How Much Money is Xanadu Losing?

[BobbyBubby]

Posted: 10/27/07 at 6:49pm

Yeah, yeah, we know you love the show...so do I, but...

How on earth is this show making a profit in the Helen Hayes with that cast and grosses at 65-70 percent lately? Even at 100 percent, they have to be losing money. Any idea what the advance was?

[theatreguy]

Posted: 10/27/07 at 7:05pm

Well, last week they made $281,087. And I hear the weekly nut is in the $250,00 range, so if that's true then they're doing fine.

[singingbackup]

Posted: 10/27/07 at 7:07pm

I am sure they are doing fine.

[MargoChanning]

Posted: 10/27/07 at 7:08pm

I believe XANADU was capitalized around $5.5 million and given many months of near sellout business it's probably paid back a good chunk of that already.


You really shouldn't look at percentages in evaluating these things and pay more attention to the weekly grosses which haven't been that bad. It's a very small show with a low weekly break even -- not sure exactly, but probably in the $250,000 - 300,000 range. It's been grossing just under $300K per week so it probably hasn't been losing much at all and actually may have been breaking even. Most shows that are smartly budgeted are set up so that they will still break even, even when attendance dips to the 65-70% range (depending on how much they're discounting and their average ticket price), so I wouldn't worry to much about it too much yet. But come the winter doldrums in January and February, if it starts dipping much below 65% then start to worry.

[Smaxie]

Posted: 10/27/07 at 7:29pm

That theatre though is going to be the problem in the economic equation. On a good week, they would be making $40,000-$50,000. But to pay off $5,000,000 would take almost two years at their current level of business.

[umgeoboy]

Posted: 10/27/07 at 8:23pm

But thats not a surprise most shows unless they sell 100% at full priced tickets take about 2 years to pay off. If a show pays off in under a year that is pretty quick.

[singingbackup]

Posted: 10/27/07 at 8:27pm

PS The title of this thread is a bit snarky.

[wonderfulwizard11]

Posted: 10/27/07 at 8:30pm

I don't think it's snarky. It's a valid question.

[sweetestsiren]

Posted: 10/27/07 at 8:35pm

It is a bit snarky, since the title assumes that Xanadu is definitely losing money, which might not be the case. It could more objectively be, "Is Xanadu losing money?" Other than that, though, valid question.

[BwayInsider]

Posted: 10/27/07 at 9:10pm

Nobody wishes a show to lose money, well perhaps some do. But the one thing the analysis on this thread is missing is the cost of advertising. Ad that to the weekly running cost and it would seem that this show is having a hard time making money.

[Tkt2Ride]

Posted: 10/27/07 at 9:29pm

It's going on tour though this Summer? How can they afford to do this if the show isn't making enough money? If they take the original cast on tour, will that allow them to use that money to off-set their original set-up fees~minus what initial cost are involved with touring in general? Verses having to keep separate books for an entirely new tour production of the show? I'm just curious.

[jsg03jd]

Posted: 10/28/07 at 12:27am

Below is an excerpt from a piece that appeared in Newsday on one of Xanadu's producer, Robert Ahrens. If this is accurate, then the show should be financially okay for now, and I'm sure the producers will make more money once the OBCR is released:

"Playing with numbers"

The rule of thumb on Broadway is that only one in five shows recoups its investment. Not great odds, but "Xanadu" comes comparatively cheap, with a capitalization around $5 million and weekly running costs in the low $200s.

Ahrens, as the lead producer, has some personal equity invested, but it's a "small" amount. Most of the early development capital came from Ahrens' former banking colleagues in New York.

"I find numbers interesting when they're making this happen," Ahrens says, gesturing to the rehearsal unfolding at the Helen Hayes. "Playing with numbers to make a profit wasn't rewarding enough for me. It is rewarding for a lot of people, and it's necessary for our economy. If it wasn't for people playing with numbers" -- he means, the pals who put up money early on -- "this wouldn't even be possible."

[henryt]

Posted: 10/28/07 at 12:42am

"How on earth is this show making a profit in the Helen Hayes with that cast..."

There are two key things that are sort of wrong about that phrase. First of all, the fact that the Hellen Hayes is such a small theatre does not matter THAT much, because even if they lose money on not being able to sell that many tickets, they make up for it in the low rent to an extent.

Second of all, even though there are five "stars" in the cast, two of them (Mary Testa and Jackie Hoffman) are ensemble, and probably get paid nowhere near "star salary". Tony Roberts probably gets paid the salary of just a regular Broadway leading man, because his name does not draw ticket buyers. Also, these three don't have to be paid the extra required by Equity, because for them it isn't a high risk show. Lastly, Cheyenne Jackson and Kerry Butler probably get a nice salary, but it is nowhere near what someone like Nathan Lane gets, because while they may bring a few ticket buyers, I would say 60-80% of the people go to see the show just because of the title.

