Cabaret Lawsuit bigger picture questions

[Ensemble1711444445]

Posted: 9/12/25 at 11:46am

The Cabaret lawsuit is interesting for one specific element. What is the fiduciary responsibility of producers to pull the plug and return money to investors when it is clear the show is failing? The show has not made money but did the producers continue on because of their personal profit structure? That is an interesting legal issue.  Different situation but equally problematic, Moulin Rouge - they are clearly in the red and have been for a long time. Yes, their investors have made money but are they now watching profits being used to keep the show afloat while the producer keeps collecting fees? Or Hells Kitchen and & Juliet - losing money weekly --do they close and return some money to investors or keep covering losses with the investors money?  There are others - Gatsby and Death Becomes Her are basically single owner shows so very little conflict. Shows like Cabaret (and Dolly Parton) that are produced by the theater owner pose very different conflicts as to profits and losses. 

Updated On: 9/12/25 at 11:46 AM

[kdogg36]

Posted: 9/12/25 at 12:13pm

I asked a version of this question on the other thread, so I endorse this discussion! Kad pointed out that this didn't seem to be part of this specific lawsuit, but I'd love to hear some answers about it nonetheless. We've seen, again and again, situations where producers kept shows open when it was clear to everyone that this would just cause more losses, and therefore they would seem to be violating their responsibility to investors. (I speculated in the other thread that investors might sign some kind of waiver to cut off any such cause of action, but I have no idea about that.)

[Ensemble1711444445]

Posted: 9/12/25 at 12:22pm

Investors have very few options and the paperwork/accounting is pretty cloudy. It is becoming more important as budget sky rocket, recoupment charts have no basis in reality, and theater owners here and on the west end are now routinely putting their own shows in their own theaters. There are fiduciary conflicts when the shows are not in profit. 

Updated On: 9/12/25 at 12:22 PM

[BorisTomashevsky]

Posted: 9/12/25 at 12:33pm

David Merrick would close at the whiff of a flop. Of course that was mostly his money. The whole “give struggling shows a chance/this deserves to be seen” thing is pretty modern.

[binau]

Posted: 9/12/25 at 12:38pm

In most cases the shows that are staying open losing money every week are in previews are they not? So pretty much all the money is gone either way and if they give up they’ll certainly never win (maybe happy ending also has probably given a precedent for this practice to continue). 

However, for most shows that are in a run are there many producers who keep the shows open way too long? Is it not the case that they at least try to break even and if starts to go in the red the shows usually close?

[SteveSanders]

Posted: 9/12/25 at 1:03pm

BorisTomashevsky said: "David Merrick would close at the whiff of a flop. Of course that was mostly his money. The whole “give struggling shows a chance/this deserves to be seen” thing is pretty modern."

This seems to be part of the decision-making tension: deciding on the appropriate timeframe for an audience, public awareness/word of mouth, et al to build.

I don't know how it happens in theater producing, but in our corporate decision-making, when proposing a new initiative we have to answer:

• What results do we expect?  On what time horizons? What assumptions are behind these projections?

Making this explicit, allows us to compare results at specific future milestones, check how well our overall assumptions are measuring up against current reality, and make any strategic or tactical adjustments.

In some cases before a new project is advanced, we also determine an objective metric for killing it off.  This helps prevent some of the more personality- or emotion-driven defenses that often come up when a project isn't performing as expected, but some still want to keep investing in it.

 

[CJRochester]

Posted: 9/12/25 at 4:24pm

Interesting discussion. For longer running shows, say Moulin Rouge, Hadestown, or Chicago, do they bank some of the profits in the good weeks to help them through the slower times? 

[Ensemble1711444445]

Posted: 9/12/25 at 4:32pm

Shows like Moulin Rouge have banked profits over the years and instead of giving the profits to investors they will keep shows running after they are in the red -- sometimes continuing to take their fees. It is a grey area. Not all shows but some.  Shows know what their advance sales look like and know when the show is out of steam. So this is a question of responsibility to investors. 

