Cirque du Soleil had seen declining profits in recent years due to a series of poorly received shows and the saturation of their market. The founder, Guy Laliberté, planned to restructure the business by expanding into new ventures beyond their successful circus shows. This included reducing hundreds of employees, cutting costs, and seeking new investors to help fund diversification into movies, television and other entertainment. However, maintaining the Cirque brand while expanding into new areas posed challenges to avoid damaging their reputation as a creative circus organization.

1. C270 CASE 35 :: CIRQUE DU SOLEIL
CASES
CASE 35
CIRQUE DU SOLEIL*
The founder of Cirque du Soleil, Guy Laliberté, after see-
ing the firm’s growth prospects wane in recent years, was
thinking about expanding his firm in new directions. For
three decades, the firm had reinvented and revolutionized
the circus. From its beginning in 1984, Cirque de Soleil
had thrilled over 150 million spectators with a novel show
concept that was as original as it was nontraditional: an
astonishing theatrical blend of circus acts and street enter-
tainment, wrapped up in spectacular costumes and fairy-
land sets and staged to spellbinding music and magical
lighting.
Cirque du Soleil’s business triumphs mirrored its high-
flying aerial stunts, and it became a case study for business
school journal articles on carving out unique markets. But
following a recent bleak outlook report from a consultant,
a spate of poorly received shows over the last few years,
and a decline in profits, executives at Cirque said they were
now restructuring and refocusing the business—shifting
some of the attention away from the firm’s string of suc-
cessful shows and toward several other potential business
ventures.
Cirque du Soleil had also suffered other setbacks. Plans
for a new show that would have been based in Dubai fell

2. through after the city had financial problems that stemmed
from the 2008 recession. Cirque also recently suffered its
first death during a performance, when an acrobat tum-
bled 94 feet during a stunt in a Las Vegas performance of
the show Ka in 2013. After a hiatus of more than a year,
Cirque brought a revamped version of the stunt back to the
show with more stringent safety measures. “The recent
struggles,” said Chief Executive Daniel Lamarre, “cer-
tainly brought a lot of humility to the organization.”1
For the first time in recent history, Cirque du Soleil
failed to generate a profit in 2013. Its market had dropped
20 percent from $2.7 billion in 2008. In recent inter-
views with The Wall Street Journal at Cirque du Soleil’s
sleek headquarters in Montreal, top executives, including
founder and 90 percent owner Guy Laliberté, revealed
rare details of the firm’s financial status and new business
plans. The company was seeking to position itself as an
attractive bet as Laliberté began to look for investors to
buy a significant portion.
Debate swirled over whether Cirque du Soleil should
return to its roots or aim for constant reinvention. At the
end of 2011, Bain & Co., contracted by Cirque, reported
that Cirque’s market had hit saturation and the company
needed to be careful about how many new shows it should
add. Bain suggested Cirque seek growth by moving its con-
cept to movies, television, and nightclubs. “Guy Laliberté
always said we are a rarity—but the rarity was gone,” said
Marc Gagnon, a former top executive in charge of opera-
tions for Cirque du Soleil, who left in 2012.2
Starting a New Concept
Cirque du Soleil developed out of early efforts of Guy
Laliberté, who left his Montreal home at the age of 14 with
little more than an accordion. He traveled around, trying

3. out different acts such as fire-eating for spare change in
front of Centre Pompidou in Paris. When he returned home,
he hooked up with another visionary street performer from
Quebec, a stilt-walker named Gilles Ste-Croix. In 1982,
Laliberté and Ste-Croix organized a street performance
festival in the sleepy town of Baie St. Paul along the
St. Lawrence valley.
By 1984, Cirque du Soleil was formed with financial
support from the government of Quebec as banks were
reluctant to support the band of fire-eaters, stilt-walkers,
and clowns. Its breakthrough 1987 show We Reinvent the
Circus burst on the art scene in Montreal as an entirely new
art form. No one had seen anything like it before. Laliberté
and Ste-Croix had turned the whole concept of circus on
its head. Using story lines, identifiable characters, and
an emotional arc, Cirque du Soleil embodied more than a
mere collection of disparate acts and feats.
Despite its early success, Cirque du Soleil was strug-
gling financially. It took a gamble on making its debut
in the United States as the opening act of the 1987 Los
Angeles Festival. Cirque managed to sell out all of its per-
formances, which were run in a tent on a lot adjacent to
downtown’s Little Tokyo. Its success in Los Angeles led
the troupe to open shows across the U.S. in cities such
as Washington, San Francisco, Miami, and Chicago.
Soon afterward, Cirque du Soleil performed in Japan and
Switzerland, introducing its concept to audiences outside
North America.
In 1992, Cirque du Soleil took a show called Nouvelle
Experience to Las Vegas for the first time. It was per-
formed under the big top in the parking lot of the Mirage.
The success of this show led to the building of a perma-
nent theater at Treasure Island for a show called Myster̀e,

