Yes, the show needs to close.
1) The argument that it provides jobs is not legit, even though it is true. If it closes, people will be out of a job, but a new show will open creating new jobs. So it's a lose/win.
2) The show has lost its story. I saw it two years ago and loathed it. Some performances were OK, but the story was lost. It was spotty. Individual actors were trying to showcase themselves, but when it came time to communicate with other actors - it was laughable at how bad the acting was.
3) It's a story that everyone knows already. Everyone knows the movie, everyone knows the music, it's time to move on and get a new show in the Ambassador. I would make the same statement for POTO and MAMMA MIA!, however I have not seen those shows so I will not judge, but I could see how both are in the same situation.
4) Yet, all three of those shows continue to survive. They're trademark Broadway shows. They're default tourist shows. So I don't see them going anywhere at the present. But in regards to CHICAGO, artistically, I think it's time to either close OR bring the director in and whip the show back into shape.
"The Spectacle has, indeed, an emotional attraction of its own, but, of all the parts, it is the least artistic, and connected least with the art of poetry. For the power of Tragedy, we may be sure, is felt even apart from representation and actors. Besides, the production of spectacular effects depends more on the art of the stage machinist than on that of the poet."
--Aristotle