Feel free to correct me on any of this. I wouldn't want to be spreading any false information.

[TheEnchantedHunter]

Posted: 10/28/07 at 1:27am

Considering the reviews XANADU received only a few months ago and the size of the Helen Hayes, their returns/percentages are eye-opening indeed.






Demeter
With Pluto In Hades

[everythingtaboo]

Posted: 10/28/07 at 1:40am

While it's been a relatively quiet September/October, as is with most shows, I'm hopeful that attendance will begin to pick up beginning next weekend through the holidays. Thankfully, as others have mentioned, their weekly nut is pretty low for a Broadway show, so that definitely works in their favour.

And if the rumours are true that they've hired another publicity firm, a fresh new marketing campaign will only help boost buzz for this show and get some new audience to see this show. Great reviews will only take a show so far if people still don't know what to expect, and know that they should give it a shot!

[MuseOfVideoGames]

Posted: 10/28/07 at 4:22am

They haven't hired a new publicity firm, they've hired a new advertising agency. Very different. Just wanted to clarify. And it's not rumor; it's fact.

Brian

[Tkt2Ride]

Posted: 10/28/07 at 4:52am

Thank you for trying to explain things. I didn't think it was really doing that badly. Hopefully they didn't go with the firm for Drowsy. So disappointing. Though I feel the tour will be exciting and I am really looking forward to it.

It looks like to me, the show itself is doing well with Kerry and Cheyenne, so who needs big names if you are selling tickets? I think it will do rather well for the Holidays when everyone just wants to enjoy an uplifting Musical.

[roseaddams]

Posted: 10/28/07 at 5:00am

"Even at 100 percent, they have to be losing money."

Why would a show even bother to open if the most possible money they could make in a week wouldn't cover their costs?

[Testing1232]

Posted: 10/28/07 at 9:06am

The OBCR will give them a boast as well, (Monday will be quite a day for them) as will the show on 10/31, which COULD get some press coverage.

[ohjohnny]

Posted: 10/28/07 at 9:35am

So say, for argument's sake, the weekly nut is $220,000. They've been open for 22 weeks, so cumulative operating expenses for that period would be be $4.4 million. In those 22 weeks, they have grossed $5.5 million. So they have brought in $1.1 million over operating expenses. If they continue at their current pace, without heavy discounting, which may get difficult as time goes on, it will take 110 weeks total to meet the $5.5 million capitalization and start showing a profit. So around July 2009 they will break even, I guess.

But maybe that's too simplistic a way of looking at it. I don't know if the weekly nut includes advertising expenses and if they are hiring a new ad agency, they may be increasing their advertising budget, which would eat into profits, I would think. But they have also mentioned, in various press pieces, that many international productions and tours are being planned, so maybe the rights for those productions and tours pay back to original investors. Also, no doubt the sales of leg warmers has been brisk.

[BwayInsider]

Posted: 10/28/07 at 11:06am

TKT2Ride-Hopefully I can answer a few of your questions. Shows going on tour are capitalized as separate entities from the NY productions. They are usually financed by the same people who put up the money for the Broadway show. The cost to mount a tour is often around 50% of the Broadway production. Tours can boost the profile of a Broadway production and they do help sell the show in NYC. The tours pay a weekly royalty back to the originating company but live or die on their own. A tour can help a Broadway production recoup, as in the case of Thouroughly Modern Millie, which did not recoup on Broadway but did so through the license fees from the tour. Also, Dirty Rotten Scoundrels continues its tour and those fees help pay back its investors even after the NY company closed.

As for keeping separate books, the only way to avoid that is to set up the initial entity (LLC,LP) to include the tour. That is rarely done as most shows do not know if they will be successful. Also, that puts the investors at a disadvantage as they will be forced to reinvest in the tour without reaping the benefits of success in NY (if there is any). 25th Annual Spelling Bee has this kind of arrangement. They financed the additional national companies with the profits from NY. This has eaten up profits as the other companies have not been very successful.

[Tkt2Ride]

Posted: 10/29/07 at 4:11am

Thank you very much. That was a wonderful explanation. I didn't think there was a real good way around the bookkeeping. That is too bad though for Spelling Bee.

I am looking forward to this tour. I know it will do very well here in the San Fransisco Area. It's coming in the Summer too. If it makes it here during the Gay Pride Parade it will be golden. Though I think it can be as much a hit with teens and us middle aged folks who just love beautiful Musicals.

The show appeals to such a wide age group so I think it is smart that they didn't put off touring for too long. If they get the advertising right, it should take the big cities by storm.

Good luck Xandu!