Shows that Recoup their investment...

[ckeaton]

Posted: 5/4/04 at 9:47am

Thinking about Avenue Q recouping their investment, and with new expensive shows such as Bombay Dreams and the like that probably won't... I have some questions...

When a show announces that it has recouped its investment, does that include the current "advance"...? (i.e. I have tickets to see Avenue Q on May 15th, I've paid for the tickets already... is the pre or post recoup?) I guess it is a factor of accounting. Is the revenue booked at the time of sale, or the time that the curtain rises? I'd assume the previous.

If a show is advancing towards making up its advance, why would producers close it? (Other than loss of space, or change in the upward trend) Has this happened in the past? A show that could be an eventual success, closing early?

There is hardly ever a subsequent investment, right? (I'm thinking of a story I once heard about 'Jane Eyre', didn't someone like Alanis Morisette drop a bunch of cash into it at a late date to keep it open a few weeks more...?)

Maybe these questions are too out there... It's just curiosity, because:
*belting* I wanna be a producer, have a hit show on Broadway.

Updated On: 5/4/04 at 09:47 AM

[WOSQ]

Posted: 5/4/04 at 11:03am

The recoupment does not include the advance. An announcement that a show is expected to recoup by such-and-such a date in the future would be based on the advance sale along with theatre-going trends, but legally and financially a show cannot recoup from the advance. Chickens before they're hatched and all that.

Shows close because they are losing money on a week to week basis. If there are no operating profits, there's nothing to pay off with.

There are two "nuts" (slang for cost): The weekly operating nut--what it costs per week to pay the rent, royalties, salaries, advertising and bills for a show. (Sometimes these are low and sometimes these are very high. Bombay probably has a big weekly nut. Match and Golda's Balcony are comparatively small.) Anything over and above the weekly nut is operating profit and goes toward...

...recouping the costs of getting the show produced in the first place. Once a show recovers this nut, it is said to have paid off and become a 'hit' and the weekly operating profits become profits.

Shows can run for years and never pay off. Jekyll and Hyde ran 4+ years and closed in the red.

Make sense so far? There is a lot more to it, but these are the basics.

One thing to keep in mind about Broadway, its all about the money. "Follow the money", as they said during Watergate.

[ckeaton]

Posted: 5/4/04 at 12:52pm

Very interesting... The later part is understandible, operating costs versus revenues...

But, what about the supposed Jane Eyre syndrome, is it a irregular experience to have a producer, or other interested party throw money at a show to keep it around longer? I assume Rosie did a similar move with Taboo... but I could be wrong.

[JakeB]

Posted: 5/4/04 at 1:30pm

If a producer loves a show, and is very rich, then yes, they'll throw money at it. It's good self-publicity.

[WOSQ]

Posted: 5/4/04 at 1:33pm

There are times when a production will throw good money after bad. For whatever reason, vanity most often, someone will think that a show hasn't found its audience and will pump money into a show to keep it open.

Many times there is a reserve fund to cover such losses especially at the beginning of a show's run or during previews when rewriting expenses can be incurred.

Usually but not always, a show that really has to seek an audience will not have one anywhere (notable exceptions do happen, witness The Wiz) and the money used to try to save a show is lost along with the capitalization. Such emergency loans to shows have first dibs on any profits although they often have no equity/share in the profits.

Jane Eyre's score was written by a friend of Alanis Morrisette's. She 'gave' the show 150 grand to cover additional losses for a few more weeks. She was raking it in at that moment and its a lot more fun to try to save a Broadway musical written by an old friend than to write a check to the taxman.

I'd reckon Rosie was given a figure by her financial people that she could lose and when she got to that figure (10-12 mil), she pulled the plug on Taboo.

Smart producers read the writing on the wall and play out the advance and throw in the towel. Alas, vanity does cloud the vision at times and shows run on and on with producers making up shortfalls until there's nothing left at all.

But then Gypsy is a case in point of a show able to lower its weekly nut substantially. Creative royalties were waived, the rent was cut and Ms. Peters took a cut and the nut dropped by about 75,000 per week.

[ckeaton]

Posted: 5/4/04 at 1:36pm

That's a lot of nuts.
Sorry had to.

[WOSQ]

Posted: 5/4/04 at 1:44pm

Don't you dare not think that all these "nuts" being bandied about didn't strike a spark in my fevered and smutty imagination.

Sadly but usually the "nuts" one gets in the theatre are drunks, tenors, divas or some combination thereof.

Shame on us. Things were going along swimmingly and oh so seriously too.

[ckeaton]

Posted: 5/4/04 at 1:46pm

But seriously folks...
M. WOSQ has some insightful information.
Bravo.