Broadway Costs

[EntrActe]

Posted: 9/30/25 at 4:59pm

Hi everyone, 

I wanted to start a conversation around Broadway budgets since it pops up weekly in the grosses conversations and is now being used as ammunition in two major labor negotiations. 

I'm going to share what I hope we can adopt into a more nuanced conversation around Broadway costs in bullets to try and keep this from being eye-glazingly academic.

The idea that a Broadway show has a weekly "budget" number is misunderstood and an over-simplification of the very complicated way that money flows in and out of a Broadway show. 

• There are two places where the "cost" of a Broadway show is published: its offering filing (what investors are given to assess the investment) and its K1 (what is supplied to investors at the end of the year to prepare their taxes from). Most of the time what people speak to as the "budget" of a Broadway show is a confusion of the "budget" and "recoup" chart from the offering filing -- which is often drafted years before the show even has a true handle on what those costs might actually be. (If you're ever presented the Offering document of a show you can tell when in the process the budget and the recoup chart were created based on how much royalty information is included in the Offering document. Deals that obligate the company to revenue participation must be disclosed in the Offering document when it's published. If there's no concrete royalty information on the author's deal (or the language is "expects" ), the show doesn't have the rights to its property yet. If the director's royalty isn't disclosed, the director's deal isn't done yet. Everything downstream of these becomes estimations based on prudence. You can estimate a production's costume costs by the number of cast members, but how can you estimate a set's cost if the production doesn't have a concept yet? These are educational offerings but seem to become the "gossip" budget number of a show. 
• To understand the cost of a Broadway show (let's stick with musicals), we have to consider the cost "buckets":
  • Company Costs (a reasonable week-to-week approximation of what the cast, show-specific crew, management costs are, sometimes this includes the weekly advertising estimation, but I'm going to pull that out). On a small musical running currently this is under $300,000 per week. On an HUGE upcoming musical this still stays under $400,000 per week
  • Advertising (an approximation of what the show expects to spend on a weekly basis. (Staying with those two examples: $125,000-$180,000.). There is usually no great way to break this out. It may or may not include the Tony campaign, it includes the advertising, marketing, and social team fees, but is a very ill-defined estimation: some weeks ad costs go up when a lot of bills come in, some they're negligible because the buys were multi-week. This is also where a show can turn its spigot down. If you HAVE to save money, you can't cut cast, crew, or orchestra members, but you can spend less here. This is also an impossible number to plan for years in advance. A huge hit could spend a lot less, or their producer may spend marketing money buying tickets to artificially inflate its grosses. This is at their discretion. 
  • The House costs. Most budgets estimate that their theaters will to cost $175,000-$300,000 a week to staff these days. The House payroll includes ushers, the house heads and house stage hands, the doormen (and ladies) and porters, sometimes the orchestra costs will go here depending on how you're presenting your "budget" (the theater payroll handles the orchestra payroll). This is in addition to the rent which currently running shows pay between 5% and 7% of their grosses. There is a guaranteed rent but you cross it at like $500,000 of your weekly grosses. 
  • But here is where the costs get extremely complicated: royalties. Every show has a guaranteed royalty payment to its royalty participants. It's usually around $22,000 per week split amongst the royalty pool participants. This is a guaranteed amount against about 40% of the net profits (the gross gross minus the above amounts and a few others). It's usually a few percentage points below 40% before recoupment and a few above, after. But this is where a show's costs scale a tremendous amount. 
  • Since a show's recoup chart shows investors how much money the company makes on their behalf after these amounts, royalties that span from $22,000/week to $350,000/week based on its gross/net increases the "budget" of a show tremendously. (Shows don't pay royalties based on the weekly, they have a larger period to equalize the ups and downs -- and, in downturns some royalty pool participants can defer their royalties in the hopes of keeping a show open longer.) 
• Now, to complicate this further, and this is where the idea of a "million dollar breakeven comes from is "amortization": the budgeted amount a show pays its investors after its guarantee royalty pool payment, but before the royalty pool is calculated. Authors gave producers the right to pay investors between $200,000-$250,000 a week by doubling the royalty pool guarantee. So, in the recoup chart, the "budget" cost of a musical is inflated by the amortization line item and the increase in royalty guarantee.  Most large musicals can't make their full amortization payment at a million dollar net gross (gross minus credit card fees, group commissions, and in some theaters the treasurer's pension payment), but a small currently running musical's recoup chart says it makes its $200,000+ amortization at a million dollars: meaning at its full royalty payment, full ad amount plan, and company and house payments, the show really only costs $800,000. It may seem like $800,000 may as well be a million dollars, but $200,000 a week is literally life and death to weekly businesses.
• (None of this even begins to contemplate the complexities of how theater owners pay the shows their share of the weekly box offices.)

