Lights! Camera! Inaction!

In a saga that raises significant questions about the management and strategy of the arts in Scotland, Mark Howitt chases the numbers behind the Filmhouse debacle. “Creative Scotland made it clear that its priority was the preservation of the festival. The public body responsible for supporting arts, screen and creative industries throughout Scotland preferred to save an annual ten day festival rather than a cinema operating 52 weeks a year and employing 60 people.”

My last visit to the Filmhouse on Edinburgh’s Lothian Road was on Saturday 20 August 2022 to see Dùthchas as part of the 75th Edinburgh International Film Festival. A documentary about the Isle of Berneray, the islanders, their relationship with the island, much of it told in Gaelic and reliant on Kodachrome 8mm archive film from the 60s & 70s could have been a dry 88 minutes. But this was a gem, played to a sell out audience in the main 280 seater screen, with the film’s directors Kirsty MacDonald & Andy Mackinnon present for a Q&A. Afterwards, as we stumbled into the summer sunshine on the street outside, my wife said that she would like to see the film again. I was sure we’d get a chance, Dùthchas was exactly the sort of thing that the Filmhouse would show at some point in the future.

A little over six weeks later, on Wednesday 5 October, the Filmhouse closed its doors for the final time. From premises converted from the United Associate Synod Church built in 1830-31, it had been operating for over 40 years as a cathedral to cinéastes with three screens showing a varied selection of films – new releases, international films, retrospectives – hosting special events including the Edinburgh International Film Festival, providing education resources, and was home to both the Edinburgh Film Guild and the much loved Filmhouse café.

For now, and almost certainly forever, all that is gone.

When the end came, it came quickly, too quick to take in the detail of what happened. For those who worked at the Filmhouse – and the Belmont in Aberdeen – it was literally, you have one hour to collect your belongings and leave. A few weeks later I wrote about the closure of the cinema and concluded by saying that if we value our cultural institutions then we need to start using them, otherwise we’ll lose more of them and we’ll have nobody to blame except ourselves.

I still go along with that, but, nine months on, I walk past the old Filmhouse – doors now shuttered, the building shrouded in scaffolding – twice, three times a week, and every time I think that what happened could have been avoided, if not easily, with a bit of forethought, with a little imagination. How come the Glasgow Film Theatre is still going strong, showing the 35th anniversary of Hairspray, a retrospective of Wes Anderson films and Gregory’s Girl in 4K, alongside Barbie and Oppenheimer? What makes it so different? Is Glasgow not susceptible to rising utility costs, wage inflation, the cost of living crisis, uncertainty of public funding, reduced trading conditions and public health issues? Apparently not, but these were the reasons cited by the Filmhouse’s PR consultants when the cinema ceased trading last October.

They don’t strike me as reasons that arise all of a sudden. The financial position can’t have been that different at the beginning of September or August, which makes me think that there was a burning desire to ensure that the 75th Edinburgh International Film Festival (“EIFF”) went ahead as planned, that the staging of that event was more important than anything else.

I’ve been a supporter of the EIFF for many years but it’s not Cannes, it’s not Berlin, it’s not Sundance. It’s a niche festival showing European & UK premieres and films – like Dùthchas – which wouldn’t see the light of day elsewhere. But during pre-closure discussions in late September, Creative Scotland made it clear that its priority was the preservation of the festival. The public body responsible for supporting arts, screen and creative industries throughout Scotland preferred to save an annual ten day festival rather than a cinema operating 52 weeks a year and employing 60 people.

Just because the EIFF has had 75 iterations doesn’t mean it’s worth saving for a 76th, at least not at the expense of losing a permanent home to cinema.

Towards the end of 2022 there was a glimmer of hope that a bid from the owner of London’s Prince Charles Cinema might see the Filmhouse reopen, but that offer fell substantially short of one from Caledonian Heritable. Recently there have been reports that the new owners are planning to re-open the premises as an “arthouse cinema” but given that their business is operating bars such as the Dome, the West End Brasserie and the Theatre Royal, it would make an unlikely addition to their portfolio. 

The sale is confirmed in the latest administrator’s progress report and this document makes for interesting reading.

What have we got? The sale of the Filmhouse itself raised £2.65M and there’s another £139k at the bank. So, a total of £2.79M.

Against that, there are liabilities totalling £1.19M to pay. But it’s worth taking a look at these. First, there is £334k due in statutory redundancy payments to the employees who lost their jobs. Clearly that is a cost that only arose as a result of the decision to close the Filmhouse – if it was still open as a cinema, there would be nothing to pay.

Second, there is a £567k payment due to the Lothian Pension Fund. This liability originated in 2018 when the company’s pension arrangements were restructured from a defined benefit scheme to a defined contributions scheme; the sum relates to pensions due to four current and fourteen previous employees. Had the Filmhouse still been trading it would have been payable over the next twenty years, it’s only due now – in one lump sum – because the Filmhouse is no more.

