The Business of Broadway – March 2019

This month’s update is about theatre owners. We often hear about the production side of things but, the very houses these productions exist in are just as integral to the industry. The focus this month is on accessibility and the efforts in play to ensure accessibility in all Broadway houses.

Updates: March 2019

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Updates: March 2019

CHAPTER 22: Theatre Owners

Broadway theatres have increased efforts to ensure that the theatre is accessible and open to everyone. One major innovation was the introduction of the GalaPro app that offers closed captioning, audio descriptions, and in many cases language translation.These services are offered on-demand, giving those who need access the ability to enjoy any show, anytime, using their own smartphone or mobile device.
In its first half-year of use, nearly 3500 theatregoers have downloaded and used GalaPro in Shubert houses alone. The vast majority are using GalaPro’s closed captioning technology to better understand the words being spoken or sung on stage, but audio descriptions and translations are getting some play too. There was a spike in translation usage in August 2018, most likely due to higher tourism numbers from Europe.

The light from smart phones can be minimalized during the use of this App.

 

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The Business of Broadway – February 2019

Love is in the air and “The Business of Broadway” just loves to bring you updates from “The Great White Way”. If Broadway were your significant other, it would all be about money. Money makes this business. Oh, and the artistry…but, without the money…anyway, here’s February 2019’s update!

Updates: February 2019

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Updates: February 2019

CHAPTER 5: Marketing / 9: Selling a Flop

 

The Technology that has come to Broadway ticket sales:

When sports commentators note the wind speed and wind direction associated with Olympic sprinters’ race times, they’re using contextual data. The 47 extracurricular activities tacked on to a college applicant’s GPA and test scores? Contextual data. 
So what and where is this data for Broadway ticket buyers and theatergoers? A great source of contextual data are integrated messaging tools that allow people to tell a site what they’re looking for. People often provide more context within a message inquiry, so instead of just a clicking on a “Get Tickets” button, they’ll message, “I’m looking for two tickets in March for my 10th Anniversary.” 

Now we know the basics—two tickets for a March performance—but we also have a contextual data point. Since an important event is prompting the purchase we can predict a couple things: it’s more likely they will want to purchase far in advance, and they are more likely to want better seats (and a higher price point) compared to the average buyer. 

With that important info, we can provide a highly targeted offer, shorten the purchase search timeframe, and convert the inquiry at a higher rate.

 

CHAPTER 10: Producing and Investing 

There are new warnings for producers and investors about bundling money for Broadway shows. Bundling, in simple terms, is when one investor collects investment money from a group of smaller investors and presents it together for greater impact on the production. The Securities and Exchange Commission is considering slapping individuals and their lead producers with civil penalties for operating as “unregistered broker-dealers.” The SEC requires broker-dealers to be registered as such.  

To get around this rule, individuals/”co-producers” should stop publicly soliciting investors through social media or emails and avoid advising investors as to the investment’s value and financial prospects which may trigger an investigation by the S.E.C. 

Also, lead producers should limit the way co-producers” (“bundlers”) can participate. After finding a potential investor, a co-producer can only introduce that investor to the lead producer. The co-producer should operate as a finder, and not a broker-dealer.

CHAPTER 10: Producing and Investing

January 2019: Forbes Magazine is telling us that musicals are making more money on the road than on Broadway. While box office revenues on Broadway have fallen in recent weeks as tourists left New York and the cold winter weather set in, box office revenues of Broadway shows touring across the nation are still quite high. In fact, some musicals made more money last week on the road than on Broadway. … The highest-grossing musical each week on Broadway, Hamilton, also appears to make more money on the road in larger theaters. The tour made $4,309,027 during the previous week, which is more money than the record-breaking show has ever made during a week on Broadway.

CHAPTER 15: Actors

Actors’ Equity Lab and Workshop Contracts have been replaced by a three-tiered agreement with the Broadway League (producers and theatre owners). This comes after 33-day strike prohibiting actors from participating in developmental labs and workshops of new shows. Some rules from the staged reading contract remain. 

Actors and stage managers who develop a show with a League producer will split 1 percent of a Broadway show’s profits once it reaches 110% recoupment, according to the new contract, in an arrangement that lasts 10 years. It will also include profits from touring productions.

Salaries were also increased. Tier One (2 weeks of development work), which does not allow props or choreography has set a minimum weekly salary of $550. Tier Two (2 weeks of work), which allows choreography only), pays a minimum of $900 per week. There is no profit-sharing in either of these tiered contracts. Staged reading rules apply with strict limits on the number times a work can utilize the contract.

