Festivals begin to feel the pinch

The acclaimed singer Bryn Terfel, who created the Faenol Festival 11 years ago to bring music and money to the undernourished corner of North Wales where he was born, has appealed to audiences to book now for this year's August bank holiday weekend event. Otherwise it may be short of some acts.

It is symptomatic of a downturn threatening what only two years ago a survey called the UK's "cultural powerhouse": arts festivals, the event form on which the Cultural Olympiad is being built for 2012. "Every festival is feeling the pinch," Terfel says. Until now, though, none has found it necessary to appeal directly to audiences to put their hands in their pockets.

"Many outdoor events are struggling, and there are a lot of factors at work," said Stewart Collins, chair of the British Arts Festivals Association, who also runs the Henley Festival. "Audiences are thinking twice about whether they can afford the treat in this economic climate, and bearing in mind three bad summers for weather in a row, they are waiting until the last minute before deciding."

Added to that, sponsors are either reducing their grants or withdrawing altogether, and the local authorities that support many outdoor local festivals are under increasing pressure to shift funding from such "soft" commitments.

Terfel's Faenol is based in a part of the country where sponsorship and philanthropy are as rare as summer rain is frequent, and Faenol has had a troubled history. Set near Caernarfon in largely rural Gwynedd, its tenth anniversary programme was cancelled last year when Welsh Assembly funding was agreed too late. This time the Arts Council of Wales have pledged £240,000 for the next three years – controversially, because at the same time, other arts organisations in Wales were having their funding cut – and ticket sales for 2010 were doing well until the Budget in June, after which they slumped.

In the past, Faenol has attracted around 30,000 visitors over the four days, and this year an extra comedy day, led by Al Murray, has been added. A craft village is also a new innovation, but the festival's success depends on advance ticket sales, Terfel said, and he has given audiences until the end of this month to pay up and give a vote of confidence.

"I know things are tough economically, but I am hopeful that our audience will give us the signal we need right now," he said. "To that end, I urge anyone who wants to attend Faenol Festival this year to buy their ticket within the next ten days, and commit to coming along and enjoying a wealth of world class entertainment."

He has a "Plan B", he said, although he would not elaborate – but it would mean support acts being axed (headliners such as Westlife and Rolando Villazon have already had to be paid and will appear). Faenol has local sponsors but no major core names; its chief support, Gwynedd County Council, is maintaining commitment for now because the festival brings £3m in extra spending to the region, but the full effects of national cuts on local councils are still to be felt.

Henley Festival, in mid-July, also had difficulties, with over £100,000 being lost in corporate sponsorship, presaged by a poor turnout in 2009. To offset the effect, Collins created a "New Patrons Club" to attract private funders, and raised £50,000 towards the £1.8m turnover. Even with a risky enhanced line-up devised to help audiences to decide to come, which included Terfel and Nigel Kennedy, ticket buyers were slow to commit. Nearly 20,000 came in the end, better than last year, but 15 per cent down on 2008, so that this year the Henley Festival broke even.

As local authorities feel the effect of £1.1bn in Treasury cuts and corporate sponsors reconsider the wisdom of hosting champagne events when staffs are being reduced, festival organisers are having to be inventive about programming and fund-raising.

Cheltenham now has four festivals – jazz, science, music and literature – spaced throughout the year, and four years ago a single chief executive for all four, Donna Renney, was appointed. Within a year she experienced a £220,000 local authority cut, and has had to build an infrastructure to cope with that and the recession that followed. There were many late bookings for the 2010 music festival, which ended last weekend; it experienced a great deal of seeming spur of the moment decisions by ticket-buyers, or "walk-ups". There was an 8 per cent improvement in box office in the final tally.

"It's down to marketing – and larger organisations like this are big enough to plan," Renney said. This year she started a membership scheme for the music festival that already has 4,000 members, and though it has only broken even, it is the core of a new support group for all four events from which she hopes to develop donors. "But smaller festivals can't have that kind of infrastructure, and they are going to find it very hard."

One festival casualty of 2010 is The Magic Loungeabout, which took a sabbatical year in 2009 and hoped to return as an extended three-day festival with a bigger capacity this year. Having added a speaker's tent, a cinema, a restaurant, a tea shop, an old school games room, doubled the entertainment on offer to children, and improved on production, a main investor pulled out at the last minute, leaving them with a sizeable funding gap.

Many pop festivals do not have the benefit of corporate back-up, and in priding themselves on being sponsorship-free events, their independent nature leaves them more exposed to the risks of slow ticket sales. Some festivals ease the pressure of ticket sales by offering early-bird tickets for the following year's event at a reduced price as soon as the festival is over, catching their buyers early.

Although many have felt a buoyancy in sales, including last week's Latitude and the forthcoming Green Man Festival – both selling out months early thanks to loyal followings developed over their consistent successes of recent years – there have been 13 festival cancellations to date this year. Among these are the dance-oriented Glade, which has been going since 2004 and which had Orbital, Simian Mobile Disco and Tricky on the bill. Organisers cited council restrictions as the main cause for their closure this year. They are an example of how increased requirements imposed upon festivals for policing, security and stewarding can be crippling for festivals who are forced to drive up ticket prices.

On their website, they stated: "As many Glade fans will know, over the years we have fought hard to maintain the integrity of the event against steadily increasing restrictions imposed by the local authority and police. The resulting compromises have led to increased costs, increased ticket prices and a throttling of the very essence of what we wanted to do. It led to us finally having to move from the lovely Wasing Estate due to late night noise restrictions and the police's demands for an ever-increasing security and police presence at the event."