Take these two elements out of the equation and we’re left with £1.19M – £334k – £567k = £289k comprising amounts due to employees (some of which may also be cessation related), HMRC and suppliers.

So, in order to pay debts of a little over a quarter of million pounds, the senior management of the Filmhouse came to the conclusion that the only solution was to bring to end 40 years of cinema history in Edinburgh, close the Belmont Cinema in Aberdeen, make 102 staff redundant and sell the one asset of any value the business had for £2.65M. But there’s one figure missing from this equation: the fees due to the administrator FRP Advisory Trading Limited (“FRP”).

As at 14 June FRP has incurred fees totalling £328k. There will be those who disagree, but considering the complexity of the task, looking at the time spent by FRP directors and staff, and their charge out rates, I am not of the opinion that this – in isolation – is unreasonable. That, I’m afraid, is the going rate for professional work at this level. What is unknown at this stage, is what the final total might be. A figure of £1M has been bandied about in the press. That seems a bit on the high side but let’s stick with that.

So, there’s £2.79M at the bank, FRP will pay £1.19M to settle the claims of the creditors and take their (estimated) fee of £1M.

Which leaves £600,000 cash.

Administration

Company administration is a formal process used to wind up an insolvent company, a company that can no longer pay its debts – the money it owes to its employees, its suppliers, its lenders. It is common in such circumstances for the creditors of the company only to receive a percentage of what they are owed, often that percentage is in single figures or even 0%.

It is unusual – as seems very likely to be the case with the Filmhouse – for the percentage return to be 100%. In other words, every business owed money by the Filmhouse when it closed last October will now be paid in full.

So, what happens to the surplus £600,000 cash? The administrator’s report gives us the answer: “A surplus [will] be paid to another charity having similar charitable objects to the Company”. Which brings us back to Creative Scotland’s priority: the Edinburgh International Film Festival. My suspicion is that the money will be donated to a new charity created as a vehicle for future film festivals in the capital city.

If the £600,000 does end up financing a re-boot of the EIFF it will have come at a huge cost. For every £6,000 of that, one person lost their job, £2,900 was spent on redundancy costs and the administrator has to date been paid £3,300, possibly rising to £10,000. And the small matter of losing the iconic Filmhouse building itself.

‘X’ rated material if ever there was.

Delusional

In March 2020 plans were announced for a new Filmhouse to replace the existing one, to be built in the adjacent Festival Square.

Hindsight doesn’t come into it. Even at the time it was obvious that the construction of a nine storey cinema complex with seven screens costing £50 million was wishful thinking without a hope of being realised. Endorsements of the project from actor Tilda Swinton and author Irvine Welsh weren’t going to help. Unbelievably, Richard Murphy Architects were still negotiating with the City of Edinburgh planning department with a view to submitting an amended planning application as late as July 2022, by which time estimated costs had increased to £60 million.

At this point it’s perhaps not unreasonable for us to ask what role the Filmhouse trustees were playing in any of this. Rather than giving the nod to the senior management’s pipe dreams shouldn’t they have been investigating more realistic ways of ensuring the Filmhouse’s survival?

Trustees

The Filmhouse – or to be correct, The Centre for the Moving Image, by which name it has been officially known for the last 13 years – was established in 1979 as a charity with its object being to “promote and advance for the public benefit the arts, culture and education by the promotion … of the art of the moving image, including film”. Like all charities the Filmhouse has a board of trustees.

Trustees play a very important role: they are responsible for the charity’s governance and strategy. Although they are not involved with day-to-day operations, ultimately it is they who are accountable for the charity’s activities and outcomes. Although charity law in Scotland does permit trustees to be paid (under very narrowly defined circumstances), it is rare, and generally a charity’s constitution will state that trustees shall not be remunerated for their services. The purpose of this is to avoid any conflict of interest and to ensure that decisions that trustees make are seen to be open and transparent.

At the time of its closure the Filmhouse had ten trustees (there were eleven but one resigned three days before the announcement), none of whom were paid for their services. On average they had acted in that capacity for five years and brought an array of skills, knowledge and experience both from within the film industry and outside including law, corporate finance, leadership development, arbitration and marketing.

A detour. Last summer I applied to become a trustee of an Edinburgh charity, there was a personal interest for me, they’d helped sort my head out when my Dad first became ill. I met with the CEO and some of the trustees. It was “only” going to take up one evening every six weeks one of them said. But it wasn’t the time commitment, I wasn’t even doing anything else then – “resting, between jobs” as I euphemistically put it. There’s more to being a charity trustee than tapping up to meetings every couple of months, it’s not only time that you’re committing, your heart’s got to be in it. And at that time, mine wasn’t. The CEO completely understood, was grateful in fact, he’d rather I didn’t do it than start, only to stop within a year or so. Accepting an appointment as a charity trustee is a long term obligation and shouldn’t be taken lightly.

