Inside the financial losses that have left Scotland's book festivals on a cliff edge amid Baillie Gifford storm

The reality is that even without the loss of money that came from Baillie Gifford, Scotland’s leading book festivals have been facing a precarious financial situation, with some of the biggest events already suffering from a sharp decline in sponsorship income compared to pre-pandemic levels.

The nation’s flagship gathering, the Edinburgh International Book Festival, is a case in point. In 2022, the latest year for which accounts are available, when it staged a hybrid festival with both in-person and live-streamed events, the festival spent more than it made, resulting in an operating loss of more than £93,000.

The reasons for that are complex and multi-faceted. The pressures brought about by the pandemic were intensified by the cost-of-living crisis, which, the festival’s directors said, had a clear material impact, with the levels of discretionary spending by visitors “drastically scaled back”.

As a result, both ticket and book sales fell short of targeted budgets. Indeed, just £613,000 was brought in via ticket sales that year. Not only was that lowest sales figure seen since 2009, but it essentially dropped off a cliff compared to the levels of ticket income realised before Covid-19, when the festival was bringing in around £1 million a year.

But there were other reasons behind the operating loss. The charity that organises the festival had to write off around £300,000 from its fully owned subsidiary, Book Festival Trading Ltd. The company had been set up to expand and develop retail spaces, but the timing was unfortunate, with the pandemic and inflation conspiring to hinder the plans before they ever really got off the ground.

And even before the decision to part ways with Baillie Gifford, the festival had been struggling to get back to the pre-pandemic levels of sponsorship it enjoyed. Its dozens of sponsors contributed nearly £468,000 in 2022, which, in isolation, seems like an impressive figure. It is less so when you consider that in each of the three years preceding the pandemic, the sponsorship income never dipped below half a million pounds; in 2019, the figure reached £656,000.

Whether it can scale such heights again is in serious doubt in the aftermath of the collective agreement by the festival’s trustees and Baillie Gifford to end their partnership. Added to this, the investment firm, Rathbones, which has previously served as a major partner for the festival, is not sponsoring this year’s iteration.

The directors of Borders Book Festival released a statement.

In the face of that sharp drop in income, contributions from the festival’s core funders are more important than ever. The most recent accounts show that Creative Scotland gave it more than £306,000, while the City of Edinburgh Council provided £50,000. There have been other six-figure sums for specific events – some £600,000 came from the People’s Postcode Lottery for the festival’s communities programme, for example – but those invested in ensuring the festival remains a presence for years to come are fretful.

“The sponsorship picture has been precarious for some time now,” explained one source. “The trustees welcome scrutiny of how the festival is funded, and how it is run, but there comes a point when people have to appreciate that there is a finite amount of funders, and a finite amount of money.”

The picture is similar at the literary festival in Wigtown, where Baillie Gifford has supported the event for more than 14 years. That partnership came to an abrupt end earlier this month, prompting concern for the financial footing of the annual gathering.

Like its Edinburgh counterpart, the Wigtown festival’s income has been outstripped by its spending of late. Its most recent accounts show that while its income stood at £614,000 in 2023, its expenditure was nearly £647,000.

The traditionally serene Edinburgh International Book Festival is at the centre of a sponsorship row. Picture: Lisa Ferguson

The event, now in its 25th year, has also struggled to reach the levels of income from ticket sales compared to before Covid-19. Whereas the average income from that stream was around £114,000 between 2017 and 2019, it plummeted during the pandemic and has never recovered, with sales of less than £79,000 last year.

Consequently, the loss of the Baillie Gifford funding will be sorely felt. It is understood the company’s contribution to the festival amounted to around £35,000, roughly the same amount it receives from Dumfries & Galloway Council. It is little wonder that Adrian Turpin, the festival’s artistic director, pointed out last week the parting of ways with Baillie Gifford meant the festival was now facing a £100,000 shortfall in its five year-plan.

Fortunately, the company that runs the festival has free reserves of £157,000, which will allow it to operate. But burning through that money is not sustainable, and there is only so much extra its public partners can put forward. As well as receiving £86,000 in regular funding from Creative Scotland last year, the arts quango also provided the festival with more than £100,000 from its recovery fund, a pot of money designed to help cultural organisations bolster their financial resilience.

The Borders Book Festival, another cultural fixture hit hard by the end of its sponsorship deal with Baillie Gifford, is also counting every penny. Even before its partnership with the investment firm came to an end after eight years, it was already having to cope with a drop in income from its core sources.

The event, founded 20 years ago, received just £81,900 in 2023. And while that represented a near £6,000 increase on the previous 12 months, it had to deal with a year-on-year fall of almost £10,000 in contributions from its public sector partners.

One source involved in Scotland’s literary festivals said the future appeared bleak. “The nature of the debate and the atmosphere it has created means there is now a very real danger that the arts will no longer be seen as a space where donors and sponsors wish to be associated,” they explained. “If that comes to pass, it will be catastrophic.”