Question about capitalization for Broadway transfers

[JBroadway]

Posted: 8/18/19 at 1:12pm

First of all, when a show transfers from, say, London or Off-Broadway, I imagine that the financials of the Broadway production are considered separate from those of the original production. Especially if the original mounting was not created with the intention of moving it to Broadway. Is that correct? 

If so, my main question is this: if a production like this is being directly transferred from a financially separate run, wouldn't that drastically lower the capitalization cost for the Broadway production? I.e, if the show is cast, the set is already built, the props and costumes have been gathered/made, the show has already been developed, rehearsed, and mostly teched through (though adjustments would obviously be needed), etc. etc. 

And if all of that is the case, wouldn't that give the production in question a big leg up on recoupment? 

I'm thinking in particular of Betrayal and Sea Wall/A Life. Both of which seemed to be very smooth, direct transfers.  I'm also thinking of shows like Constitution and The Ferryman, both of which did announced recoupment after originating at non-profit theatres. 

Updated On: 8/18/19 at 01:12 PM

[HogansHero]

Posted: 8/18/19 at 3:23pm

The answer is: it depends. 

As a general proposition, it is a separate entity, but that does not mean it is not weighted down by the original. (It also varies in structure some between the typical off-B (or regional) transfer, which is almost always a non-profit and thus by definition separate, and a London transfer, which is often commercial.)

It may or may not reduce the costs, and the savings may or may not be all that significant. In general, I think you are more optimistic about savings than is the case (and as I say above, even where there are savings, they may have been paid for before, during, or after the commercial run, in a variety of ways. But yes one reason for transfers is to find whatever savings are possible, and this also accounts for why producers dump big bucks into NFP productions as enhancement money. But that money of course is going to get capitalized. 

There are a number of factors that work against "a big leg up." Aside from the fact that Broadway is its own beast, there are questions of scale, production values, and most of all marketing. It's not that hard to sell well at NYTW, for example. Even a small Broadway house is a bigger challenge. And of course everyone is getting paid more.

[itsjustmejonhotmailcom]

Posted: 8/18/19 at 5:55pm

There are still minimum rehearsal periods required, the sets often don't transfer, (because they were built in a non-union shop, weren't built to be moved, aren't the right dimensions for the theater, etc.) To Hogan's point, if a transfer was planned from the outset, those costs usually become part of the Broaway capitalization. You'll always need to re-tech the show because a new theater will have different acoustics, lighting positions, stage dimensions etc and you'll likely want to make improvement on everything too.

[ScottK]

Posted: 8/18/19 at 9:35pm

For the most part, the original costs (pre-transfer) would be rolled over into the new Broadway capitalization--yes, costs for the new Broadway production would be reduced, but certainly NOT drastically.

[JBroadway]

Posted: 8/18/19 at 10:09pm

Thanks for the responses: 

So I guess this begs the follow-up question: where does most of the money go when it comes to capitalization? I would be curious to see a pie chart of sorts. It seems like a lot of the high expenses of Broadway shows involves labor and theatre rentals, both of which are included in the weekly running cost, not the capitalization. So how exactly do shows (particularly plays) rack up mid-six-figure production costs? I would have guessed that most of that money goes toward acquiring and fabricating all of the physical production elements and equipment. But I see now that may not be the case. So where does most of it go? Or is it a pretty even distribution through all the many expenses? 

Hogan, I see you mentioned marketing - do you know roughly what kind of marketing budget range most Broadway shows have? 

Updated On: 8/18/19 at 10:09 PM

[ErmengardeStopSniveling]

Posted: 8/18/19 at 11:20pm

I hesitate to attach numbers to some of these because they vary from show to show, depending on the physical production, development process, and the pedigree and size of the cast and creative team. But the standard categories include:

 

Physical Production min 500k

Advertising before the 1st preview, between 500k and 1m. After that, there's a Weekly Advertising budget (usually 50-125k weekly, some of which could be earmarked for future use).

Development Expenses (option payments, reading/workshop, "enhancement" for a tryout, etc)

Contingency between 300k and 1m

Fees/Salaries/Misc:
– Advances to the Author, Director, and Underlying Rightsholder. A prominent director could get an advance of $100k, on top of weekly fee/royalty.
– Administrative Fees
– Designer Fees
– Rehearsal Salaries (Actors, Stage Management, Crew during tech, etc.)
– Opening night party & gifts $100k+
– Theatre owner deposit
– Union bonds

[HogansHero]

Posted: 8/18/19 at 11:50pm

The hesitance expressed below is well founded, and the numbers are pretty meaningless. There are just too many variables. Aside from existential differences in marketing budgets for what's being sold, there are dramatically different styles of marketing and advertising. Want a multi-page color spread in the Times? That's gonna blow a small fortune. Some producers do it; some, you'll notice, don't. So how do you generalize? Got high paid actors? How do you compare that with a show that is paying mostly close to the minimums? Got a large cast? Got foreign actors (or domestic ones) you are giving apartments to? No comparison. You get the idea.

[DiscoCrows]

Posted: 8/19/19 at 2:29am

Hogan (or anyone for that matter), do you guys have any sort of resources, books, or podcasts you’d recommend, just to learn more about for-profit producing and commercial theatre administration as a whole? Really love reading these threads and ya’ll seem to know a lot about how it’s split up. I’m sure immediate experience within the industry would probably be where you’ll learn the most about it, but second to that, what would you recommend?

I listen to lots of Ken Davenport’s Producer’s Perspective podcast already, which is super interesting.

[HogansHero]

Posted: 8/19/19 at 8:58am

For in depth, nothing can beat the Commercial Theater Institute. In terms of books etc, I have not looked or noticed in years but probably the best is Donald Farber's book on producing theatre. I don't know if it has been updated and I am sure the copy I had would be over 20 years old by now, so if you find it, realize it may be seriously outdated in many ways but the basic contours are mostly still in place. Re what Davenport writes, I would take that with a grain of salt too, bearing in mind that he is an unsuccessful producer and also that (so far as I can tell) most of what he does is geared to ensnaring people in his enterprises. Another resource mentioned here some is Playbill which will occasionally do articles answering specific questions.

[ErmengardeStopSniveling]

Posted: 8/19/19 at 9:08am

John Breglio’s I Want to Be a Producer (2016) is pretty good and might answer some of your questions. It’s a very legal-minded look at producing, because he’s an extremely successful entertainment lawyer and “ghost producer” who was only credited as Lead Producer on a few shows.

Updated On: 8/19/19 at 09:08 AM

[theatregeek6]

Posted: 8/19/19 at 1:45pm

My go to is "The Business of Broadway" by Mitch Weiss and Perri Gaffney    https://www.amazon.com/business-broadway/s?k=business+of+broadway

[DiscoCrows]

Posted: 8/20/19 at 4:49am

Awesome, thanks all!