In Tier Three of the new agreement, which covers developmental work that lasts between two to eight weeks and includes props and choreography, the minimum salary is now set at $1,250 plus profit-sharing as stated above. All of the above includes pension and health payments as well.

The fact that only 18,000 out of 50,000-odd members of Actors’ Equity ever worked in a given year, and worked, on average, just 16.4 weeks during that year, is more than just unimpressive. (Equity’s own report) And there had not been a raise given in to actors working in “Labs” in over 11 years.

The union had taken the bold move of warning that all non-union actors and stage managers “will be prohibited from joining the union in the future if they agree to take work that is subject to Equity’s strike.”   

With the fortunes being earned by mega-hits like Hamilton, actors who worked in and contributed to the show in its earliest stages were not happy that there was absolutely no financial reward for their work. Hamilton and Mean Girls responded by previously agreeing to profit-sharing realizing their debt to these performersand Equity saw this as a way forward. Of course, the chance that the vast majority of shows earning a profit to share is extremely small.

 

 

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Updates: 2018

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The Business of Broadway is essential reading for anyone interested in producing, investing, or working in theatre. Engaging and illuminating, Mitch Weiss and Perri Gaffney explain the myriad of people and roles they play to collaborate on a show from development to opening night and beyond.


 UPDATES FOR READERS OF “THE BUSINESS OF BROADWAY”

2018 Updates

January 2018

March 2018

April 2018

May 2018

June 2018

July 2018

August 2018

September 2018

October 2018

November 2018

December 2018


Archived Updates

 Updates 2015

Updates 2016

Updates 2017

 

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Updates: January 2019

CHAPTER 10: Producing and Investing

Under a provision of the Tax Cuts and Jobs Act, which began taking effect in 2018 and will appear on tax returns for the first time in 2019, owners of limited liability companies and other pass-through entities are eligible for a tax deduction of up to 20 percent of qualified business income. However, individuals who work in the performing arts, including theater investors, have been excluded from the deduction under the initial guidelines written by the U.S. Treasury Dept. Members of the Broadway League met with the Treasury Department in the fall to argue for the inclusion of Broadway investors. If no new guidelines are released before tax returns are prepared, accountants will operate under the assumption that theater investors are not included. 

CHAPTER 10: Producing and investing; and CHAPTER 13: Box Office

Is it prices or demand for Broadway shows? Total grosses for 2018 were $1.074 billion, up 17% over last season’s pace and attendance up nearly 10%. For sure, prices went up. Not known is whether some producers are inflating their attendance numbers by reporting comps (free tickets) and in some cases, buying their own tickets, as has been reported in past decades. And that would mean that tickets prices increased even more than we know they have.

CHAPTER 14: Press Agents, and CHAPTER 18: Managers

As of Sept 10, 2018, ATPAM salaries increased 3% (per year for the next 5 years) and weekly welfare costs change to $225/wk. This affects Press Agents, House Managers and Company Manager.

CHAPTER 15: Actors

As diversity is embraced in society and on the stage, the estates of certain dead playwrights are objecting vehemently. Arthur Miller’s estate, overseen by Rebecca Miller, the playwright’s daughter, declined to let director Gregory Mosher cast two black actors in a pair of sibling roles normally played by white actors in All My Sons. … In response, Mosher quit the Roundabout Theatre Company revival. 


Jack O’Brien, a Tony-winning director with a long Broadway résumé, is taking over, and the production will continue as scheduled. According to Roundabout, there will be actors of color in All My Sons, just not in the configuration Mosher envisioned

 

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Updates: December 2018

CHAPTER 5: PROMOTION & MARKETING

  Tourists now make up approximately 65% of the Broadway audience, leading some to believe that bad reviews can be overcome with enough money being thrown at the out-of-town market. The jury is still out on this.

  Also: The Broadway League reported that the average Broadway audience is getting younger! During the 2017–2018 season, the average age of Broadway theater-goers was 40.6, the lowest since 2000. For a second year in a row, there was a record total number of kids and teens under 18 attending a Broadway show. At 2.1 million, it represents the highest total ever (it was 1.65 million the season prior). Additionally, since the 2010-2011 season, Hispanic/Latino attendance has grown by 61%, or 430,000 admissions (from 710,000 to 1.14 million). 

