The slow-motion shutdown of Cirque du Soleil should have been an early warning of the disaster to come. The novel coronavirus was still considered a local problem in late January, when the world’s largest circus producer canceled performances of The Land of Fantasy, its first and only permanent offering in China. Within two months, the virus had spread to every corner of the world.
“Everything was going very well,” recalls Diane Quinn, Cirque’s chief creative officer, who had visited the show in Hangzhou, near the epicenter of the outbreak in Wuhan, just a few weeks earlier.
The abrupt cancellation of The Land of Fantasy was a serious blow to profits, but a manageable one. Cirque still had 43 other shows around the world. COVID-19 would not have an official name for a few more weeks, and even as late as early March, the idea that it could grind the entire world to a halt seemed unimaginable.
An outbreak in Italy was an inflection point for the company. Cirque had a show set to open in Rome—tickets were already being sold—when the event’s promoter called it off. The show would have gone on to Milan, but that would clearly be impossible after the Italian government locked down the country on March 9.
One by one, the dominos fell—more cancellations, more travel restrictions, more bad news. “As the virus spread across Europe and ultimately into North America, we realized, boy, we’re going to have a problem on our hands,” Quinn says.
Las Vegas, which accounted for some 35% of Cirque’s revenue and is the company’s most important market, was the final straw. On March 14, CEO Daniel Lamarre received a call from MGM Entertainment in Las Vegas, informing him that all of the city’s casinos and other tourist destinations would be shut down.
“I woke up the day after, Sunday morning, and I had no more shows, no more revenue,” Lamarre says. The world had come to a halt, and Cirque du Soleil with it. For the first time in 35 years, the show wouldn’t go on.
“Nobody has a crystal ball”
For performers like AJ Anaya, the shutdown has been devastating. Not long ago, Anaya could be seen twirling through the air on his BMX bicycle in a nightly spectacle of acrobatic mastery and gravity-defying stunts. He’d be hamming it up for thousands of cheering fans in Chicago, Atlanta, or Los Angeles, under the glittering big top in a high-octane show called Volta, a touring production by Cirque du Soleil that featured a wild array of extreme sports. For more than three years, Anaya has been among the show’s star attractions.
These days, the 34-year-old BMX performer lives a much more sedentary existence. Like thousands of his fellow performers, Anaya has been sidelined since March 13, when the famed circus brand announced the suspension of its touring shows in response to the coronavirus pandemic. Ten days later, he was laid off along with 95% of the company’s other employees, who are not represented by a union.
Anaya still communicates regularly with his fellow Cirque performers—his extended family, he calls them—through a Facebook group where they offer each other emotional support, trade tips about training and exercise routines, and discuss the day when they’ll once again feel the adrenaline rush of performing live with the world’s most famous circus.
“It’s been quite an adjustment going from 10 shows a week to just kind of being at a standstill,” says Anaya, who lives in Denver with his wife and newborn son. “Everybody’s excited to kind of get back on the road and do what we do.”
But with economies in free fall and no vaccine in sight, it remains to be seen how Cirque can reopen—and if it will be the same company when it does.
In hindsight, there were few companies as vulnerable to COVID-19 as Cirque du Soleil Entertainment Group. Since its inception in 1984, it’s played shows in 1,450 cities in 90 different countries, and large gatherings are their lifeblood. Its vast army of 1,800 artists relies on international travel to get from show to show, regularly crossing borders, performing on cruise ships, and interacting with fans. Daily training regimens require constant physical contact. The entire operation depends on an intricate logistical network of cargo ships, trucks, hotels, and food-service businesses, all of which have ground to a halt.
In effect, government bans on large gatherings are a ban on Cirque itself, leaving a company that generated an estimated $950 million last year with essentially “zero revenues,” according to Lamarre.
A former public relations guru, Lamarre exudes optimism that Cirque du Soleil will survive the pandemic, even if he admits to not knowing when or how it will happen. In a way, that’s been the hardest part. “The uncertainty of when it’s going to end, it’s just kind of rough,” Lamarre says. “Nobody has a crystal ball, right?”
That hasn’t stopped financial analysts from spinning their gloomy prognostications. In a recent credit assessment, analysts at Moody’s downgraded Cirque’s credit rating to junk territory, citing its “excessively high leverage” and limited investment capacity for 2020.
“Weak liquidity, soft show demand and challenging economic conditions will further pressure Cirque du Soleil’s operating flexibility and capacity for growth capital investments once shows resume,” the analysts wrote. S&P Global Ratings offered a similarly dire outlook, downgrading Cirque to its lowest rating and citing “missed principal and interest payments.”
Daniel Lamarre, CEO
One thing’s for sure—if you called me this time next year, Cirque du Soleil will be open.”
