Show Financials

[hearthemsing22]

Posted: 8/20/24 at 1:42pm

When I look at the Broadway Grosses, I see a show like back to the future grossed over 1 million and I think "that's amazing". But then other people who comment say that number isn't good. 

I guess I'm curious as to why, and when people talk about a show "nut", what is that? Is it the number a show wants to hit in order to break even, or keep up their run? 

I don't follow the financial details of shows. I'm sorry if this is a stupid question. 

[ErmengardeStopSniveling]

Posted: 8/20/24 at 2:13pm

In very broad terms, there are two key factors when analyzing a show's finances:

• Its capitalization: This is the money raised to produce the show in the first place. Set construction, costumes, tech & load-in costs, pre-previews marketing, author advances, rights procurement, development costs, auditions, legal fees, opening night party, etc etc etc. For a musical, that's usually going to cost between $12 million and $25 million. A nonmusical play could be cheaper, in the $4-10 million range.
• Its weekly operating cost: That's the money that it costs to run the show every week. If you meet or exceed that, you "break even" on the weekly nut. Salaries & wages (actors, band, crew, service providers, etc), theatre expenses, weekly royalties and percentages to key creative team and profit participants, laundry, weekly advertising spend, nominal general manager & producer office fees, etc etc etc. That number could be between $400K for a tiny play or $1 million++ for a large musical.

 
After you break even on the weekly running cost, any additional money goes towards paying off the capitalization. So if you cost $800K a week to run and you earned $1mil last week, that's $200K of profit; if it's an 18 million musical, at that rate it could recoup the capitalization after about 90 weeks. If you cost $1mil a week to run and you earned $800K last week, you just lost $200K and that deficit comes out of the show's contingency or additional money has to be put up if they want to keep it running. A financial "flop" is any show that does not pay back its capitalization in full. Some shows pay back part of the capitalization before closing. Then, when a show tours or has international productions, there will be a royalty (around 3% of total ticket sales) paid back to the Mother Company (the original Broadway or West End production, wherever it began first). So that is another way for a show to earn a sloooooooooowwwww trickle of money.

It's impossible to know if a number "seems good" without knowing the approximate operating cost per week. For a show that reportedly costs north of $1 million to run each week, like BTTF and WFE, a weekly gross of $850K is bad. For a show that costs $500K a week to run, a weekly gross of $850K is great.

Updated On: 8/20/24 at 02:13 PM

[hearthemsing22]

Posted: 8/20/24 at 2:24pm

ErmengardeStopSniveling said: "In very broad terms, there are two key factors when analyzing a show's finances:

• Its capitalization:This is the money raised to produce the show in the first place. Set construction, costumes, tech & load-incosts, pre-previews marketing, author advances, rights procurement, development costs, auditions, legal fees, opening night party, etc etc etc. For a musical, that's usually going to cost between $12 million and $25 million. A nonmusical play could be cheaper, in the $4-10 million range.
• Its weekly operating cost:That's the money that it costs to run the show every week. If you meet or exceed that, you "break even" on the weekly nut.Salaries & wages (actors, band, crew, service providers, etc), theatre expenses, weekly royalties and percentages to key creative team and profit participants, laundry, weekly advertising spend, nominal general manager & producer office fees, etc etc etc. That number could be between $400K for a tiny play or $1 million++ for a large musical.

 


After you break even on the weekly running cost, any additional money goes towards paying off the capitalization. So if you cost $600K a week to run and you earned $900K last week, that's $300K of profit; if it's an 18 million musical, at that rate it could recoup the capitalization after 60 weeks. If you cost $1mil a week to run and you earned $900K last week, you just lost $100K and that deficit comes out of the show's contingency or additional money has to be put up if they want to keep it running. A financial "flop" is any show that does not pay back its capitalization in full. Some shows pay back part of the capitalization before closing. Then, when a show tours or has international productions, there will be a royalty (around 3% of total ticket sales) paid back to the Mother Company (the original Broadway or West End production, wherever it began first). So that is another way for a show to earn a sloooooooooowwwww trickle of money.

It's impossible to know if a number "seems good" without knowing the approximate operating cost per week. For a show that reportedly costs north of $1 million to run each week, like BTTF and WFE, a weekly gross of $850K is bad. For a show that costs $500K a week to run, a weekly gross of $850K is great."

 

Wow thank you for this breakdown! But where do people look to see the operating costs of shows? It seems like everyone on here knows what those are for shows- is that widely available information??

