses, thousands of desperate applicants waited eagerly to submit their paperwork right at noon, when the system was scheduled to open.
And then they waited. And waited. Nearly four hours later, the system was still not working at all, sending applicants into spasms of anxiety.
“This is an absolute disaster,” Eric Sosa, the owner of C’mon Everybody, a club in Brooklyn, tweeted at the agency.
Shortly after 4 p.m., the Small Business Administration — which runs the initiative, the Shuttered Venue Operators Grant program — abandoned its effort to salvage the broken system and shut down it down for the day. No applications were processed.
“Technical issues arose despite multiple successful tests of the application process,” Andrea Roebker, an agency spokeswoman, said in a written statement.
After discussions with the vendors that built the system, the agency decided “to shut down the portal to ensure fair and equal access once reopened, since this is first-come, first-serve,” Ms. Roebker said. “This decision was not made lightly as we understand the need to get relief quickly to this hard-hit industry.”
In social media forums and Zoom calls, frustrated applicants vented and shared their anger.
“It’s hard to keep hearing ‘help is on the way’ and then not be able to apply,” said Tom Weyman, the director of programing at the Columbus Theater in Providence, R.I. “I don’t think any of us thought the application process would be totally smooth, but this is life and death for our venues.”
The meltdown echoed problems the agency had last year in taking applications for the Paycheck Protection Program, which it also oversees. When that program opened, the agency’s overwhelmed systems seized up — and the same thing happened again, weeks later, when a new round of funding became available.
Applicants for the grant program were incredulous that the agency was not better prepared — especially because the funds are to be distributed based on the order in which people apply. Those who get their applications in early have the best chance of getting aid before the money runs out.
“It pits venues against each other because we’re all mad-dashing for this,” Mr. Sosa, the Brooklyn club owner, said in an interview. “And it shouldn’t be that way. We’re all a community.”
For businesses like Crowbar, a music club in Tampa, Fla., getting a grant is a matter of survival. Tom DeGeorge, Crowbar’s primary owner, took out more than $200,000 in personal loans to keep the business afloat after it shut down last year, including one using its liquor license as collateral.
More than a year later, the club has reopened with a smattering of events at reduced capacities, but the business still operates in the red, Mr. DeGeorge said.
“We lost an entire year of concerts in the blink of an eye, which was close to $1 million in revenue,” Mr. DeGeorge said. “That’s why we need this grant so badly.”
The aid was authorized by Congress late last year after months of lobbying by an ad hoc coalition of music venues and other groups that warned of the loss of an entire sector of the arts economy.
For music venues in particular, the last year has been a scramble to remain afloat, with the proprietors of local clubs running crowdfunding campaigns, selling T-shirts and racking their brains for any creative way to raise funds. For the holidays, the Subterranean club in Chicago, for example, agreed to place the names of patrons on its marquee for donations of $250 or more.
“It’s been the busiest year,” Robert Gomez, the primary owner of Subterranean, said in an interview. “But it’s all been about, ‘Where am I going to get funding from?'”
Even before Thursday’s fiasco, the opening of the shuttered venue program was riddled with complexity and confusion.
The Small Business Administration posted a 58-page guide for applicants late Wednesday night, then quickly took it offline. A revised version of the guide was posted just minutes before the portal opened on Thursday. (An agency spokeswoman said the guide had to be updated to reflect “some last-minute system changes.”)
And less than two hours before the agency was supposed to start accepting applications, its inspector general sent out an alert warning of “serious concerns” with the program’s waste and fraud controls. The Small Business Administration’s current audit plan “exposes billions of dollars to potential misuse of funds,” the inspector general wrote in a report.
Successful applicants will receive a grant equal to 45 percent of their gross earned revenue from 2019, up to $10 million. Those who lost 90 percent of their revenue (compared to the prior year) after the coronavirus pandemic took hold will have a 14-day priority window for receiving the money, followed by another 14-day period for those who lost 70 percent or more. If any funds remain after that, they will then go to applicants who had a 25 percent sales loss in at least one quarter of 2020. Venues owned by large corporations, like Live Nation or AEG, are not eligible.
The application process is extensive, with detailed questions about venues’ budgets, staff and equipment.
“They want to make sure you’re not just setting up a piano in the corner of an Italian restaurant and calling yourself a music venue,” said Blayne Tucker, a lawyer for several music spaces in Texas.
Even with the grants, music venues may be facing many dry months before touring and live events return at anything like prepandemic levels.
The grant program also offers help for Broadway theaters, performing arts centers and even zoos, which share many of the same economic struggles.
The Pablo Center at the Confluence, in Eau Claire, Wis., for example, was able to raise about $1 million from donations and grants during the pandemic, yet is still $1.2 million short on its annual fixed operating expenses, said Jason Jon Anderson, its executive director.
“By the time we open again, October 2021 at the earliest, we will have been shuttered longer than we had been open,” he added. (The center opened in 2018, at a cost of $60 million.)
The thousands of small clubs that dot the national concert map lack access to major donors and, in many cases, have been surviving on fumes for months.
Stephen Chilton, the owner of the 300-capacity Rebel Lounge in Phoenix, said he had taken out “a few hundred thousand” in loans to keep the club afloat. In October, it reopened with a pop-up coffee shop inside, and the club hosts some events, like trivia contests and open mic shows.
“We’re losing a lot less than we were losing when we were completely closed,” Mr. Chilton said, “but it’s not making up for the lost revenue from doing events.”
The Rebel Lounge hopes that a grant will help it survive until it can bring back a full complement of concerts. And if its application is not successful?
“There is no Plan B,” Mr. Chilton said.