07-08 Recouping- Page 2

[blaxx]

Posted: 12/9/08 at 5:02pm

Whether a show is a hit or flop is NOT a matter of opinion, but one of fact. The only way something can be a FACT is to prove it. You can prove financials: Re-paid it's investors or did not....simple as that.

Yay, wisdom!

Now, the funniest uninformed comments of this thread:

um you think cat on a hot tin roof is a hit?? it was a BIG flop compared to legally blonde and spring awakening. legally blonde ran for a year and a half. spring awakening: about 2 years. cat on a hot tin roof was open for what, 2 months?

XANADU (closed...FLOP)
YOUNG FRANKENSTEIN (closing soon...BIG FLOP)
CURTAINS (closed...FLOP)
LEGALLY BLONDE (closed...FLOP)

All those ran over a year, not flops at all.

XANADU did when Whoopi was there.

you're using the term "flop" incorrectly.
it does have to do with length of run, reviews, etc.
just bc they did not make their money on Broadway, does not classify as a flop.
alot of these shows will make money on the tours, foreign rights, etc
and if you are going to use the word flop, be more specific-- commercial or financial.

[songanddanceman2]

Posted: 12/9/08 at 6:05pm

I don't know why it's so hard for people on here to understand

Its the same as films, if the film does not make back its budget, the film is a box office flop.It's the same thing.It makes no difference how long a show runs for

[chris d]

Posted: 12/9/08 at 6:20pm

I think if a show recoups or not is fact-based, but I see no reason to etch HIT and FLOP in stone based on this. If people want to see Xanadu or Legally Blonde as a HIT, what's the big deal?? It's too bad a small group of rich investors, as important as they are to putting a show up, are the sole determining factor of this kind of branding.

[blaxx]

Posted: 12/9/08 at 6:27pm

It's too bad a small group of rich investors, as important as they are to putting a show up, are the sole determining factor of this kind of branding.

Uhhh, the group of rich investors are the ones that made it happen? You saw the show because of them, yeah?

[MillieDillmount]

Posted: 12/9/08 at 8:29pm

So, what happens if a show doesn't recoup the cost back when it closes? Does someone have to make up the difference, or does the producers just lose that money?

And just wondering, has anyone heard how much Young Frankenstein was short? I didn't think it was THAT much of a flop ...

[dramamama611]

Posted: 12/9/08 at 8:35pm

yes...the investors LOSE money. Just like the stock market, they take a risk.


YF never released it BO numbers, so it would be hard to know for sure. While they had DECENT houses for awhile, the key is that WE never really know how much money it took to get it to B'way.

[frontrowcentre2]

Posted: 12/9/08 at 9:23pm

Variety published estimates of YF's box office numbers. The show broke even many weeks but didn't make any money to speak of.

[Yero my Hero]

Posted: 12/9/08 at 10:31pm

I think if a show recoups or not is fact-based, but I see no reason to etch HIT and FLOP in stone based on this. If people want to see Xanadu or Legally Blonde as a HIT, what's the big deal??

If you want to call those shows hits, fine. As long as you know that you are using a different definition than the one accepted by the industry.

The terms FLOP and HIT were coined, in terms of Broadway shows (and movies), specifically to separate shows that earn a profit from shows that don't. The categories could just as easily be called MIMP and WURF, but they're not. They're called FLOP and HIT.

[Yero my Hero]

Posted: 12/9/08 at 10:41pm

The problem with Young Frankenstein is that it's such an expensive show to run that, even when they made enough to pay their weekly operating costs, there wasn't much left over to pay back the investors.

I'm speculating here, since we don't know the actual numbers, but that's true enough.

Since I just left my review session for the final in all this stuff next week, I'll elaborate: a show has two budgets. There is the capitalization budget and the weekly operating budget.

The capitalization budget is the cost of putting the show together. This includes everything from the moment of conception until opening night.

The weekly operating budget is the cost of running the show for a full week once it is open. These are things like salaries, theater rental, etc.

After a show opens, any revenue from ticket sales goes towards the weekly operating costs. Once THOSE are paid, the left over money gets sent back to the investors who put up the money for the capitalization.

After the investors are entirely paid off (in other words, the full amount of the capitalization budget has been returned), then the show has recouped and can begin to turn a profit for the producers.

If the show closes before the investors are paid off, they lose their investment. End of story. Unless the producer invested his own money, he loses nothing.

If anyone has any more questions, I'll try to answer them. It will help me study for my final!

[CurtainPullDowner]

Posted: 12/9/08 at 11:17pm

It's gotta get harder and harder to decipher the recouping.
ALL MY SONS and THE SEAGULL can prove that they made a profit while MARY POPPINS and YOUNG FRANKENSTEIN don't publish there original investments so they can claim whatever they want.
Many large Companies hide money.
But any show that keeps the New York Theatre's professionals working can be called succesful, if not a "hit".

[Yero my Hero]

Posted: 12/10/08 at 1:06am

I haven't heard of any shows announcing their original investment until after they recoup. They can't just say "Hey, we recouped!" For one thing, their investors would wonder why they haven't gotten all their money back yet.