 

Updated On: 9/12/25 at 04:32 PM

[nasty_khakis]

Posted: 9/12/25 at 4:37pm

I might be misremembering but I remember a lot of Rudin's investors were upset that even though the show was basically 100% sold out from the start he was still buying $100k full page NYT ads for "Hello, Dolly." Even though they recouped it still seemed odd they couldn't have actually profited more vs just being made whole.

[BorisTomashevsky]

Posted: 9/12/25 at 4:38pm

Ensemble1711444445 said: "Shows like Moulin Rouge have banked profits over the years and instead of giving the profits to investors they will keep shows running after they are in the red -- sometimes continuing to take their fees. It is a grey area.Not all shows but some.

"

I wonder if the interest earned from those amounts gets paid equally to investors when they get their share, or if the general partners have it arranged so that they keep it. 

[DiscoCrows]

Posted: 9/12/25 at 5:07pm

I think it boils down to the ambiguity (or lack-thereof) of the language in the operating agreement. AFAIK, the language included is usually so dense and gives leeway for the lead producers to exercise spending entirely at their discretion. How much they decide to spend obviously directly correlates to their weekly operating costs, which can change a lot week to week depending on where a show is at in its lifecycle. I have seen operating agreements that allude verbatim to these costs running higher/lower depending on things like Tony campaigns or other factors that would influence the show’s net income each week.

What doesn’t change is the pre/post-recoupment profit distributions - that being, a show that hasn’t recouped owes 100% of it’s “weekly net profits” to investors, and a show that has can split it 50:50 between it’s lead producers and investors.

My two cents - would love to hear what others experience has been. How much can a producer reasonably continue to “spend” each week beyond that of what their offering document budgets reflect before it becomes irresponsible or misleading? Is there a point where it could be illegal? Probably just depends on how the language included in the offering documents for that specific show are interpreted by a judge.

Updated On: 9/12/25 at 05:07 PM

[JSquared2]

Posted: 9/12/25 at 5:29pm

The Operating Agreement and investor documents prepared by any halfway decent theatrical attorney and general manager will make it crystal clear that the Managing Members (or General Partners, depending on how the entity is set up) have total authority to spend on legitimate expenses at their full and sole discretion. Investors and "co-producers" have to sign and initial in, like 30 places in the investment papers that they know and understand what they are getting themselves into. Should a particular investor become "difficult" and start complaining (either in public or privately), they will most assuredly never be invited to the party again.  In this business, everybody talks to everybody else -- there are no secrets.  

[mikem]

Posted: 9/12/25 at 6:10pm

In this case, I can understand why investors are frustrated.  Within a couple of weeks of Billy Porter and Marisha Wallace starting, it was clear that they weren't going to increase the box office enough to have any breakeven weeks between that point and the end of their run two months later.  Billy Porter being out made it worse, but even if he had stayed, the fiscally responsible thing to have done would have been to close the show by Labor Day at the latest.

The show will probably lose $2 - 3 million more by staying open past mid-August.

[Angel of Harlem]

Posted: 9/12/25 at 6:42pm

mikem said: "In this case, I can understand why investors are frustrated. Within a couple of weeks of Billy Porter and Marisha Wallace starting, it was clear that they weren't going to increasethe box office enough to have any breakeven weeks between that point and the end of their run two months later. Billy Porter being out made it worse, but even if he had stayed, the fiscally responsible thing to have done would have been to close the show by Labor Day at the latest.

The show will probably lose $2 - 3 million more by staying open past mid-August."


the biggest issue was Eva N and Orville P being out so much meaning inconsistency and attendees being able to get refunds!

noticable lack of adverts for the show in the city as well. Gypsy is still (despite closing) on 3 Times Square billboards - as of this afternoon when I just strolled through. There were TV ads for Gypsy - all highlighting Audra rather than the show.

not seen a single thing advertising Cabaret for months.