[ErmengardeStopSniveling]

Posted: 8/20/24 at 2:29pm

hearthemsing22 said: "Wow thank you for this breakdown! But where do people look to see the operating costs of shows? It seems like everyone on here knows what those are for shows- is that widely available information??"

 

 

Those aren't public information.

Offering documents with budget proposals are publicly available by the SEC but those are created sometimes a year+ before a show opens and by the time it actually begins performances, the numbers could be higher or lower.

Operating cost can also vary week to week, just like with your personal finances or any other business.

It's a good deal of guesswork + conversations with people who invest in shows or work for a GM, producer, theatre owner, etc. and know the numbers. If a show has 12+ people in the orchestra and 20+ actors in the cast, it's safe to assume it's going to cost north of $800K a week to run.

[ErmengardeStopSniveling]

Posted: 8/20/24 at 2:47pm

All that I wrote above brings us to ticket sales. Ticket sales are basically the ONLY meaningful revenue stream for a show.

Rising costs of goods & services, union minimums, development costs, technology, and other factors have caused weekly running costs and capitalizations to balloon, especially post-pandemic. Shows are priced with the intention that if they can sell almost every seat, they make a profit that week. Easier said than done: if sales soften then they try to create more attractive ticket prices and/or different marketing strategies.

Tickets could be $10 back in the day because, among other reasons, union minimums were ridiculously low and profit margins of producing a Broadway show were higher. Nowadays, wages are more aligned with the modern cost of living. (Among other costs that have risen such as scenic automation, sound, projection, new ways of marketing to buyers, etc)

A hit show is also trying to combat the secondary market, which is far more ruthless now than in the days of the original MY FAIR LADY. Any tickets sold by the secondary market mean that the upcharge doesn't go to the hardworking people who created the show.

People can complain about prices as much as they want but unless costs of producing a show go down or new sources of significant revenue magically emerge, ticket prices won't be lower than they are now.

Updated On: 8/20/24 at 02:47 PM

[GottaGetAGimmick420]

Posted: 8/20/24 at 2:50pm

This is a great breakdown. I almost want this link hyperlinked to the weekly grosses so we don't have to re explain this once a month. Great job.

[carolinaguy]

Posted: 8/20/24 at 3:01pm

This great discussion brings to mind a very specific question I've had about Moulin Rouge since it opened. What kind of negotiation did they do for music royalties? It's not even a catalogue show where they could negotiate with one artist or estate. It's about a billion songwriters. Did they do some kind of package deal that keeps the rights costs manageable?

[hearthemsing22]

Posted: 8/20/24 at 3:09pm

carolinaguy said: "This great discussion brings to mind a very specific question I've had about Moulin Rouge since it opened. What kind of negotiation did they do for music royalties? It's not even a catalogue show where they could negotiate with one artist or estate. It's about a billion songwriters. Did they do some kind of package deal that keeps the rights costs manageable?"

Could you ask that about any jukebox musical or would it be a case by case basis? You couldn't say the same for Moulin Rouge! and &Juliet, for example, right? 

[hearthemsing22]

Posted: 8/20/24 at 3:10pm

ErmengardeStopSniveling said: "All that I wrote above brings us to ticket sales. Ticket sales are basically the ONLY meaningful revenue stream for a show.

Rising costs of goods & services, union minimums, development costs, technology, and other factors have caused weekly running costs and capitalizations to balloon, especially post-pandemic.Shows are priced with the intention that if they can sell almost every seat, they make a profit that week. Easier said than done:if sales soften then they try to create more attractive ticket prices and/or different marketing strategies.

Tickets could be $10 back in the day because, among other reasons, union minimums were ridiculously low and profit margins of producing a Broadway show were higher.Nowadays, wagesare more aligned with the modern cost of living. (Among other costs that have risen such as scenic automation, sound, projection, new ways of marketing to buyers, etc)

A hit show is also trying to combat the secondary market, which is far more ruthless now than in the days of the original MY FAIR LADY. Any tickets sold by the secondary market mean that the upcharge doesn't go to the hardworking people who created the show.

People can complain about prices as much as they want but unless costs of producing a show go down or new sources of significant revenue magically emerge, ticket prices won't be lower than they are now."

^^^I wish more people understood this about high ticket prices and how they relate to the cost of running a show. 

[ggersten]

Posted: 8/20/24 at 3:14pm

hearthemsing22 said: "carolinaguy said: "This great discussion brings to mind a very specific question I've had about Moulin Rouge since it opened. What kind of negotiation did they do for music royalties? It's not even a catalogue show where they could negotiate with one artist or estate. It's about a billion songwriters. Did they do some kind of package deal that keeps the rights costs manageable?"

