Does Mardi Gras still matter to the gay and lesbian community? This weekend’s parade and party is seen as a crucial test for the long-term viability of the event, with organisers scrambling to make up for last year’s disappointing attendance.

Critics question its continuing relevance and focus on dance parties instead of arts and culture. Organising group New Mardi Gras is banking on stronger ticket sales to climb out of a financial hole that threatens the iconic activist parade which goes up Oxford Street and along Flinders Street.

The decision last year to hold the parties on a separate weekend to the parade — a “mistake”, organisers admit — was disastrous: just 12,000 tickets were sold, well down on previous years. According to their annual report, the lax attendance was seen as the “single biggest factor” in New Mardi Gras’ operating loss of $575,000 in 2009-10, which wiped more than a third from its cash reserves of $1.5 million.

But just days out from the 2011 party speculation abounds that this year’s ticket sales have also been underwhelming. One well-placed source told Crikey the official party had sold between 6,600-6,700 tickets and that last Saturday’s Harbour Party had sold 2,400 out of 3,500 tickets. Each unsold ticket to the Harbour Party costs New Mardi Gras $93, while leftovers from this weekend’s party will mean a hit of $114 per ticket.

But New Mardi Gras CEO Michael Rolik rejects any suggestion the festival is in financial trouble. He says Mardi Gras has recorded the highest sales figures ever for the weekend before the party

“Harbour ’11 sold considerably more tickets than you claim and made a substantial profit,” Rolik told Crikey. “The break-even point for Mardi Gras Party was passed almost two weeks ago. All ticket sales at this stage are pure profit.”

According to the source, the best-case scenario for Mardi Gras Party sales was 10,000 tickets and the projected loss on the party is currently $450,000, claims Rolik denies: “Your claim that our best-case scenario is 9,000 to 10,000 is absolute rubbish. That is below our worst case scenario at this stage. This attempt to paint us at a crisis point is crap.”

Rolik says efforts have been made to ensure there will not be a repeat of last year’s problems.

“Last year was an exceptionally difficult year, but the parade and party are back on the same night this year,” he told Crikey. “Our bottom line is strongly affected by ticket sales to Mardi Gras party, however we’ve taken many steps this year to reduce our reliance on these.”

The 2010 party still raked in more than $1.3 million for the organisation — easily New Mardi Gras’ biggest earner — but was not enough to prop up the rest of the festival. The loss came after the group recorded a profit of $389,900 in 2008-09 and $483,650 in 2007-08. According to the organisation’s 2009-10 annual report, the next two years are “critical” to the operations of New Mardi Gras. The report identifies the economy as a major factor in the festival’s success:

”This weaker than expected economy will impact NMG attendance by … locals, interstate and overseas visitors and will make it challenging to rebuild these reserves quickly.”

Dr Graham Willett, a senior lecturer in gay and lesbian history at the University of Melbourne’s Australia Centre, says declining attendance at Mardi Gras may be a sign it is losing its relevance among the gay and lesbian community.

“I think the community has now got so many choices and is so integrated into Sydney life that the attachment we used to have to Mardi Gras is fading,” Willett told Crikey. “I think it’s a shame but I think that’s a sign of success of the movement — that it doesn’t need to rush to defend these events and institutions like it used to.”

Scott Abrahams, publisher at SSO Media (which publishes Sydney Star Observer and Southern Star), says Mardi Gras looks to be engaging in a repackaing of this year’s festival as a way of bringing back the punters, including a shift to a more political focus.

“It seems that they are going back to their political roots this year with the theme of ‘Say Something’,” he told Crikey. “Gay marriage is very high on the national agenda at this point in time and Mardi Gras is clearly tapping into that with this year’s parade.”

Adam Lowe, general manager of Midsumma, Melbourne’s yearly queer arts and cultural festival, says he doesn’t believe there is a decline in the relevance of festivals like Mardi Gras. Attendance figures for this year’s Midsumma were well above expectations, he says, with all sales targets being met.

“I think the relevance is no longer about protest or solidarity, but is now is about being  on the lookout for an opportunity that might set the organisation up for longer term relevance,” he told Crikey.

Lowe says his festival’s focus on arts and culture, instead of dance parties and nightlife, has been a boon for Midsumma and that perhaps New Mardi Gras should look to do the same. “The objective of the game for a long time has been equality in terms of social acceptance,” he said. “To a large extent these objectives have been achieved in urban areas and dance parties that focus on gay and lesbian-only events may be on the way out, they may have been for a long time.”

Whatever the performance of this year’s festival, the long-term future of Mardi Gras may still be assured. New Mardi Gras will be able to bid for a slice of a promised $40 million increase in the budget for tourism and major events from the NSW Coalition.

Dr Willett reckons that says something about the community interest in the event: “It tells you something that Mardi Gras is more important to Liberal politicians, and politicians in general, and the Sydney economy, than it is to the Sydney lesbian and gay community.”

Note: An original version of this story said that the Mardi Gras parade went “down George Street”. This was a subbing error. The actual route is up Oxford Street and along Flinders Street.