The coronavirus restrictions look likely to cost the Royal Pavilion about £1 million in lost revenues, councillors were told yesterday (Thursday 30 July).
And losses could mount further if visitor numbers fail to pick up quickly, especially with lost bookings from groups, overseas visitors, weddings and other events.
There are concerns that reduced visitor numbers and revenues could even affect the Pavilion’s finances for a number of years to come.
Social distancing rules, which reduce visitor capacity, are among the changes making it hard for the historic palace to generate enough income.
As a result, trustees, who are expected to take over running the Pavilion from Brighton and Hove City Council in October, have asked the council for a £3.7 million bailout.
They look likely to be given financial help worth more than £1.5 million and to be able to draw money from a £4 million council-backed “cash flow facility”.
The council and trust had previously agreed a £500,000 cash flow facility which would operate like a bank overdraft – to provide a “financial safety net”.
The council will also pay the trust the full-year rate of £1.3 million up front for running the Royal Pavilion and Museums service, even though the trustees are due to take over half-way through the financial year.
Former Labour council leader Daniel Yates said: “I’m quite frankly staggered that the trustees came to us asking for £3.7 million of additional funding.”
Councillor Yates said that two of the trustees – new Green council leader Phélim Mac Cafferty and Conservative leader Steve Bell – ought to know the scale of the council’s own financial difficulties.
The council is currently forecasting a £20 million coronavirus-related shortfall in the current financial year, to the end of next March.
Green deputy leader Hannah Clare and Conservative deputy leader Lee Wares defended Councillor Mac Cafferty and Councillor Bell at the council’s Special Policy and Resources Committee meeting yesterday.
Both Councillor Mac Cafferty and Councillor Bell stayed away from the “virtual” meeting because of the potential conflict of interest.
But the council’s executive director of the economy, environment and culture Nick Hibberd said that both councillors would be expected to act in the best interests of the Royal Pavilion and Museums Trust in trustee meetings.
The trust was due to take over the Royal Pavilion and Museums service from the council in April but the date was put back to October because of the coronavirus measures.
The service includes the Royal Pavilion, Brighton Museum and Art Gallery, Hove Museum and Art Gallery, Preston Manor and the Booth Museum.
The council hopes that the trust will be eligible for charity, Arts Council and government funding that is currently available only for independent organisations rather than those run by local authorities.
A report to the Special Policy and Resources Committee said that the Brighton Dome and Festival, for example, had recently received almost £500,000 in emergency Arts Council funding.
The council-run Royal Pavilion did not qualify although the government has since announced some relief for loss of visitor income that may be worth up to £500,000.
The council fears that if the proposed transfer falls through, the current significant constraints on council funding could mean budget cuts and job losses in the Royal Pavilion and Museums service.
Mr Hibberd said, though, that since the Pavilion had reopened on Monday 27 July, visitor numbers had been better than expected.
He said that the council and the trust wanted to the Royal Pavilion and Museums to have a financially sustainable future.
The committee approved to offer the package of financial support.