Avoiding bankruptcy may be a high-wire act. Reuters reported in March that all options are on the table as Cirque explores plans to restructure its debt and repair its balance sheet.
Lamarre did not deny that bankruptcy is a possibility, though he calls the report “overstated.” Cirque has a wealthy patron in TPG Capital, the private equity giant that purchased a majority stake in the company five years ago, spurring a new wave of expansion and diversification for the brand. (Cirque’s portfolio now includes Blue Man Group and the Illusionists franchise, among others.) Perhaps even more substantial, Lamarre says, is support from another major shareholder, Caisse de dépôt et placement du Québec, a Canadian manager of pension funds that doubled its stake in February. “They’re very eager to keep us alive,” Lamarre says.
Still, the relationship with TPG is complicated. The 2015 deal that made Cirque du Soleil cofounder Guy Laliberté a billionaire also saddled Cirque with nearly $900 million in leveraged debt—a common practice among private equity firms to generate higher profits. That high-risk debt was later packaged into collateralized loan obligations and sold to global investors. Now, with that debt reduced to junk status, Bloomberg reports that Cirque has discussed a $50 million loan from TPG, using its Canadian intellectual property rights as collateral to buy time while seeking government assistance.
Cirque declined to comment on the loan, but Lamarre told me that Cirque has indeed been negotiating a short-term rescue plan with the Canadian government. “Having support from the government would be helpful,” he says, referring to Cirque as a “Canadian ambassador” that represents the country all over the world. “It’s kind of intriguing right now because we have no shows, we have no revenues, but we have an amazing brand.”
The company later added, “we are confident that when the day comes when we can reopen our shows, we will get back to profitability.”
Between Caisse and TPG, and with an additional leg up from the government—Cirque’s “three buddies,” as Lamarre calls them—the company may be in a better position than many entertainment and performing arts organizations, some of which have already announced permanent closure in the wake of the pandemic. And while Lamarre may not have that crystal ball, he is confident enough to make a prediction: “One thing’s for sure—if you called me this time next year, Cirque du Soleil will be open.”
Enter the SWAT team
In the weeks since Cirque laid off its 4,679 employees, the company has been operating with a skeleton crew of administrative personnel and executives—Lamarre calls them the “SWAT team”—to mitigate the damage and plot a path forward. Discussions have already begun to reopen Cirque’s show in China, although how or when that would work is unclear, especially as Cirque performers would usually need to travel to and from China to keep the show operating.
The fraught logistical puzzle underscores one of the most frightening challenges that live-entertainment companies such as Cirque du Soleil are facing. Even after cities and countries begin to get their coronavirus outbreaks under control, life will not return to normal all at once. It will drip back incrementally. And even with the best of possible outcomes, large gatherings will be one of the last aspects of prepandemic life to return.
Every day that goalpost gets pushed further into the future for industries across the live-entertainment sector. Broadway producers had been eyeing July 4 weekend as a possible reopening date, but producers are now saying they’ll be lucky to be open by September. Disney and other theme park operators are quickly losing hope that they can salvage the summer. Some experts say we should not expect major live events to resume until fall 2021 at the earliest.
Cirque du Soleil has survived other downturns. It took years for the company, which began as a humble group of 20 street performers, to become a global phenomenon. After exploding growth in the 1990s and 2000s, Cirque suffered a massive round of layoffs in 2013 and was seen as past its prime when TPG took a controlling stake two years later. It’s grappled with high-profile performer fatalities that have called its safety record into question. And it’s struggled to find a winning formula in cities such as New York that take their live entertainment seriously.
Through it all, Cirque has thrived thanks to a multigenerational base of support that seemingly never tires of its unique brand of theatricality, daredevil acrobatics, and wonder. Even during the worldwide lockdown, diehard fans tuned in to watch streamed excerpts from three shows on places like Facebook and YouTube. The result across platforms during one test was an audience of 14 million people, Lamarre says, a number that far exceeded even his most ambitious expectations.
“You know, internally we were betting about how many people we would reach. I was the highest bidder and I was looking for 2 million viewers,” he says. “I was totally off and so were my colleagues. That was such an encouragement in the middle of a crisis.”
Back in Costa Mesa, California, where Cirque du Soleil’s “Volta” was supposed to be up and running by now, AJ Anaya is still hunkering down, his custom BMX bike in tow, ready for when the lights of the big top are shining again. Performing with Cirque is a dream job, he says, and looking on the bright side is part of the gig, even in the darkest of times. “It’s such a crazy, crazy thing that we’re going through, but honestly I think it’s all gonna work out for the better,” Anaya says. “We’re going to return to normal, and hopefully better than we were before.”
This post has been updated to remove a reference to the big-top tent in Rome, which Lamarre misstated was already erected when the show was called off.