Could you ask that about any jukebox musical or would it be a case by case basis? You couldn't say the same for Moulin Rouge! and &Juliet, for example, right?"

Moulin Rouge is more like Rock of Ages - a disparate catalog of songs. &Juliet is just Max Martin so easier to logistically negotiate. 

 

[ErmengardeStopSniveling]

Posted: 8/20/24 at 3:15pm

carolinaguy said: "This great discussion brings to mind a very specific question I've had about Moulin Rouge since it opened. What kind of negotiation did they do for music royalties? It's not even a catalogue show where they could negotiate with one artist or estate. It's about a billion songwriters. Did they do some kind of package deal that keeps the rights costs manageable?"

I'm not savvy enough about this stuff to give you hard numbers. It's usually higher than if a score was written specifically for the show, but not prohibitively so. The accounting process is also different.

It's a per-song negotiation with the rightsholder and there are companies that handle Music Clearances for shows, working closely with the Music Supervisor, the GM, and the Producer. Sometimes rightsholders deny use of a song and that requires elements of a show to change. Sometimes there can also be use limitations (such as can't use it in marketing or on a cast album, rights for Broadway only or for the show's woldwide life in perpetuity) and length and context of song can also be a factor (using a snippet of a song vs the entire song, orchestration/arrangement, etc)

Updated On: 8/20/24 at 03:15 PM

[hearthemsing22]

Posted: 8/20/24 at 3:18pm

ErmengardeStopSniveling said: "carolinaguy said: "This great discussion brings to mind a very specific question I've had about Moulin Rouge since it opened. What kind of negotiation did they do for music royalties? It's not even a catalogue show where they could negotiate with one artist or estate. It's about a billion songwriters. Did they do some kind of package deal that keeps the rights costs manageable?"

I'm not savvy enough about this stuff to give you hard numbers. It's usually higher than if a score was written specifically for the show, but not prohibitively so.

It's a per-song negotiation with the rightsholder and there are companies that handle Music Clearances for shows, working closely with the Music Supervisor, the GM, and the Producer. Sometimes rightsholders deny use of a song and that requires elements of a show to change.Sometimes there can also be use limitations (such as can't use it in marketing or on a cast album) and length and context of song can also be a factor(using a snippet of a song vs the entire song, orchestration/arrangement, etc)"

All of this is so fascinating- is there any book to read about this or anything?? Does anyone have any recommendations? Is it just general business with a theatrical focus?

[DiscoCrows]

Posted: 8/20/24 at 3:34pm

Wow thank you for this breakdown! But where do people look to see the operating costs of shows? It seems like everyone on here knows what those are for shows- is that widely available information??"

Broadway General Manager by Peter Bogyo is my go-to recommendation! Fantastic book.

Updated On: 8/20/24 at 03:34 PM

[ErmengardeStopSniveling]

Posted: 8/20/24 at 3:41pm

I remember John Breglio's 2016 book I WANNA BE A PRODUCER being pretty good. It's easy for a book or article to become outdated quickly, but the general processes usually remain the same.

This story about Hamilton is the most thorough financial reporting I've seen about a show. 

Hal Luftig and Ken Davenport used to have podcasts interviewing people from the industry. Sometimes reporters like Michael Riedel, Lee Seymour & Mark Hershberg had good nuggets of info if you can sift between the bull**** or hearsay.

Mostly it's just learned in the trenches or at the Columbia producing MFA.

[chrishuyen]

Posted: 8/20/24 at 4:01pm

Philip Boroff in the Broadway Journal also tends to report on numbers a lot and he revealed a lot of information about weekly running costs/capitalizations for last season

[hearthemsing22]

Posted: 8/20/24 at 4:11pm

ErmengardeStopSniveling said: "I remember John Breglio's 2016 book I WANNA BE A PRODUCER being pretty good. It's easy for a book or article to become outdated quickly,but the generalprocesses usually remain the same.

This story about Hamilton is the most thorough financial reporting I've seen about a show.

Hal Luftig and Ken Davenport used to have podcasts interviewingpeople from the industry. Sometimes reporters like Michael Riedel,Lee Seymour & Mark Hershberg had good nuggets of info if you can sift between the bull**** or hearsay.

Mostly it's just learned in the trenches or at the Columbia producing MFA."