4. * Case prepared by Jamal Shamsie, Michigan State University,
with the
assistance of Professor Alan B. Eisner, Pace University.
Material has been
drawn from published sources to be used for purposes of class
discussion.
Copyright © 2015 Jamal Shamsie and Alan B. Eisner.
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CASE 35 :: CIRQUE DU SOLEIL C271
All of the Cirque du Soleil shows were originally
developed to be performed under a Grand Chapiteau, or
Big Top, for an extended period of time, before they were
modified, if necessary, for touring in arenas and other ven-
ues. The troupe’s Grand Chapiteau were easily recogniz-
able by their blue and yellow coloring. The facility could
seat more than 2,600 spectators and was accompanied
by smaller fixtures that were necessary to accommodate
practice sessions, food preparation, and administrative
services. However, after the contract to develop Myster̀e
for Treasure Island in Las Vegas, Cirque began to develop
shows that were to be performed on a more permanent
basis in specially designed auditoriums.
Losing Its Touch
Cirque du Soleil continued to expand even as the reces-
sion cut into demand. It launched 20 shows in the 23 years
from 1984 through 2006, none of which closed during
that time other than a couple of early ones. Over the next

5. six years, however, it opened 14 more shows, 5 of which
flopped and closed early. The reasons for the failures dif-
fered. One show, Zarkana, couldn’t make enough money
to cover its production costs playing in New York City’s
6,000-seat Radio City Music Hall. Iris, in Los Angeles,
played in Hollywood, a seedy neighborhood that despite
heavy tourist traffic was commercially marginal. Zaia, in
Macau, simply didn’t appeal to local audiences. Perhaps
more troubling, the company’s nearly perfect record of
producing artistic successes began to waver. Viva Elvis and
Banana Shpeel were among several Cirque shows that gar-
nered terrible reviews. Both shows closed quickly. “Shows
like that diluted the brand,” said Patrick Leroux, a profes-
sor at Montreal’s Concordia University who had closely
studied Cirque du Soleil.3
One problem, said Cirque du Soleil executives, was
that audiences didn’t understand the differences among
various shows carrying the Cirque brand. As a result,
many people would dismiss the opportunity to see, for
instance, the show Totem thinking they had already seen
something similar in the older Varekai. On the other hand,
Cirque tried to move in different directions with each of
the new shows that it developed. “We’re constantly chal-
lenging ourselves,” Laliberté said.4 Audiences, however,
complained that some newer shows were not as focused on
the acrobatic feats that they had come to expect and enjoy
from Cirque.
By August 2012, Laliberté was concerned and con-
vened a five-day summit for executives at his estate out-
side Montreal. There, he and others drew up plans to lay
off hundreds of executives and performers and pare the
number of big new touring circus shows Cirque produced.
The cuts began soon after and continued through 2013 and
amounted to around $100 million of savings, according to

6. Laliberté. They included everything from giving out fewer
suede anniversary jackets for employees to cutting out
child performers and tutors.
a nonstop perpetual-motion kaleidoscope of athleticism
and raw emotion that thrilled audiences. It became the first
of the troupe’s permanent shows and led to several others
that opened in other hotels along the Las Vegas strip. The
most spectacular of these was O, which included acts that
were performed in a 25-foot-deep, 1.5 million–gallon pool
of crystal clear water in a custom-built theater at Bellagio.
By the end of 2011, Cirque du Soleil had 22 shows—
seven of them in Las Vegas. It had become an international
entertainment conglomerate with 4,000 employees work-
ing in offices around the world. It had established its head-
quarters in a $40 million building in Montreal, where all
of Cirque’s shows were created and produced. Much of the
building was devoted to practice studios for various types
of performers and to the costume department that outfitted
performers in fantastical hand-painted clothes. Cirque du
Soleil recruited many types of talent, among them acro-
bats, athletes, dancers, musicians, clowns, actors, and
singers.
Growing with the Concept
Cirque du Soleil hired key people from the National Circus
School in its formative years in order to develop its concept
of the contemporary circus. Its first recruit was Guy Caron,
the head of this school, as the Cirque’s artistic director.
Shortly afterward, the troupe recruited Franco Dragone,
another instructor from the National Circus School, who
had been working in Belgium. Dragone brought with him
his experience in commedia dell’arte techniques, which he
imparted to the Cirque performers.

7. Together, Caron and Dragone were behind the cre-
ation of all the Cirque du Soleil shows during the firm’s
formative years, including Saltimbanco, Myster̀e, Alegría,
Quidam, and the extravagant O. Under the watchful eye of
Laliberté, Cirque developed its unique formula that would
define its shows. From the beginning, it promoted the
whole show, rather than specific acts or performers. Cirque
eliminated spoken dialogue so that its shows would not be
culture-bound, using instead strong emotional music that
was played from the beginning to the end by musicians.
Performers, rather than a technical crew, moved equip-
ment and props on and off the stage to avoid disrupting
the momentum as the show transitioned from one act to
the next. Most importantly, the idea was to create a circus
without a ring or animals, as Laliberté believed that the
lack of these two elements would draw the audience more
into the performance.
Even though Laliberté and his creative team were
clearly innovative in their approach, they were not reluc-
tant to obtain inspiration from outside sources. They drew
on the tradition of pantomime and masks from circuses in
Europe. They learned about blending presentational, musi-
cal, and choreographic elements from the Chinese. Caron
readily admitted that Cirque took everything that had
existed in the past and pulled it into the present, so that it
would strike a chord with present-day audiences.
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C272 CASE 35 :: CIRQUE DU SOLEIL

