Broadway Grosses: Week Ending 12/24/17- Page 4

[itsjustmejonhotmailcom]

Posted: 12/30/17 at 2:03pm

Liza's Headband said: "Except that the weekly nut (fixed) isn't dollar-for-dollar equivalent to the weekly operating expenses (variable), which can fluctuate by a small -- OR LARGE -- margin depending on a number of factors including marketing & advertising spending campaigns, interest fees and/or payments on any loanstaken out on the production (if applicable), unexpected or "non-budgeted"expenses for sundry, etc."

That's not quite right as I understand it. While a week with more advertising than usual will affect cash flow for that week, most advertising expenses are amortized over a set period of time and so the weekly charges against the budget remain pretty consistent. And loans are paid back from profits, so those only get paid back on the weeks that there is a surplus. 

[Papi2013]

Posted: 12/30/17 at 4:44pm

Jarethan said: "Unless I missed a year, Chicago (without even including rare week 53) has grossed more in 2017 than any year since 1998. Clearly, theweekly nut is not the same as it was 19 years ago, and there has been ticket inflation, etc.; but that is still amazing. Two questions:

-- Does anyone know what their weekly nut is?

-- Is it ever going to close? I am thinking that this is probably the perfect show to move to World Stages (or whatever it is called) if it actually ever starts losing money on an annual basis (I assume that it loses money on certain weeks every year (for years), but that the better weeks more than compensate for those periodic losses. I am sorta thinking that it might become Broadway's Fantasticks or The Mousetrap, i.e., the small show that runs forever. Not the same as Phantom or Wicked or The Lion King...just this plugger that manages to thrive year after year.

"

I’m sure they have a great deal at the Ambassador.   Not exactly the most comfortable house.  It is not moving anywhere. 

Updated On: 12/30/17 at 04:44 PM

[HogansHero]

Posted: 12/30/17 at 5:04pm

itsjustmejonhotmailcom said: "That's not quite right as I understand it. While a week with more advertising than usual will affect cash flow for that week, most advertising expenses are amortized over a set period of time and so the weekly charges against the budget remain pretty consistent. And loans are paid back from profits, so those only get paid back on the weeks that there is a surplus."

You both can be right some.

Typically (actually, closer to always) there is money budgeted from the capitalization for advertising for a period of time. (E.g., through the opening and maybe the first pull quote ads.) After that, it would normally be expensed as paid. I don't think amortization is the right term. Loans are generally paid out of profits, but not necessarily. Obviously, the terms are specific to the agreement, and there could be debt service along the way. The can be significant fluctuations in expenses week to week, and advertising is very often not flat. There are weeks in which data suggests it is a waste, and there are heavy ad periods (e.g., aligning with spring/fall previews and the like). 

[Liza's Headband]

Posted: 12/30/17 at 5:18pm

itsjustmejonhotmailcom said: "Liza's Headband said: "Except that the weekly nut (fixed) isn't dollar-for-dollar equivalent to the weekly operating expenses (variable), which can fluctuate by a small -- OR LARGE -- margin depending on a number of factors including marketing & advertising spending campaigns, interest fees and/or payments on any loanstaken out on the production (if applicable), unexpected or "non-budgeted"expenses for sundry, etc."

That's not quite right as I understand it. While a week with more advertising than usual will affect cash flow for that week, most advertising expenses are amortized over a set period of time and so the weekly charges against the budget remain pretty consistent. And loans are paid back from profits, so those only get paid back on the weeks that there is a surplus."

 

Then you misunderstand. We're talking about two different things here but, please, feel free to educate me on an arena I already work in. 

[Mike66]

Posted: 12/30/17 at 8:42pm

Liza's Headband said: "i
Then you misunderstand. We're talking about two different things here but, please, feel free to educate me on an arenaI already work in."

Why don't you all continue to educate the rest of us who don't work in the arena, and are very interested in learning as much as we can about how all of this works.

m

[itsjustmejonhotmailcom]

Posted: 12/30/17 at 9:32pm

Liza's Headband said: "itsjustmejonhotmailcom said: "Liza's Headband said: "Except that the weekly nut (fixed) isn't dollar-for-dollar equivalent to the weekly operating expenses (variable), which can fluctuate by a small -- OR LARGE -- margin depending on a number of factors including marketing & advertising spending campaigns, interest fees and/or payments on any loanstaken out on the production (if applicable), unexpected or "non-budgeted"expenses for sundry, etc."

That's not quite right as I understand it. While a week with more advertising than usual will affect cash flow for that week, most advertising expenses are amortized over a set period of time and so the weekly charges against the budget remain pretty consistent. And loans are paid back from profits, so those only get paid back on the weeks that there is a surplus."



Then you misunderstand. We're talking about two different things here but, please, feel free to educate me on an arenaI already work in."

I wasn't trying to be snarky and I'll give you the benefit of the doubt that you weren't either. I don't work in the industry, but I've invested in many shows. And I've made priority loans to two shows. In both cases - different shows with different lead producers - the language in the loan docs was that they were to be paid back only when the show was in profit. My attorney, a theatre attorney, told me that is the standard arrangement.  My knowledge of the advertising budgets is limited and comes from seeing the budgets, sitting in on weekly ad meetings, and speaking with the GM's - but they aren't sharing everything with investors of course.  I'm trying to share things here others might find interesting and to explain them to the best of my knowledge. Since you work in the industry you probably know a lot more than I do, I'd encourage you to help us all understand these things better, I think everyone here would find it interesting and appreciate your insights :)

[HogansHero]

Posted: 12/30/17 at 10:08pm

@itsjustme - I'm going to steer clear of what ever controversy is or is not brewing between y'all, and drop in only to say one thing in explanation of interest and loans. What you are talking about is absolutely standard but there can also be interest show up from a much less monumental circumstance like a line of credit that might be used for cash flow for a few days until the week is settled.

[itsjustmejonhotmailcom]

Posted: 12/30/17 at 10:12pm

@HogansHero I didn't realize that but it totally makes sense. Thanks for sharing.