Broadway tax credit program fund near depletion

[DaveyG]

Posted: 7/17/25 at 6:59pm

https://deadline.com/2025/07/broadway-tax-credit-program-depletion-1236461676/

Terrible news.

[GottaGetAGimmick420]

Posted: 7/17/25 at 8:22pm

RIP to new musicals ... 

[BorisTomashevsky]

Posted: 7/17/25 at 8:34pm

How does this tax credit work in terms of distribution - does it  go in the pockets of investors according to points since the money spent is theirs by majority? Does the producer themself see any of it?

[Bobster159]

Posted: 7/17/25 at 9:47pm

BorisTomashevsky said: "How does this tax credit work in terms of distribution- does it go in the pockets of investors according to points since the money spent is theirs by majority? Does the producer themself see any of it?"

It's revenue to the production. So it looks the same as any income from non-ticket sources. Unless loans or other priority funds have been raised, it largely goes to investors.

The loss of it is going to hit plays in particular hard. Assuming nothing changes and the credit ends, I'd guess some of the announced ones won't happen.

[BorisTomashevsky]

Posted: 7/17/25 at 10:19pm

Bobster159 said: "BorisTomashevsky said: "How does this tax credit work in terms of distribution- does it go in the pockets of investors according to points since the money spent is theirs by majority? Does the producer themself see any of it?"

It's revenue to the production. So it looks the same as any income from non-ticket sources. Unless loans or other priority funds have been raised, it largely goes to investors.

The loss of it is going to hit plays in particular hard. Assuming nothing changes and the credit ends, I'd guess some of the announced ones won't happen."

Thanks so much for explaining this, that makes perfect sense. 

[MusicalGuy3]

Posted: 7/17/25 at 10:59pm

This is not good news for accessibility either.

[ErmengardeStopSniveling]

Posted: 7/18/25 at 11:33am

Really bad news. Hopefully the League's lobbyists will be successful in getting it back in some form. It has basically meant that every show's investors see some type of financial distribution. Even 10% back on a $25 million musical is better than 0%. Especially with play budgets now approaching eight figures, when a decade ago $5 mil was pretty standard for a play.

However, it's always rubbed me the wrong way that the Tax Credit is still applicable to shows that turn a profit. Glengarry and GN&GL should not be eligible for this, but that's just my opinion!!!!

[JSquared2]

Posted: 7/18/25 at 11:36am

MusicalGuy3 said: "This is not good news for accessibility either."

 

Huh??

[ErmengardeStopSniveling]

Posted: 7/18/25 at 11:42am

BorisTomashevsky said: "Bobster159 said: "BorisTomashevsky said: "How does this tax credit work in terms of distribution- does it go in the pockets of investors according to points since the money spent is theirs by majority? Does the producer themself see any of it?"

It's revenue to the production. So it looks the same as any income from non-ticket sources. Unless loans or other priority funds have been raised, it largely goes to investors.

The loss of it is going to hit plays in particular hard. Assuming nothing changes and the credit ends, I'd guess some of the announced ones won't happen."

Thanks so much for explaining this, that makes perfect sense."

And just to add to Bobster159's great comment ---- each show is set up as an entity (think startup business), and each investor has a share of X% of that entity. So when the money hits it's distributed proportionally amongst the investors. An investor with $1 million in the show is going to see more of this than an investor with $25,000 in the show. The producers themselves will not see money until the investors are made whole.

[BdwyFan]

Posted: 7/18/25 at 11:56am

ErmengardeStopSniveling said: "BorisTomashevsky said: "Bobster159 said: "BorisTomashevsky said: "How does this tax credit work in terms of distribution- does it go in the pockets of investors according to points since the money spent is theirs by majority? Does the producer themself see any of it?"

It's revenue to the production. So it looks the same as any income from non-ticket sources. Unless loans or other priority funds have been raised, it largely goes to investors.

The loss of it is going to hit plays in particular hard. Assuming nothing changes and the credit ends, I'd guess some of the announced ones won't happen."

Thanks so much for explaining this, that makes perfect sense."

