On this episode, we speak with Cirque du Soleil Entertainment Group’s president and CEO Stéphane Lefebvre about his experience facing what seemed to be the worst-case scenario for the entertainment giant. In March 2020, Cirque du Soleil had six shows in Las Vegas with another 10 shows touring around the world. Then suddenly, within just six days, their revenue plummeted from over a billion dollars per year to zero.

In his previous role as CFO, Stéphane helped identify new sources of funding for the company, and now, as CEO, he is leading the company's renewal efforts. Lefebvre recounts how he and his team were able to navigate this period of extreme uncertainty. Not only did his team need to manage to keep the company afloat, they also had to contend with the challenge of getting hundreds of performers and employees, located all around the world, back to their respective homes safely.

The views and opinions expressed in this podcast are those of the guest and do not necessarily reflect that of CPA Canada.

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Neil Morrison:

Welcome to Foresight, The CPA Podcast. I'm Neil Morrison.

Stéphane Lefebvre:

Neil Morrison:

Stéphane Lefebvre:

On Monday on the night, the executive committee met with the leader of the touring show division. We had to decide what do we do with our show that was supposed to travel to Milan, where else can we send it? We looked at different places in Europe. "Should we send it to Paris or Spain?" That was a conversation on the ninth. Then over the week, all the markets kept falling off and closing down, shutting down. On the Friday, it was actually Friday the 13th, March 13th, we then had to come to realize that all of our markets were shut down except Las Vegas. Las Vegas was still open. We've had six shows operating in Vegas. Before leaving the office on the Friday, my boss told me, "Well, at least we've got Vegas."

Again, then I got a text on a Sunday from Danielle, from my boss, that read, "Call me," or something like that. I called him and he had just received a call from the CEO of our partner in Las Vegas, CEO of MGM. Bill Hornbuckle told him, "Look, we're going to announce that we're shutting down Vegas. The city is being shut down." I called Danielle and told me "That's it." When you think about that, we on the Monday the 9th, we were $1 billion business, and six days later we had none. We went from a billion to zero in six days. That's how crazy it was.

Neil Morrison:

A $1 billion business that drops to $0 in revenue in six days. If we're going to talk about navigating uncertainty, it doesn't get more extreme than this. The total collapse of a global business in less than a week. That's why on this episode, we're not looking ahead to the uncertainty that is over the horizon. Instead, we are looking back to see if any lessons can be drawn from the Cirque's experience. What's it like to face the worst case scenario? In those first few days as the scope of what they were facing became clear, Stephane Lefebvre's mind turned to logistics.

Stéphane Lefebvre:

Well, the first thing that comes to mind is we're in the business of travelling around and presenting shows in so many markets in the world. Think about the nine or 10 shows that we had touring around the world. It means literally thousands of people scattered in different parts of the world that you need to bring back home, whatever home means for most of them. In a time when the whole air transportation was extremely difficult. We put a lot of resources into getting in touch with X, and Y, and Z in different parts of the world, trying to find a flight ticket to bring that person back either home or to another location. It's been a logistical nightmare, but I got to say we really put all of our efforts into it and at the end, after a few days, we had everybody back home. You know what the old say, "Leave no men behind." We actually brought back all of our employees, performers, technicians, back home.

Neil Morrison:

Amazing. When you say going back home, these are countries all over the world. Europe, Mongolia, all through Asia, they're coming from everywhere.

Stéphane Lefebvre:

Coming from everywhere. In quite a few cases actually, you've got some people that are going on tour for years. The definition of homes not as clear as it can be for other people. We've had a couple of Russians that had left Russia at the time, but that didn't mean that they wanted to go back to Russia. They didn't have home back in Russia, actually. It wasn't easy for them. It was quite hard.

Neil Morrison:

As the scope of what you were facing became clear, what ran through your mind?

Stéphane Lefebvre:

Survive. We go to a survival mode, right?

Neil Morrison:

Right.

Stéphane Lefebvre:

We, being myself and a bunch of people from the management team, we knew that the Cirque du Soleil brand hadn't died. We knew that this was going to be a tough patch, and we would go through this and come back in business in weeks or months. We never thought it was going to be months and years, but we never lost faith that we could actually bring back the business and operation. The first thing that goes through your mind is you got to put yourself under survival mode. I was the chief financial officer at the time, so it meant finding some arrangements with our lenders. We reached out to advisors that know the complexity of these kind of large restructuring far better than I did at the time, advised us on what the next steps would be, and we sought protection from the bankruptcy, both in Canada and the US. It bought some time to come up with a good business plan and seek for investors to reinvest in the business to relaunch Cirque du Soleil's business.

Neil Morrison:

Was there a moment when you realized bankruptcy protection was the only option for you?

Stéphane Lefebvre:

Neil Morrison:

I wonder if that's one of the keys as we explore how to make your way through uncertainty. I wonder if one of the keys is it optimism? Or just having faith or trying to stay positive? I don't know what it is, but it sounds like there's a bit of a key there for getting through that kind of unbelievable uncertainty.

Stéphane Lefebvre:

Probably was keeping the faith is one thing, but in our case, I always believed in this brand and it wasn't just being optimistic and keeping the faith that something magical would happen. We knew that we had an asset that was very valuable. There was something, we were on solid grounds with our brand. I guess that supported us to be optimistic about the future.

Neil Morrison:

How were you sleeping during all of that, while it was going on?

