Updated June 30, 2020 - 9:12 am
For a quarter century, Cirque du Soleil has been a Las Vegas Strip phenomenon. That bond is never more apparent than today, as the circus company restructures its finances and leans on Vegas for support.
Cirque’s refinancing plan, announced Monday, allows the company to restructure its debt, position itself for purchase and continue business as an entertainment brand. Consequently, Cirque’s half-dozen Las Vegas shows remain in the blueprint and their 1,370 employees in town can feel some relief.
But Cirque has been forced to terminate 3,500 furloughed employees from its international productions during the refinancing period. Those employees are now in “call-back” mode, and relying on their countries’ unemployment assistance. The touring shows are looking at a 2021 return, at the earliest.
At the time of its coronavirus-forced shutdown in March, Cirque ran 44 shows around the world, six in Las Vegas, the company’s profit center. The Strip productions “O” at Bellagio, “Ka” at the MGM Grand, “Love” at The Mirage, “Zumanity” at New York-New York, “Mystere” at Treasure Island and “Michael Jackson One” at Mandalay Bay account for upward of 60 percent of Cirque’s revenue.
Those performers and technical staffers have remained in town, furloughed, during the halt in productions.
Cirque is also holding its productions “Drawn to Life” in Orlando, Florida, which was due to open in April, and “X: The Land of Fantasy” in Hangzhou, the capital city of east China’s Zhejiang province, which returned June 3. Cirque is also planning to open “Joya,” its first resident show in Mexico, on Friday.
Otherwise, the company based in Montreal is artistically focused on Vegas.
“Our business was highly profitable before this virus, and we feel that whenever normalcy is back, we will rebound as an organization,” Cirque CEO and President Daniel Lamarre said Sunday during a dual interview with MGM Resorts International President of Entertainment and Sports George Kliavkoff. “We have more chances to reopen our resident shows sooner than our touring shows, because our touring shows all the cast and crew are disseminated around the world.”
The timeline for return is unclear, of course. But in an indication of the company’s challenges, there is no firm commitment for all six Vegas shows to return when COVID-19 clears.
Audio: Kats interviews Daniel Lamarre and George Kliavkoff
“The objective overall is, obviously, to bring as many shows as possible,” Lamarre said. “But none of us knows what the market will be able to bear in the next couple of years, so we are going to open shows and hopefully we’ll find all of our artists back to work one day. That’s the dream, but I think right now we have to be very careful and we have to analyze the market and open the show one by one.”
It will be months before Cirque’s financial viability and ownership future is stabilized. But MGM Resorts is moving forward with its reopening plans for resorts and theaters regardless of who winds up owning the company.
“Obviously the timing of reopening shows will be driven by public factors, first, and always the health and safety of our guests, our employees, and also by business demand,” Kliavkoff said. “But I would say the timing of opening the shows will not be delayed at all by Cirque’s court proceedings. We can proceed to prepare to reopen the shows without worrying about the court proceedings.”
It is possible for MGM Resorts to reopen Cirque theaters by the end of the year. The company’s acting CEO, Bill Hornbuckle, said at the June 4 reopening of Bellagio that he hoped theaters could be open by December. Kliavkoff said Sunday, “Absent things getting worse, which is out of our control, it’s our hope to have all of our showrooms and theaters up and running by the end of the year.”
The return of the Vegas shows is a sensible financial move. They are easier to remount, given that they are all in customized, dedicated theaters. Lamarre says Cirque’s Las Vegas productions can collectively run at 50 percent capacity and still maintain a profit, while satisfying social distancing protocols (Cirque’s show in China runs at half-capacity in an 1,800-seat theater).
“At 50 percent, we certainly can open shows and make money together,” Kliavkoff said. “The shows wouldn’t be as profitable as they’ve historically been, but we can put people back to work and provide entertainment for our guests and still make money.”
But already the Cirque has cut the schedule of its most successful resident show in history, “O.” The company has scrapped the seven-night schedule adopted in December, likely to come back with its original five-night, two-shows-per-night rotation.
The resort company also stages “Blue Man Group,” a hit show and a Cirque acquisition, at Luxor.
MGM Resorts International remains Cirque’s most prevalent partner in Las Vegas. MGM Resorts employs some 800 Cirque technicians and front-of-house show personnel. These employees were due to move over to Cirque on April 1. Instead, MGM has held those employees and offered them full benefits through Aug. 31. There is no specific plan for when those staffers will be reassigned to Cirque.
“I carry the same concern as Daniel,” Kliavkoff said, speaking of his company’s sidelined staff. “I wake up every day and think about how to get those folks back to work.”
On Monday morning, Cirque announced from its headquarters in Montreal it was seeking debt restructuring protection under its home country’s Companies’ Creditors Arrangement Act (CCAA). The move was framed as a response to the March shutdown forced by COVID-19.
The company is drawing down its debt load from $900 million, to what Lamarre estimated would be about $250 million at the end of the process. The move sets a “stalking horse” purchase agreement with current investors, a consortium led by TPG Capital of San Francisco, Fosun Capital Group of China, and Caisse de dépôt et placement du Québec (Caisse).
Kliavkoff reiterated that MGM Resorts is not among the bidders interested in buying Cirque. The production company is now being pursued by a half-dozen suitors, including a consortium led by company co-founder Guy Laliberte, and the Canadian communications conglomerate Quebecor.
The other parties who have entered the bidding process have not been made public, and today all of the potential investors are under nondisclosure agreements.
Cirque has been bolstered by $300 million from its investors (including $200 million from its own government agency, Investissement Quebec) to continue operations while productions are sidelined. Its current ownership consortium contributed $50 million in “emergency funds” to the company in May. A total of $15 million is being applied to sidelined employees’ ongoing benefits coverage. Another $5 million is earmarked for payments to contractors.
The company’s application is to be heard by Superior Court of Quebec on Tuesday. After it is reviewed, the company will then file for Chapter 15 bankruptcy protection in the United States.
Through all the hardships and obstacles, Cirque and MGM Resorts remain inexorably linked.
“Cirque is among our biggest entertainment partners, and you can’t think about live entertainment in Las Vegas without thinking about Cirque du Soleil,” Kliavkoff said. “They’re the heart and soul of what this town does.”
“We have a loyalty to MGM that has lasted for 25 years,” Lamarre said. “I think it will be crazy for us to try to work with someone else right now. You know, we are spoiled, and for us this is a partnership that should last forever.”
John Katsilometes’ column runs daily in the A section. His “PodKats!” podcast can be found at reviewjournal.com/podcasts. Contact him at firstname.lastname@example.org. Follow @johnnykats on Twitter, @JohnnyKats1 on Instagram.