I’m not for a minute suggesting that any of the Filmhouse trustees treated their appointment with anything less than the gravitas it deserved, or merely as a few lines to add to their resumé – none of them needed that, their careers spoke for themselves. You can tell from the minutes of the final audit & risk committee meeting in mid-September of their deep concern for the future of the Filmhouse. But years before that, eyes were taken off the road, the car crash might have been a long way off, but it was coming and could have been avoided.

A National Film Centre?

As far back as 2016 the trustees recognised that “the existing Filmhouse building is … exceptionally limited in development potential, is requiring increasing amounts spent on it, [and] the existing offices are inadequate for meeting the needs of the business”. This is repeated in each of the next three years’ Trustees’ Reports by which point – March 2019 – the balance sheet had been transformed from the reasonably healthy position of having net current assets of £480k to one showing net current liabilities of £331k. 

It should be no surprise that a building which pre-dates Queen Victoria ascending the throne should now require “increasing amounts spent on it” but prevaricating for four years, talking about a “long term vision to create a new National Film Centre, providing a new home for the Filmhouse and the EIFF”, then rubber stamping senior management’s proposed £60 million flight of fancy wasn’t the answer.

Do we even need a new National Film Centre? The National Theatre of Scotland has a purpose-built HQ (Rockvilla in Glasgow, designed by Hoskins Architects, brought in on budget for £6.5 million in 2017) but that building is used for administrative, storage and rehearsal purposes only. NTS is still a theatre without walls, using existing performance spaces throughout Scotland and beyond.

One solution lay in the Filmhouse building itself: a sale and leaseback arrangement whereby the Filmhouse sold the building to a third party and then leased It from them. The benefit to the new owner would be that they held an income generating asset that – more than likely – would also increase in value. For the Filmhouse it would give them a one-off cash injection which would enable them to clear their debts, leaving a substantial amount to make lease payments for many years to come.

At this distance it’s impossible to say, but it’s hard to imagine that there wouldn’t have been interest from – for example – pension or life insurance funds; commercial property is, after all, what they invest in. As to how long the sale proceeds would have lasted, quantifying what the “many years” might have been, by my back of the envelope calculations I come to twelve. So, when things really started to go pear shaped in 2019, that might have given the Filmhouse until 2031 to steer the ship through the stormy waters. Paying rent for a building you used to own may seem unpalatable, but the solution the trustees came up with in the end wasn’t one to whet the tastebuds.

But maybe even that is over-complicating matters.

Shortly after the announcement of the closure, a group of former Filmhouse employees launched a crowdfunding campaign to buy the building. To their credit they raised £600,000 in three weeks. It was too little too late, but it was clear – and should have been clear to anyone with the slightest connection with the Filmhouse – that there was public interest in saving a much loved part of Edinburgh life.

At that audit & risk committee meeting in mid-September, there was a discussion “about whether to go public in seeking help” but this was dismissed as it was felt that “a public appeal would be unlikely to succeed”. Technically there was no need then to raise enough to buy the building: £600,000 would have been plenty in the short term, creditors could have been paid off, the company made solvent and as a result of that, the Filmhouse would have received its quarterly funding payment of £266,000 from Creative Scotland in October. Yet, by the time of that meeting it was too late, the brake pedal was full to the floor, but nothing could stop the crash.

It could all have been so different.

One of my earliest Filmhouse memories is from 1988 when I was introduced to Italian cinema via Giuseppe Tornatore’s wonderful Cinema Paradiso. I saw it again some 30 years later as part of a ‘Filmosophy’ series, an exploration of Plato’s Allegory of the Cave along with Kubrick’s A Clockwork Orange and The Truman Show with Jim Carey, the sort of thing the Filmhouse did so well and made it more than somewhere that just showed films.

Above all, Cinema Paradiso is a love story, the love that the small Sicilian village Giancaldo has for its local cinema. When the Paradiso burns down it rises from the ashes as the Nuovo Cinema Paradiso, the rebuilding paid for by one of the villagers. Of course, there’s much more to the film than that – deservedly it won a raft of industry awards including the Academy Award for Best foreign Language Film and the Cannes Film Festival’s Grand Prix – but it would be lovely to think that a New Filmhouse can be saved from the mess that has been left.

Alas, it seems unlikely. The film alludes to this too: towards the end, when a grown up Salvatore returns home village for the funeral of Alfredo, the projectionist who inspired him to a career in the film industry, he discovers that the Cinema Paradiso is to be demolished. Demolished in the name of progress: to make way for a car park. 

As Alfredo says, “Life isn’t like in the movies. Life is much harder.”