CHAPTER 12: SURPRISES

  Update of 25 Longest Running Broadway shows as of October 21, 2018: 

This list is from Playbill.com and does not include Preview Performances; Note: Broadway League official stats come out at the end of each season in May.

(* means the show is still running.)

1. * The Phantom of the Opera 12,790
2, * Chicago (1996 Revival) 9,115
3. * The Lion King 8,719
4.   Cats 7,485
5.   Les Misérables 6,680
6.  * Wicked 6,254
7.   A Chorus Line 6,137
8.   Oh! Calcutta! (1976 Revival) 5,959
9.   Mamma Mia! 5,773
10. Beauty and the Beast 5,461
11. Rent 5,123
12. Jersey Boys 4,642 
13. Miss Saigon 4,092
14. 42nd Street 3,486
15. Grease 3,388
16. Fiddler on the Roof 3,242
17. Life with Father 3,224
18. Tobacco Road 3,182
19. * The Book of Mormon 3,171
20. Hello, Dolly! 2,844
21. My Fair Lady 2,717
22. Hairspray 2,642
23, Mary Poppins 2,619
24. Avenue Q 2,534
25. The Producers 2,502

     Honorable mentions:

Cabaret (1998 Revival) 2,377
Annie 2,377
Man of La Mancha 2,328
Rock of Ages 2,328
Abie’s Irish Rose 2,327
* Kinky Boots 2,314 (has announced closing in the Spring 2019)

 

CHAPTER 26: RESOURCES

PAYROLL COMPANIES: 

One of the few New York-based Broadway-Theater-specialists in handling theatrical union payroll checks and accounting services is called Checks & Balances Payroll Inc. (which has recently been acquired by the company Cast & Crew.) The daily operations of Checks & Balances will continue as usual and founder Sarah Galbraith as well as her staff will remain with the company

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Updates: November 2018

November 1, 2018

 

Chapter 5 (Promotion and Marketing):

NEWEST PATH TO SUBSIDIARY INCOME: 

A new digital platform called “Streaming Musicals,” dedicated to streaming shows that have been captured on a soundstage or theatrical stage without an audience present (and filmed specifically for the screen) debuted on October 3 with Paul Gordon’s musical Emma, filmed this past spring at the Westside Theatre Off-Broadway. The filmed production will be available for purchase for $19.99 and to rent for $7.99 at StreamingMusicals.com. No subscription is necessary.

 

Chapter 10 (Producing & Investing):

Investors of the failed “Nerds” musical are suing the lead producers claiming they mislead them into believing the musical had the needed funding in place. The 13 investors allege that the show was never “adequately capitalized” and say that the producers falsely cited the loss of a major investor for the closing of the show before it began previews, even though there was no major investor. The plaintiffs are seeking relief for their capital contributions, which amounted to more than $600,000, as well as a minimum of $5 million in punitive damages to be determined at trial. It should be noted that New York State law forbids any Broadway production to begin rehearsals unless it is fully capitalized.

 

Chapter 13 (Box Office)

More scams every producer should know about: New York’s Attorney General is probing a widespread, but little known tactic used by ticket scalpers to rake in cash even before they buy up Broadway seats. The strategy is called speculative ticket sales or short selling.” The practice involves posting ads on re-sale websites that promise seats to buyers — before the sellers even have the tickets in hand. Once a buyer pays for the tickets, a short seller tries to track down the seats for a cheaper price –- and pocket the difference.” 

 

Chapter 13 (Box Office)

Run by the not-for-profit Theatre Development Fund, TKTS provides discounted same-day Broadway and off-Broadway tickets. The most popular TKTS booth is in Times Square on 47th/7th Avenue, with satellite booths at Lincoln Center and South Street Seaport. Accounting for 12% of all tickets sold (Broadway League Demographics 2016-2017), this equates to over 1.4 million tickets and $104 million returned to the shows. That’s a lot of tickets.

 

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Updates: October 2018

Chapter 5 (Promotion and Marketing):

Broadway’s next great marketing and performance adventure: the small screen. Public Broadcast System’s “Great Performances” will continue its program of Broadway related premieres: An American in Paris The Musical on Friday, November 2 … Rodgers & Hammerstein’s The Sound of Music on Friday, November 9 … John Leguizamo’s Road to Broadway on Friday, November 16 … Harold Prince: The Director’s Life on Friday, November 23. While there is little, if any, subsidiary income to be made for investors on PBS-TV, each show’s brand and the industry in general is given a wide boost among its prime ticket-buyers around the world.  