Stéphane Lefebvre:

It was hard. Wasn't so much about not sleeping because of the level of stress. But literally, I don't think I've ever, you're a CPA, you'll... A lot of CPA put in the hours. We've always done that. But I think that probably has been the worst part of my career. This was nonstop early morning, late night, seven days a week for months. It's been hard.

Neil Morrison:

Without a clear end point to it, either.

Stéphane Lefebvre:

Neil Morrison:

As a CFO, and you're a CFO with a CPA, what is your key take away from going through that period when the very survival of the company was uncertain? This isn't just about going through a rocky period. There were many periods where you must have thought, "Are we actually going to be able to emerge from this?" Now that it's a bit in the rear view mirror, is there a key takeaway for you?

Stéphane Lefebvre:

I had the benefit of having worked in this company for almost five years when it happened, as the CFO. Just by personality, I guess I was the type of CFO would love to and to be involved in understand the operations, understand the strategy. When Covid hit, we had to literally redo a business plan for the company. I had some thoughts on the few things that I thought we needed to change. We encompassed all that into a comprehensive business plan. We made tons of presentations to investors and very pleased that it worked.

We put together a business plan that was executable, realistic, on the conservative side, and we told people so. I think if I were to do it again, I'd do exactly the same thing. We went and secured 375 million of fresh capital in the company. Turned out that once we started relaunching the business, it actually went pretty well, and we didn't need to use the whole 375. But I'm glad we went on the market with a conservative approach and convinced people to give us the financial flexibility or relaunch the business, even if we ended up not having to need it all.

Neil Morrison:

Is that for you, the takeaway is approaching the problem or the uncertainty with the conservative approach, trying to keep things a little bit tighter?

Stéphane Lefebvre:

Conservativism and I would say even more important, transparency. In my view, in uncertain times I'd rather be more transparent than not with different stakeholders. We don't know what we don't know, but we certainly can voice that there's some uncertainty. Of course, you make certain assumptions, but if you're clear on the assumptions you're making, if you're clear on some of the scenarios that may or may not happen and get people to understand the sensitivity of a few events that could happen, it makes the whole thing easier in my view. That's how we approached it at the time.

Neil Morrison:

The narrator in your show, Crystal says, "It's easy to fall, harder to get back up," I want to explore that. What were the first signs that you were emerging from the crisis?

Stéphane Lefebvre:

Neil Morrison:

This is almost a pent up demand for it. It's exactly the sort of thing people were looking forward to when they were stuck in Covid lockdown.

Stéphane Lefebvre:

I think you're right, Neil. I think people felt the need to meet friends, get out of the house, gather in venues, see live entertainment, being touched by emotions, as well, because that's what our people do on stage. Yeah, to a certain extent, I think there's been a pent up demand, but we see some stickiness. This would've been over what, 18, almost 20 months now. We've beaten a lot of records in many markets. The attendance in Las Vegas, even after a year and a half, is still very strong. Despite risk of recession, our advanced sales are still really good. I think there's this deepness to that demand, at least that's what we see right now.

Neil Morrison:

Have your touring shows started up as well?

Stéphane Lefebvre:

All of our shows have started up.

Neil Morrison:

Are you back to where you were pre pandemic, in sales?

Stéphane Lefebvre:

Neil Morrison:

Stéphane Lefebvre:

Neil Morrison:

Yeah. For a moment that you became the CEO and suddenly you're almost a public health officer on top of it.

Stéphane Lefebvre:

Neil Morrison:

No doubt. That brings me to one of my last questions. A Report On Business article quoted Professor Patrick Ludu from Concordia University. He said that you are the right person to weather the next few waves of uncertainty because you are very much, and I'm quoting here, "An administrator and an accountant." I'm wondering why do you think an accountant is what the Cirque needs right now as it continues its rebuilding process?

Stéphane Lefebvre:

Neil Morrison:

Yeah. Well, now that you have things back to, essentially, where they were pre pandemic, is there anything keeping you up at night now?

Stéphane Lefebvre:

That's a good question. There's a few things that you read in the paper. Well, are we getting into a recession? How will the economy pan out next year? Quite frankly, none of that keeps me awake at night. What excites me though is how can we grow this business? It's not keeping me awake at night, it's finding ways to bring more people to connect with our brand on stage. There's tons of markets out there that we haven't really tapped into, so we got to find the right product, the right show for the right market. That excites me a lot. Other means to connect with people, mainly digital, social media, metaverse. We have got quite a few projects in the pipeline for us to get our brand connected with a broader audience, younger audience on stage, but not only on stage, but get to experience what Cirque du Soleil is all about through different means. That's what excites me the most.

Neil Morrison:

Nothing's keeping you up. You're a cool customer.

Stéphane Lefebvre:

Yes, I am.

Neil Morrison:

Stephane Lefebvre, I've really enjoyed this. Thank you so much for taking the time to talk to me.

Stéphane Lefebvre:

Thank you. Thanks for having me, Neil.

Neil Morrison:

Stephane Lefebvre is the CEO Cirque du Soliel. He was in Montreal. That's it for this episode of Foresight, The CPA Podcast. On our next episode, we'll be speaking with Priyanka Lloyd. She is the executive director of Green Economy Canada. She talks to us about the challenge of convincing businesses to invest in sustainability in uncertain times. Economic uncertainty has a way of making business owners nervous about implementing new processes.

But Priyanka gives a great example of an Ontario company that is more efficient, and more resilient, after it implemented a whole suite of energy saving changes.

That’s Priyanka Lloyd, the executive director of Green Economy Canada. Priyanka is our guest on our next episode.

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