Cirque du Soleil's Expanding Big Top
By Thane Peterson
It's hard not to watch Cletus Okpoh while I'm talking with Chantal Côté, the public-relations person at Cirque du Soleil. We're in a huge, hanger-style training studio at the circus company's Montreal headquarters, and gymnast Okpoh is perched above us on a trapeze some 45 feet off the ground.
A coach yells instructions at him, and Okpoh, clad only in Lycra shorts, periodically drops off the trapeze and plunges toward the floor. After bungee cords catch him and send him flying back up, he tries to grab the bar, usually misses, and ends up bouncing up and down on the elastic cords. "Focus is the key," the coach yells at one point. "And don't forget to squeeze your bum together."
Here's hoping that execs at Cirque don't miss the bar when they embark on an ambitious expansion plan that the company hopes will one day make it nearly as ubiquitous and multifaceted as Disney. Already, Cirque du Soleil is a fascinating company. In addition to five unique traveling big-top shows, it now has three that are performed in permanent arenas -- one at Walt Disney World in Orlando, Fla., and two in Las Vegas, at the Bellagio and Treasure Island hotels. All told, the Cirque employs some 2,400 people and will have revenues of an astonishing $500 million Canadian (about $325 million U.S.) this year, 90% of that generated by its whimsical circus shows.
OFF THE STREETS.
That's a lot of whimsy, and it sure isn't bad for an outfit founded by a troupe of street performers just 18 years ago. The guiding genius behind the Cirque is CEO Guy Laliberté, 42, a one-time fire-eater and street musician who ran away from home as a teenager. But Laliberté, whose father was an executive at the aluminum giant Alcan, is a daring, charismatic businessman. Early on, he charmed the Quebec government into giving the troupe more than $1 million to buy equipment. Then, in 1987, Cirque bet everything on a Los Angeles gig that it agreed to do for free in exchange for top billing. Laliberté has said the troupe didn't even have gas money to get home.
Luckily, the L.A. performance won rave reviews, kicking off more than a decade of continuous expansion. Eighteen months ago, Laliberté bought out the company's co-founder and now owns Cirque du Soleil outright, making him one of Canada's richest citizens. His partner had wanted to take Cirque public, but Laliberté intends to keep it private to avoid having to cater to finicky investors.
Last week, when I was in Montreal, Cirque du Soleil's top execs were laying out their new five-year plan. The company's strategy will continue to be different from that of Disney, MGM, and other entertainment rivals. Cirque du Soleil styles itself as a pure content provider, whose main business is harnessing the creativity of performers, producers, and other artists, not owning and operating hotels and other properties. Instead, it focuses its attention and finances on training and other activities related to the creative process. For instance, the Cirque makes all its own costumes, and to ensure that its artists are well-fed, it hires gourmet chefs to accompany the traveling shows.
YOU ORDERED SELTZER?
Daniel Lamarre, president of shows and new ventures, predicts that Cirque du Soleil will expand at a rate of about 25% annually over the next five years, which would boost its annual revenues to roughly $1 billion (U.S.) by 2007.
Lamarre says Cirque is in the midst of "an aggressive expansion of its core business." In mid-June, it announced plans to open two more permanent productions in Las Vegas in partnership with MGM Mirage, and the companies are also exploring other joint ventures around the world. Meanwhile, Cirque is talking with potential partners about opening new permanent shows in other cities, including London, Tokyo, and New York.
Around 2005, it expects to also start generating substantial growth from a panoply of new initiatives. To me, the most interesting are planned Cirque du Soleil hotel/spas with a circus ambiance. The Cirque won't be buying the real estate, just providing the staff and entertainment. Room service, for instance, might be delivered by a juggler, and the concierge might sport a red clown's nose. However, Lamarre says the facilities also will be "heavily multimedia," which might mean everything from airing films of Cirque performances to having computer-generated virtual characters strolling the halls. As early as 2005, Cirque du Soleil hopes to have finished a prototype hotel/spa in Montreal that will be used as a "laboratory" to develop and try out its ideas.
CANADIAN CASE STUDY.
Meanwhile, Cirque du Soleil is rapidly expanding its film, TV, and recording operations. It already has deals with a number of big partners, including the major Canadian TV networks, Bravo in the U.S., Fuji in Japan, and Televisa in Mexico. An example of the kind of programming it hopes to do is a 13-part TV series (to be aired by Canadian networks this fall and in the U.S. by Bravo next year) that follows some of its performers as they prepare for a show. Cirque also has plans to shoot a new TV variety series this fall that it hopes will be aired by the consortium. It's also working on an animated children's TV show and has hired experienced record producers to expand its music operation.
Regardless of whether these ventures pan out, Cirque du Soleil is a tremendously interesting case study. Skeptics (me among them) wrongly predicted that Quebec was headed for economic disaster after strict French language laws and the threat to separate from Canada spurred many companies to relocate to English-speaking Canadian provinces in the 1970s and 1980s. Cirque du Soleil is a prime example of how French-Canadian entrepreneurs have taken up the slack, spurring growth and creating jobs. Indeed, more than 1,000 of Cirque du Soleil's employees are based in Montreal, where the company is headquartered.
Unlike most circuses, Cirque du Soleil's target audience is adults, not children, with tickets going for around $100 per person. The company believes each individual show can be kept going for up to 15 years before it has to be retired. It has grown so rapidly because its productions -- which combine circus acrobatics with the narrative of theater -- fill a deep human need to gather together and experience something marvelous.
In our cynical age, it's refreshing to see a company succeed so well by betting everything on its ability to astonish and amaze its customers.
Peterson is a contributing editor at BusinessWeek Online. Follow his weekly Moveable Feast column, only on BusinessWeek Online
Edited by Patricia O'Connell