 

Chapter 10 (Producing & Investing):

Behind-the-scenes diversity efforts: The Broadway League has started working on a number of programs with the goal being to impact diversity in Broadway producing/managing offices. First, in an effort to get minority individuals interested in working behind the scenes on Broadway, the organization offers a special program for New York City public high school students. … Second, to attract minority students in college theatre programs who might otherwise enter another business after graduation, the Broadway League partnered with the labor union ATPAM to match them up with company managers on national tours for one-week shadowing opportunities. … Third, to discourage minority workers who are already working on Broadway from leaving the industry, the Broadway League created a fellowship program that puts them into the offices of Broadway marketing specialists, general managers, and producers for 26 weeks. 

 

Chapter 10 (Producing & Investing):

Three more Broadway shows bit the dust in September, one of the common periods of low attendance when less-than-strong shows must pack up before their losses overwhelm their bank accounts. In recent years, the number of limited engagements (16 weeks or so) have increased meaning that producers can plan ahead for these low-attendance months: January, July, September.   

 

 

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Updates: September 2018

Chapter 5 (Promotion and Marketing):

            How important is the Hispanic audience to Broadway? According to Univision Communications, more and more every year. In a report provided to the Broadway League (producers and theatre owners association), Univision stated that nationwide, Hispanics (Spanish-dominant or bilingual) spent $59.6 billion on entertainment in 2017 plus $87 billion on food and alcoholic beverages away from home. And the IHS Global Insight Hispanic Market Monitor anticipates a 40% growth in this figures.

            New York Hispanics spent $4.3 billion on entertainment last year and nearly 65% attended a Broadway show. 32% attended an Off-Broadway show. The “average” Hispanic attendee saw 5.1 events in the past year. Non Hispanics saw just 3/9 live events.

            Hamilton and John Leguizamo aside, there’s not much Hispanic representation on our stages. And still Hispanic audiences are going to see live entertainment in huge numbers. They are 36% more likely to learn about live events from commercials. And Hispanic Theatregoers tend to skew younger. 39% are between the ages of 18 and 34. This is a serious consideration when discussing building our audiences.

Chapter 10 (Producing & Investing):

            Investors in producer Scott Rudin’scelebrated revival of Hello, Dolly! (starring Bette Midler) that ended its intended limited engagement at the end of Summer 2018, have earned a profit of 10 percent, according to two people familiar with the production. (A note said more was on the way.)

            For angels seeking prestige, glamour and the satisfaction of helping to create a revival worthy of the iconic, 1964 original, Dolly!delivered and made them money. Others, however, expected more from a production that’s grossed $126 million. 

            The larger context is the background behind the complaints from investors. In order to get a piece of Dolly’s pie, most investors were required to put money into riskier projects on the producer’s slate, too. According to them, even a 15% profit on Dolly wouldn’t cover half the losses taken on Tony- winner A Doll’s House, Part 2orThe Glass Menagerie (starring Sally Field), both of which closed last year.

            An important lesson about “limited runs with famous names leading the cast.” The answer may rest with why investors invest at all. Is it a producer’s charm, the producer’s claims of success, an investor’s gullibility, the inherent risk of a Broadway show, or does the investor really believe they are going to make a lot of money? 

Chapter 10 (Producing & Investing):

            Lindy’s Deli on 7th Avenue, in Manhattan, is where some Broadway actors discussed their common observation that the longer any single play ran on Broadway, the longer it would run in regional theatres and anywhere off Broadway. It’s believed that this effect is relevant for Bitcoins as well. An asset gains a sort of stamina as it continues to survive against the odds, thereby demonstrating strength and the ability to attain longevity. Broadway, for example, is a competitive environment. People have evolving tastes, there are always different shows vying for the best audiences, and as a show ages it gets more difficult to sustain. 

            The longer a show has run on Broadway, the more credibility and notoriety is has earned. Off Broadway/Regional stages are eager to reproduce it in their own towns, lending longevity to the play. Both Bitcoin and a Broadway play are “unperishable ideas.” On Broadway, the best shows run for decades regardless of where they are or who plays the main roles. A few prominent blockchain ideas also “survive” in this manner and are able to persist despite increasing friction in the market—but the comparison isn’t perfect.

            And so statistician, author, and former trader Nassim Taleb writes in his book “Antifragile.” He calls this “The Lindy Effect” (comparing Broadway shows to Bitcoin evolutionary factors). Just another opinion…

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