And just to add toBobster159's great comment ---- each show is set up as an entity (think startup business), and each investor has a share of X% of that entity. So when the money hits it's distributed proportionally amongst the investors. An investor with $1 million in the show is going to see more of this than an investor with $25,000 in theshow. The producers themselves will not see money until the investors are made whole."

First of all, lead producers see “money” starting day one of previews through their participation in the weekly royalty pool and also as being part of the weekly G&A  expense pool.  Co-producers do not see  “money” until investors are made whole.  That’s correct. 
Second, should a production have gone through its reserves and had to take a priority loan or had to defer royalties due to poor box office and not covering weekly costs, then the tax credit would first go to pay back these items.  Then what’s left of the $3M tax credit (for musicals) would be paid to investors and producers.  That’s my understanding of how it works. 
So, the critical thing here is to fix the whole model so that weekly operating costs can be lower but that will take major union negotiations.  Possible ?

[ErmengardeStopSniveling]

Posted: 7/18/25 at 12:02pm

BdwyFan said: "So, the critical thing here is to fix the whole model so that weekly operating costs can be lower but that will take major union negotiations. Possible ?"

Correct, priority loan folks always come first. I was simplifying because that's a whoooole different explanation ;)

And yes, the weekly running cost model is broken with no meaningful change on the horizon. I bet a lot of producers would love if Broadway had a model like SETA, where initial upfront salaries were lower in favor of people getting a kicker when the gross exceeded a certain amount. Or a model where shows could play 7 a week without having to pay people for 8.

[kdogg36]

Posted: 7/18/25 at 12:24pm

I am quite torn about this. Of course I want our society to support the arts, and I will be very disappointed if the end of this program means we'll see fewer quality shows on Broadway.

But these aren't grants to struggling nonprofit theaters producing bold new work; they're tax credits for commercial businesses with rich investors. If those tax credits were going to build a new sports venue or office building, I'd rightly condemn this as corporate welfare (and I suspect many others here would, too). I'm not sure I can draw a clear line that allows me to support this kind of government support just because the beneficiary happens to be something that's very important to me.

On another note, I wonder if this looming problem might have been a known issue to some extent, contributing to (what I perceive as) a slower pace of announcements for this Broadway season.

Please feel free to rip into me if any of the above reflects actual technical ignorance about Broadway financing rather than just me being a philosophical outlier on this thread. 

Updated On: 7/18/25 at 12:24 PM

[KrupYou]

Posted: 7/18/25 at 12:35pm

Complex. With so many people suffering i understand why tax payers and elected official have different priorities 

[ErmengardeStopSniveling]

Posted: 7/18/25 at 12:42pm

kdogg, all of your concerns are valid.

A nonprofit subsidy program would be most welcomed as long as it doesn't come with censorship (as we're seeing from the federal government right now).

I'm a little doubtful the tax credit has much to do with the pace of announcements for this season, though. There are 12 shows announced to open between now and the end of the year, and four vacant Shubert playhouses which might get tenants for the fall.

Sometimes there are just pipeline issues too...some shows that have opened out of town or off-b but are either assessing next steps (rewrites, second out of town, etc) or raising money or deciding if they even want to come in.

There are also some that have been announced that I'm not convinced will actually make it to previews (such as Lost Boys, which has a huge theatre, novice producers, and IP with low value).

At the moment it's also unclear what will close by early 2026. There are a lot of shows on the bubble, financially speaking, which means they could either go up & keep running or go down & close. Mincemeat? Hadestown? HK? Moulin Rouge? & Juliet? Great Gatsby? Oh Mary (depending on star-casting)? Just In Time (depending on Groff's schedule)?

Updated On: 7/18/25 at 12:42 PM

[Jumpin_J]

Posted: 7/19/25 at 8:08pm

The tax credit is a major incentive to potential investors in an attempt to have a show go into profit. Tax credits are given to film and TV shot in New York State, but this was the only lifeline thrown to Broadway and Off-Broadway. Given this administration's outright hatred of not just the arts but NYC, I think it's all but certain that to paraphrase the infamous NY (Com)Post headline, "Capital Hill to Broadway - Drop Dead". Kiss all that tourist money that are taxed that eventually wind up in the federal government coffers goodbye. They don't understand the old saying when NYC sneezes, the rest of the country gets a cold. They'll find out soon enough.