8. Grand Chapiteau & Arena Shows Resident Shows
1990 Nouvelle Experience 1993 Myster̀e*
Treasure Island, Las Vegas
1992 Saltimbanco 1998 O*
Bellagio, Las Vegas
1994 Alegría 1998 La Nouba*
Downtown Disney, Lake Buena Vista
1996 Quidam* 2003 Zumanity*
New York New York, Las Vegas
1999 Dralion 2005 Ka*
MGM Grand, Las Vegas
2002 Varekai* 2006 Love*
The Mirage, Las Vegas
2005 Corteo* 2008 Zaia
The Venetian Macao
2006 Delirium 2008 Zed
Tokyo Disney Resort, Tokyo
2007 Kooza* 2008 Criss Angel Believe*
Luxor, Las Vegas
2007 Wintuk 2009 Viva Elvis
Aria Resort & Casino, Las Vegas
2009 Ovo* 2011 Iris
Dolby Theatre, Los Angeles
2009 Banana Shpeel 2013 Michael Jackson: One*

9. Mandalay Bay & Resort, Las Vegas
2010 Totem* 2014 JOYA*
Riviera Maya, Mexico
2011 Michael Jackson: The Immortal World Tour
2012 Amaluna*
2014 Kurios: Cabinet of Curiosities*
*Still in performance.
Source: Cirque du Soleil.
EXHIBIT 1
Cirque du Soleil Shows
Laliberté also reexamined core production costs. The
payroll for Cirque’s show O, in Las Vegas, for instance, had
ballooned thanks to a surge in contortionists. “I said, ‘Why
do we need six contortionists?’” Laliberté, 55, recalled
while chain smoking in his office.5 In addition to the lay-
offs, Cirque also suffered a blow to morale when acrobat
Sarah Guyard-Guillot was killed in 2013 during a perfor-
mance. The company overhauled the show’s finale, a “bat-
tle” staged on a vertical wall with performers suspended
from motorized wire harnesses. After the performer’s death,
Cirque continued to stage the show, replacing the live finale
with a videotape of the scene from a past performance.
A New Direction?
Cirque du Soleil managed to generate profits out of a busi-
ness model that was quite challenging. Kenneth Feld, of
Ringling Bros. and Barnum and Bailey circus, commented:
“If you think about spending $165 million on a show that

10. seats 1,900 people, the economics are just staggering.”6 But
Laliberté’s stroke of genius was realizing that no Cirque
show ever had to close. The troupe could either keep tour-
ing or play in locations such as Las Vegas and Orlando that
drew a lot of tourists. By keeping as many shows running as
possible, the troupe managed to build a repertory of shows
that could all be running at the same time (see Exhibit 1).
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CASE 35 :: CIRQUE DU SOLEIL C273
Yet circus experts said Cirque du Soleil was walk-
ing a fine line as it sought to expand into new ventures
without damaging its central brand as a creative entity.
But Laliberté was convinced that Cirque could apply its
unique talents to other businesses. “We’ll be more about
intelligent analysis of each project,” he remarked to crit-
ics who questioned the new direction.7 For Laliberté, the
stakes were high. He was seeking to sell 20 to 30 percent
of the company to outside investors by emphasizing the
more disciplined company structure and growth plan. The
additional funding would help Laliberté to keep taking on
new and different challenges.
ENDNOTES
1. Alexandra Berzon. Cirque’s next act: Rebalancing the
business. Wall
Street Journal, December 2, 2014, p. B1.
2. Ibid., p. B4.
3. Ibid.

11. 4. Christopher Palmeri. The $600 million circus maximus.
Business
Week, December 13, 2004, p. 82.
5. Berzon, op. cit., p. B4.
6. Palmeri, op. cit.
7. Berzon, op. cit., p. B 4.
However, the rising costs of new shows and the
increase in the number of early flops had cut into the
firm’s revenues and profits. Although revenues dropped to
$850 million in 2013 from $1 billion in 2012, Cirque still
managed to return to profitability because of stringent cost
controls. Chief Executive Daniel Lamarre said the com-
pany expected to reduce its revenues from Cirque-branded
shows to 60 percent in 5 to 10 years, down from 85 percent
now. Already the special-events unit had increased revenue
to $37 million from $15 million, said Laliberté.
Laliberté’s executive team had come up with a business
restructuring plan to manage this diversification through
the creation of discrete business units under a central cor-
porate entity to try to beef up the noncircus side of the
business. New Cirque subsidiaries included a musical-
theater production arm based in New York City and a
special-events producer that was beginning to operate
under the name 45Degrees Events. Other new areas that
Cirque was venturing into included small cabaret shows
at hotels, children’s television programs, and theme parks.
Executives said that currently the company’s biggest
growth area wasn’t a show at all. It was an expanding deal
to provide ticketing services to the arena company AEG.
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