Case description Frankie Devine is an aspiring concert promoter with a modest track record. She has been offered the extraordinary chance to host as part of the Sydney Fringe festival a four-week residence of Bernie Dieter's Club Cabaret show starting 2 April 2022 and being performed daily through to 29 April 2022 with two daily shows on Fridays and Saturdays. The show will put her on the map in a highly competitive industry that has been hit hard by Covid restrictions over the past three years. The show features international standout cabaret artist Bernie Dieter and half a dozen other world-class artists such as fire-breathing and swordswallowing Jacqueline Furey, hula-hooping queen extra-ordinaire Lisa Lottie, and fabulous aerial artist Matthew Pope. A gin-soaked houseband soundtracks a hazy night of outrageous cabaret, and breath-taking circus lasting two hours, with a twenty-minute intermission. The show has been an outstanding success elsewhere. These precedents show that at a price of admission of $75 the shows are very likely to sell out. Ms Devine can hire the whole package (Bernie Dieter, the artists, houseband, sound-engineer, lightengineer, stagehands) for $13,500 per show, with each additional show costing the same as the first. The performers are contractors and are not viewed as employees by Frankie or the venue where the shows will be hosted. This means that they will only be paid if the shows go ahead. This also applies to the staff that she will have to contract to check tickets, serve drinks, and guide patrons into the venue. The staffing cost to cover these services is $1,000 per show. Many of these contract workers are university students who have Page 2 worked with Frankie previously and indirectly helped her to build her business before Covid restrictions hit the industry. The only appropriate and fitting venue for the show is The Famous SpiegelTent which she can rent only for the full four weeks, at a fixed cost of $195,000. This price includes the setting up of the venue but does not cover organizational costs associated with enforcing a Covid safety plan such as checking vaccination records, additional security to enforce mask mandates and additional staff to facilitate and monitor social distancing. These costs are estimated to be an additional $2,000 per show. The Famous SpiegelTent can accommodate 300 tightly packed paying customers at maximum capacity with no social distancing. There is no seating. First come, first serve. The following Terms and Conditions of Entry apply to all ticket holders, and are mentioned in the advertisement to the show: 1. Patrons entering the SpiegelTent venue must have a valid Event ticket. 2. Covid-19: Please note all SpiegelTent ticketholders must be fully vaccinated; proof of vaccination will be required upon entry. 3. By entering this venue, ticketholders acknowledge there is a heightened risk of contracting COVID-19 and the Event Organisers do not guarantee that it is or will remain a COVID-19 free area. The ticketholder assumes all risk for any loss or damage caused in this regard while in or around the SpiegelTent venue. 4. The Sydney Fringe Festival is responsible for all aspects of this event. All complaints and claims arising out of or in connection with this event, including but not limited to admittance at this event, shall be directed to Sydney Fringe Festival. Since 10 March 2022 the number of cases has started to drift up again, apparently driven by a more infectious variant of Omicron known as BA.2. The BA.2 virus wave is predicted to reach its peak in mid-April. Vaccination and mask-wearing mandates are put in place on 1 April 2022, and additional social-distancing restrictions are also put in place the same day, reducing the SpiegelTent capacity to 150 patrons if enacted. The City of Sydney's penalty for violations of that social distancing stipulation is $10,000 for a first offence and capped at a maximum of $55,000 in total for subsequent offences. During the two years of the pandemic the City of Sydney's enforcement of its stipulations has become increasingly lackadaisical. After much deliberation and analysis, Frankie decides to go ahead with the shows as planned and, contrary to the announcement in the advertisement, to not check vaccination status at the shows and also not to enforce the mask-wearing and social-distancing stipulations. 1. What are the most relevant economic considerations of the decision to go ahead with the show?