Government had concerns over Picture Palace cinema

The unfinished Picture Palace cinema on Lower Merchants Road.

The Government raised concerns about the economic viability of the Picture Palace cinema as long ago as 2012, urging the promoters of the project to scale the development back, newly released documents have revealed.

Work has once again stalled on the city’s cultural cinema, which is running more than €2 million over budget and remains under construction seven years after building first commenced.

Doubts have now been cast on whether the cinema will be economically sustainable when it eventually opens its doors, after it emerged that the Department of Arts, Heritage and the Gaeltacht questioned the viability of the project as early as 2012.

The Department also advocated that the cultural cinema should have been planned as a multipurpose facility, questioning whether the demand for art-house film would make the project economically sustainable.

The business plan for the Picture Palace addresses the issue of demand by citing a 14-year-old Arts Council report under a section entitled “Proven Need for Cultural Cinema in Galway”.

The financial projections contained in the business plan are based on a minimum of 63 film screenings each week and minimum weekly attendances of 1,722 people. This is based on 25% seat occupancy, although the plan states that a higher rate of admissions would be anticipated in practice.

In total, a minimum of 87,822 tickets would need to be sold during a full year in order to ensure the cinema’s viability, which would also rely on annual profits of up to €75,000 from its café and €40,000 from advertising on screens and programmes.

In an email sent to public representatives on June 19, 2012 Chairperson of Solas Galway Picture Palace Ltd Lelia Doolan reported: “Today we were informed that the Department is raising questions about the economic viability of the Picture Palace, suggesting that it should have been planned as a multipurpose facility.

“Conversely, it appears that they also believe that the building should be scaled back,” wrote Ms Doolan.

Asked whether market research in relation to demand for cultural cinema in Galway was still reliable, given that it was carried out years before the economic downturn, Ms Doolan said there were still encouraging signs.

“Projections for cultural cinema-going remain steady, given the continuous Irish support (€104.1m in income in 2015), increase in Irish Film Centre and Lighthouse entries, the packed houses for Galway Film Society and the success of the Galway Film Fleadh (17,476 admissions over five days last year) and have enabled Solas to attract Element Pictures, who run the Lighthouse, to come on board as operators of the Picture Palace,” he said.

Former TD Jimmy Deenihan, who was Arts Minister when the Department raised questions about the viability of the cinema, described the project as complex and sensitive.

“It was a complex project that I inherited and I tried to steer it through towards completion as best I could,” he said.

“My officials acted very responsibly and carefully to protect the taxpayer as much as possible in relation to the project. At all times, that was my priority and I was very concerned to protect the taxpayer and, at the same time, I wanted it to be completed. I was trying to balance both.”