How do producers make money?

You get a chunk of the show gross until it's paid off, then you get a percent of the profits that is negotiated in your contract.

You are actually talking about being an investor, not a producer.

A basic overview:

Every show has a weekly operating cost to cover salaries, theatre rental, advertising, etc. This is the weekly "nut" or break even figure. A big musical can cost $500K to $600K to run.

Also it costs money to get the show open, known as the capitalization.

Let's say a new musical will cost $10 million and you are one of 10 investors putting in $1 million each. That money allows the show to rehearse, preview and open.

Our sample musical opens to positive reviews and the week after the opening this musical is bringining in $200K a week above the break-even. The excess is divided so that a percentage is held by the producers (as insurance agains a few slow weeks) and the rest is divided among the 10 investors. This basic formula continues week after week. Eventually the investors get back their $1 Million and start seeing additional income. If the musical is a huge hit and runs 5 years, it will probably take the first year to recoup, after which years 2-5 will be profitable. Of course, the box office changes every week. Some very good weeks (New Years for example) are countrebalanced by slow weeks in Januaray and February.

At the end of the seaosn Variety reports which shows have recouped (andare called HITS) and which shows are still waiting (STATUS NOT DETERMINED.) A show that closes before it recoups is a FLOP. This word bothers people who hate to see a show they loved called a flop, but if it closes without recouping that is exactly what it is: A FLOP! And the financuial status has no bearing on quality. Garbage shows (CATS, PHANTOM OF THE OPERA) can be huge money makers for their investors. Quality pieces (GREY GARDENS, PASSION) close with huge losses for their investors.

A long run does not guarantee HIT status. Some shows have run 3-4 years and still close with losses (JEKYLL & HYDE, teh 2001 revival of 42ND STREET) and sometimes a movie or TV deal can ensure financial success. The original Mary Martin version of PETER PAN was only scheduled for 152 performances because there was a deal in place to broadcast it live on TV. The broadcast deal was made before the show even opened so it was a hit before opening night.

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The Producer receives what is called a producer's fee...which is considered part of the fixed costs of the show...investors receive an allocation of profits based on their investment, so if they invest 15% of the show's capitalization they will receive 15% or less of the profit...all of which is negotiated ahead of time.

I don't know how this fits in, but I'll say it.

There are two rules to being a broadway producer.

Number one is never put your own money in the show..........

Number 2 is
NEVER EVER EVER PUT YOUR OWN MONEY IN THE SHOW

NEVER PUT YOUR OWN MONEY IN THE SHOW!!!!!

Because that's Taboo!!!