[Mamie]

Posted: 12/10/08 at 11:06am

I like these words on the subject:
"I'm not really into directing hits. I submit that no one who was would undertake a production of Pacific Overtures. Or Follies. Or countless other prestigious flops. (I insist there are hits and flops. And there are successes and failures.) I am definitely into successes. Both Pacific Overtures and Follies I consider successes."

Hal Prince (Harold Prince and the American Musical Theatre)

[frontrowcentre2]

Posted: 12/10/08 at 2:03pm

I believe it was Hal's wife Judy who once told him that "hit" and "flop" are purely box-office/financial terms.

Success and Fairlure, while harder to define, represent (I think) the artistic integrity of the production.

To me many shows that did indeed lose money, were artitsic successes, and certainly any show that runs more than 500 performances is deemed a popular successs.

AS I keep saying do not take the "flop" label personally: it is just a quick disignation as to whether a show made money. That's all.

[Jud Faginsky]

Posted: 12/11/08 at 4:31pm

Do cast albums, souvenir programs, and other paraphernalia get taken into account at all, or is it just ticket sales?

[CurtainPullDowner]

Posted: 12/11/08 at 4:50pm

But Yero, since POPPINS is produced by a corporation they have no investors looking for their returns.
Someone is looking at the numbers, of course but they also work for the company.

[frontrowcentre2]

Posted: 12/11/08 at 6:54pm

There is no law as to whether productions have to share their financial data, but most have. Variety has been reporting Broadway grosses for years, and the producers generally made the figures available. The Mel Brooks-Young Frankenstein fiasco generated so much bad publicity that it will probably be a long time before anyone tries that again.

[Yero my Hero]

Posted: 12/12/08 at 12:21am

But Yero, since POPPINS is produced by a corporation they have no investors looking for their returns.

Most shows are produced by corporations, technically. Many producers incorporate to benefit from the limited liability and tax breaks that result. They still seek money from investors, however.

I do not know how Disney Theatricals works. I think they work like any Broadway producing company, but I'm not sure.

Either way, for the purposes of industry tracking, their shows work under the same definitions of "hit" and "flop."

I'll repeat that NO shows publish the amount of their original investment until they recoup. It has nothing to do with corporations hiding anything. It's just nobody's business unless they want to boast about earning all that money back.

[wonkit]

Posted: 12/12/08 at 3:52pm

Yero - thanks for all the great information. A fair number of shows still obtain their capitalization as limited partnerships rather than limited liability companies. That's because partnerships that turn a profit are not taxed at the partnership level - the individual partners pay tax on their distributions. With corporate entities, there is the possibility of double tax - when the profit is realized by the corporation, and again by the investors when they receive a distribution.

Good luck on the exam - or should I say break a leg?

[Yero my Hero]

Posted: 12/12/08 at 4:23pm

Thanks!

The issue of limited liabilities is actually one of my exam questions.

In a limited partnership, the investors are limited partners and they are only responsible for the amount of their investment. They cannot lose any more than that. The producers are general partners and, while they are not required to invest any of their own money, they are personally liable if the show loses money or goes over budget. They have to pay the deficit out of pocket.

If they incorporate, then the producers are not personally liable. If they show loses money, the corporation loses money, but it does not come out of the producers' pockets.

You're right that it could lead to double taxation, but many times producers feel that it is worth it.

Also, side note: investors are allowed to use their original investment as a tax write-off if the show flops, so they don't even lose their entire investment (in a way).

[umgeoboy]

Posted: 12/12/08 at 6:01pm

Thanks for the information. There is one thing that I would like to clear up. If a show makes it money back on tour then it is a hit. In this thread someone pointed to Jeckyll and Hyde being a flop on broadway, this is true except that the tour made back all of the rest of the investment and a fair bit of profit. So in fact it wasn't really a flop.

[blaxx]

Posted: 12/12/08 at 6:16pm

There is one thing that I would like to clear up. If a show makes it money back on tour then it is a hit.

Nah, the Broadway run is what determines the status : FLOP!!!

[binau]

Posted: 12/12/08 at 6:23pm

Plus, what if the tour (e.g Sweeney) is backed by different people? Money would still have been lost and never recovered - so it's still a flop.

[frontrowcentre2]

Posted: 12/12/08 at 8:15pm

No I disagree..if a show has made a profit even after the Braodway run it should be deemed a hit.

ZORBA was a flop in 1968 but sometime in the early 80's the Hal Prince office announced that it had repaid its investment.

An investor doesn't care whether they get all their money back from just the New York run or from post-Broadway tours.

I'm all for re-classifying shows if they eventually turn aprofit, but we need a way to verfify it. Thsi si teh first I have heard of J&H paying off. According to what I read in variety the tour did realtievly weak business on the road. Umgeoboy where did you get this info?

[wonkit]

Posted: 12/12/08 at 8:34pm

qolbinau - The Sweeney revival recouped on Broadway and paid a small profit, and therefore qualifies as a hit.
But you are right - the tour was separately capitalized, with the Broadway investors given the first shot at investing again.

[Yero my Hero]

Posted: 12/13/08 at 12:21am

However, as I have already said at least once in this thread, some producers buy an option along with the rights to the original material to get a share of the profits of any future productions in the next ten years.

That means they could have absolutely nothing to do with a tour, but they will earn money from it, which will go towards paying off their original capitalization and possibly recouping the show years after it closed on Broadway.