I've never considered going back to school, but looking at the Columbia Producing program is making me reconsider. It's all so interesting 

[Alex Kulak2]

Posted: 8/20/24 at 4:52pm

hearthemsing22 said: "ErmengardeStopSniveling said: "In very broad terms, there are two key factors when analyzing a show's finances:

• Its capitalization:This is the money raised to produce the show in the first place. Set construction, costumes, tech & load-incosts, pre-previews marketing, author advances, rights procurement, development costs, auditions, legal fees, opening night party, etc etc etc. For a musical, that's usually going to cost between $12 million and $25 million. A nonmusical play could be cheaper, in the $4-10 million range.
• Its weekly operating cost:That's the money that it costs to run the show every week. If you meet or exceed that, you "break even" on the weekly nut.Salaries & wages (actors, band, crew, service providers, etc), theatre expenses, weekly royalties and percentages to key creative team and profit participants, laundry, weekly advertising spend, nominal general manager & producer office fees, etc etc etc. That number could be between $400K for a tiny play or $1 million++ for a large musical.

 

 


After you break even on the weekly running cost, any additional money goes towards paying off the capitalization. So if you cost $600K a week to run and you earned $900K last week, that's $300K of profit; if it's an 18 million musical, at that rate it could recoup the capitalization after 60 weeks. If you cost $1mil a week to run and you earned $900K last week, you just lost $100K and that deficit comes out of the show's contingency or additional money has to be put up if they want to keep it running. A financial "flop" is any show that does not pay back its capitalization in full. Some shows pay back part of the capitalization before closing. Then, when a show tours or has international productions, there will be a royalty (around 3% of total ticket sales) paid back to the Mother Company (the original Broadway or West End production, wherever it began first). So that is another way for a show to earn a sloooooooooowwwww trickle of money.

It's impossible to know if a number "seems good" without knowing the approximate operating cost per week. For a show that reportedly costs north of $1 million to run each week, like BTTF and WFE, a weekly gross of $850K is bad. For a show that costs $500K a week to run, a weekly gross of $850K is great."



Wow thank you for this breakdown! But where do people look to see the operating costs of shows? It seems like everyone on here knows what those are for shows- is that widely available information??"

 

 

Another part that you have to consider when looking at the Broadway grosses is that there's a portion that's taken off the top before the rest of the money goes to covering operating costs/recouping the capitalization. This includes credit card fees, producer's fees, and a percentage the theatre owner takes to pay the rent. All told, this is about 16% of the gross. So, if a show makes $1M a week, only $840K of that is the "take-home" gross, if you will.

[Ke3]

Posted: 8/20/24 at 5:32pm

ggersten said: "hearthemsing22 said: "carolinaguy said: "This great discussion brings to mind a very specific question I've had about Moulin Rouge since it opened. What kind of negotiation did they do for music royalties? It's not even a catalogue show where they could negotiate with one artist or estate. It's about a billion songwriters. Did they do some kind of package deal that keeps the rights costs manageable?"

Could you ask that about any jukebox musical or would it be a case by case basis? You couldn't say the same for Moulin Rouge! and &Juliet, for example, right?"

Moulin Rouge is more like Rock of Ages - a disparate catalog of songs. &Juliet is just Max Martin so easier to logistically negotiate.

"

Even that is more complicated than it looks. Max Martin is an easy brand name to sell but there are only two songs in that show where he's credited as sole composer. Including the one written specifically for the show (four credited writers). A lot had to happen behind the scenes to make that show work.

[tmdonahue]

Posted: 8/20/24 at 6:18pm

My husband and I published a book in 2010 titled "Stage Money."  It's examples are a little out of date, but it's larger descriptions of legal structures and money flows in the professional theater still hold.  The book still sells.  We were led to research and write the book because we couldn't make sense out of what we read in newspapers and entertainment publications and websites. 

This is self-promotion but I think the book is still one-of-a-kind.  It's a paperback, only 192 pages.  

[Gabriel6]

Posted: 8/21/24 at 7:42am

hearthemsing22 said: "When I look at the Broadway Grosses, I see a show like back to the future grossed over 1 million and I think "that's amazing". But then other people who comment say that number isn't good.

I guess I'm curious as to why, and when people talk about a show "nut", what is that? Is it the number a show wants to hit in order to break even, or keep up their run?

I don't follow the financial details of shows. I'm sorry if this is a stupid question."

Not a stupid question at all! It’s great that you’re curious about how Broadway shows make it work financially.

When people refer to a Broadway show's 'nut,' they mean the amount it needs to earn each week just to cover its expenses—like cast and crew salaries, theater rent, and other costs. So, even if a show grosses over $1 million in a week, it might not be profitable if its expenses are higher. If it earns less than its 'nut,' it’s losing money. While a $1 million gross sounds impressive, it’s important to consider how much the show costs to run.