07-08 Recouping — Page 2

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.

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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.

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 ...

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

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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!

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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.

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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.

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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.

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.

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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).

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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!!!

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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?

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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.

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