[Kad]

Posted: 9/12/25 at 6:44pm

Cabaret advertisements have been very common throughout the city throughout its entire run and all of its cast changes. 

[Angel of Harlem]

Posted: 9/12/25 at 7:35pm

Kad said: "Cabaret advertisementshave been very common throughout the city throughout its entire run and all of its cast changes."

Not true of late - they stopped 2 weeks into the Orville pairing - when they realised the show would close in Oct 

[BorisTomashevsky]

Posted: 9/12/25 at 7:40pm

Looks like a medical situation (possible stroke?) for Price Waldman onstage tonight (Friday).

https://www.reddit.com/r/Broadway/s/R2zE1z38iR

[Kad]

Posted: 9/12/25 at 9:19pm

There are plenty of Billy/Marisha posters, particularly up here in Harlem where I live. It never stopped. 

[HBP]

Posted: 9/12/25 at 11:06pm

I was at the show this evening. A few moments after Herr Shulz's entrance, Price Waldman (on as understudy) paused for a few moments after his first couple of lines. At first Ellen (Fraulein Schneider) and Calvin (Cliff) tried to cover for him, but Calvin looked concerned and seemed to notice something was wrong. He said 'Sorry, can we stop the show?' or something to that effect. Calvin and Ellen walked Price offstage along with a stagehand. I won't speculate on what might have happened. He remained standing and walked with the help of the two actors off the stage, and they announced that he was conscious, talking and taken away by ambulance shortly before they resumed the show about 20 minutes later. As an audience member in the dark, I was very grateful stage management announced that he was doing alright. I hope it was not too serious and that Price has a swift recovery.

I didn't catch who stepped in after Price (I think Colin Cunliffe?), but he was great, as was the rest of the cast. Marisha is a star–I hope we see her in more. Marty was excellent as the Emcee. Silly, queer, and haunting. Ellen steals the show every scene she is in. The best Fraulein Schneider I've seen in any incarnation of the show. Calvin's Cliff is grounded but still funny and a great counter to the high-octane Sally and Emcee performances. 

I must say the audience was respectful when the medical incident happened. They quieted immediately each time the stage manager came on and I think we were all grateful to hear that the actor seemed to improve before the show continued so we could enjoy the rest of the evening. 

If you have a chance to see it before it closes, it's in great shape.

[Angel of Harlem]

Posted: 9/13/25 at 4:52pm

Kad said: "There are plenty of Billy/Marisha posters, particularly up here in Harlem where I live. It never stopped."

I live in Harlem (obviously) - haven’t seen any!

there’s an old tatty poster of the Eva days in 116th subway though

[The Bandstand]

Posted: 9/13/25 at 5:00pm

Angel of Harlem is just a copy cat version of African Queen.  Sutton Ross is desperate for attention 

[Angel of Harlem]

Posted: 9/14/25 at 5:49am

The Bandstand said: "Angel of Harlem is just a copy cat version of African Queen. Sutton Ross is desperate for attention"

I don’t know what any of this means?

gave a great night and be kind 

[theatrejunkie007]

Posted: 9/14/25 at 8:24am

JSquared2 said: "The Operating Agreement and investor documents prepared by any halfway decent theatrical attorney and general manager will make it crystal clear that the Managing Members(or General Partners, depending on how the entity is set up) have total authority to spend on legitimate expenses at their full and sole discretion. Investors and "co-producers" have to sign and initial in, like 30 places in the investment papers that they know and understand what they are getting themselves into. Should a particular investor become "difficult" and start complaining (either in public or privately), they will most assuredly never be invited to the party again. Inthis business, everybody talks to everybody else -- there are no secrets."

 

all true- this is covered in the legal documents. It’s pretty ironclad as they say. The tough thing for investors is when the operating cost prospectus/estimates say, hypothetically, $800k, and it turns out to be $1.1m. It happens and completely changes the trajectory of the financial expectations for a show.