Are show costs growing? Yes. Ten years ago shows didn't have full-time physical therapy staffs, DEI consultants, or as many swings or stage/company managers, assoc/resident directors/choreographers, and, yes, company members have seen inflation adjustments to their salaries but in isolation these costs are incremental. Similarly, the costs of advertising and marketing a show have increased tremendously. With social media teams, ad agencies, marketing firms, ticket price consultants, bartering firms, etc. it has never cost more to create the demand for a Broadway show. And that 40% royalty pool becomes costlier and costlier as ticket prices increase. 

But, by and large, Broadway is a handmade business. When you say: costs have become unmanageable, you're saying specific people are being overpaid. Most of the costs of a Broadway show are people: who are world class artists who've spent most of their lives building their craft and are at the top of their game and living in one of the world's costliest metropolitan areas. It takes a lot of people and every day it takes more -- for a lot of reasons that building 25 million dollar assets that cost six figures a week to operate require. But producers who can manage to build the full producing skill set: the ability to build, finance, market, and operate a Broadway show will continue to find a viable business waiting on the Great Bright Way. (Which is why Sonia Friedman has been bemoaning the cost of Broadway in NYTimes articles for at least fifteen years, but still has sixty projects in "development." )

I'm not on the producer's side, the investor's side, or labor's side. I've had the luxury of being at all three tables -- and I'm none anymore. I'm just hoping that in being educated we can lose some of the "us vs them" that these complicated labor negotiations of late seems to devolve into.

Updated On: 9/30/25 at 04:59 PM

[JSquared2]

Posted: 9/30/25 at 5:12pm

I'll say this much -- what you lack in actual "real world" knowledge (and there are quite a few suppositions that are patently false) , you more than make up for with pretentiousness.

 

[kdogg36]

Posted: 9/30/25 at 5:15pm

Thank you for your very detailed explanation of how Broadway budgets work. I wanted to ask about one specific point:

"in downturns some royalty pool participants can defer their royalties in the hopes of keeping a show open longer"

If a struggling show's fortunes don't turn around and it closes without ever becoming profitable, do members of the royalty pool eventually receive their deferred royalties?

[chrishuyen]

Posted: 10/1/25 at 1:14pm

JSquared2 said: "I'll say this much -- what you lack in actual "real world" knowledge (and there are quite a few suppositions that are patently false) , you more than make up for with pretentiousness."

Could you mention what the falsehoods are?  I find this topic fascinating and this is the most in depth explanation I've seen.

[Wick3]

Posted: 10/1/25 at 1:35pm

Wow I didn't realize the house cost that much per week: $175k to $300k! And that's not including rent! For some shows, $300k is half the weekly gross. I understand this includes ushers/merch/bar/backstage/orch folks. 

What helps shows with A-list celebrities is most of the time the majority of tickets have already been sold BEFORE the production even starts previews. At that point, it's pretty much guaranteed the show will recoup and advertising/marketing is not really needed.

[Mike66]

Posted: 10/1/25 at 1:48pm

Why oh why cant we have ANY conversation without someone immediately insulting someone else?  

Please -- ask yourself -- if you were in a group and someone said what the OP said -- would you say to his/her face what you wrote?  I dont think so (or at least, I hope not, and want to give the benefit of the doubt.

This is a very interesting topic to so many of us -- it's constantly being discussed as to how much it costs to 'put on a show' and whether a show is making or losing money.  The more information and understanding I can get on how this all works, the better I can understand what everyone is saying all the time.  Which is why I read these things.

Of course, if someone says something that is not entirely true -- we all learned how to politely correct an error and at the same time provide more useful information to the group.

But take the personal insults and put them in a 'i dont need to be this way' jar somewhere.  Honestly and respectfully -- they just look bad for the person who writes them.  I'm not coming to Broadway to deal with more anger -- there's more than enough right now, thanks.

Thank you