Stage Money

Sizing Up the New York Not-For-Profits

2010-07-26T16:53:00.008-04:00

The Alliance for the Arts has published a list of the 100 biggest not-for-profit cultural organizations in New York City, measured by budget. Nine theater producing groups are in the top 100, suggesting the relative importance of theater in the cultural life of NYC. Some theater-related organizations also made the cut. In the top 100 the producing theaters are:

Ranking	NFP Theater Organization	Budget
17	Roundabout Theatre Company	$50 million
24	Lincoln Center Theater	$34 million
30	Manhattan Theatre Club	$22 million
33	Public Theater/New York Shakespeare Festival	$20 million
54	Playwrights Horizon	$9 million
65	Second Stage Theatre	$7 million
74	Atlantic Theater Company	$5.9 million
81	Theatre for a New Audience	$5 million
90	New York Theatre Workshop	$4.7 million

In addition, one of the top 100 produces children's theater that plays in NYC and tours across the country, Theatreworks USA with a budget of $13 million at number 40. Some additional organizations present some theater but are probably best considered to be road houses, presenters of touring productions, music, and dance. This description as road houses is not to denigrate these organizations. Some of what they present is very important to the theater life of New York City and the US. These include the Brooklyn Academy of Music (21st with $36.8 million), the New York City Center (34th with $18.7 million), the New Victory Theater (45th with $11.8 million), and perhaps the Apollo Theater (52nd with $10 million).

Also on the list, at number 46, is the Theater Development Fund (TDF) with a budget of $11.5 million. TDF, which was founded in 1967 to promote the performing arts, is a theater oriented service and advocacy organization dedicated to the advancement of for-profit and not-for-profit dramatic, music, and dance productions. TDF's best-known initiative is the TKTS ticket booths which offer day-of-performance discounted tickets to performances in New York.

The biggest NYC cultural organization is the Metropolitan Museum of Art, with a budget in excess of $309 million. And the biggest number of top 100 cultural NFPs are museums, about 35 of 100. ("About" depends on how one defines a museum.) The next biggest chunk are organizations presenting classical music, dance, and opera; they make up another 19. These totals are offered to give the rankings of theater producing groups some perspective.

Attention Students!

2010-07-08T09:29:00.001-04:00

If any students read this blog, they need to know about http://www.studentrush.org/. This new site brings together links to discounted and free tickets for theater, dance, museums, film, etc. Good source for leads on lower cost admission to cultural events.

Take Two International Stars and a Pound of Press Releases

2010-07-04T13:56:00.007-04:00

The formula is being trotted out again. Two great stars—Vanessa Redgrave and James Earl Jones—will revive Alfred Uhry’s Driving Miss Daisy for a limited Broadway run scheduled to open at the Golden October 25. While the “star-studded package” has been applied to straight plays for decades, it has hardly ever been employed more consistently than in the past five years. As noted in the post before this one, last season four productions used the tried-and-true recipe to earn back their investments in short runs.

Redgrave and Jones are more than international names. They are theatre artists who have repeatedly won kudos for stage work. Redgrave was last on Broadway in 2007's one-woman play, A Year of Magical Thinking. Jones played Big Daddy in the African-American cast revival of Cat on a Hot Tin Roof in 2008. Both shows recouped their investment in New York and went on to play London. Casting these actors for any play is not a cynical choice driven only by potential for profit.

While the star formula--and its application--may be good for the bottom line, this blueprint sometimes cheats patrons, many from across America. We wanted to see the prize-winning Reds but its 12-week run without extensions meant that we could not make it to Broadway because of other commitments. The producers won but some potential audience members lost.

Elsewhere in this blog we've written about the financial impact of stars, demonstrated especially when a star gets sick or takes a vacation. And if a show whose box office relies primarily on the appearance of stars is to continue to run when the stars' contracts expire, then star replacements are needed. See, for example, the casting of Bernadette Peters and Elaine Stritch as replacements for Catherine Zeta Jones and Angela Lansbury in the current revival of A Little Night Music.

Driving Miss Daisy--a three-character play with little staging needs--has never played Broadway before. It opened in April 1987 at the not-for-profit Playwrights Horizon and transferred to an off-Broadway run at the John Houseman Theater. It became a movie in 1989 that won four Oscars. On stage, the two lead roles were played by Dana Ivey and Morgan Freeman; in the movie, Jessica Tandy took the part of Miss Daisy. The play won the Pulitzer Prize, for whatever that honor is worth. The history of the Pulitzer Prize in Drama is riddled with dubious choices. Although no one was clambering for a revival of Driving Miss Daisy, this production may attract an audience. The wonder of Broadway is, one never knows.

Is there room for shows on Broadway without stars? Last season's Next Fall (photo on right) earned strong critical reviews when it opened off Broadway. But the producers ignored the star formula and opened in an appropriately small theatre with the original cast. No stars, no run, and a 100% loss of investment. Similarly, the revival of the musical Ragtime transferred from the Signature Theatre in Washington, DC, got glowing reviews but it had no stars and closed with a loss of its investment. Folks who saw these two shows report they lived up to their strong reviews--at least, we report so.

2009-2010 Season Recap and Finishing with 2008-2009

2010-06-10T10:32:00.008-04:00

The Broadway season ended May 23. Income was up a bit; attendance was down a bit. Thirty-nine new shows opened in the 2009-10 season compared with 43 in the 2008-9 season. The decline in new productions was mostly caused by a reduction in productions from the three not-for-profit Broadway theaters, the so-called "super-NFPs," who opened 10 shows last season, compared to 15 the prior season.

There were 29 commercial openings on Broadway last season. Variety declared four shows to be "hits," meaning the investors received their investment back. The shows were Hamlet, Race, A Steady Rain, and A View from the Bridge. Each of these shows featured at least one performer well-known from television or film. Half were new scripts and half were revivals. None were musicals.

Another 14 shows were declared "too soon to tell," meaning they had not paid back their investors by the end of the season but were still running so could recoup in the next season. The number of "too soon to tell" shows tends to be high because the Tony Awards coming in mid-June motivate some producers to open shows late in the season. Only with the coming months will we know which of the 14 become hits. "Misses," shows that closed without paying back their investors, totaled eleven. These are productions that Stage Money: The Business of the Professional Theater calls "flops."

Big hits continued in the 2009-2010 season to rake in the bulk of ticket sales. Of a total of 71 shows running sometime during the season, the top 18 shows accounted for over 70 percent of Broadway revenues. All of these were musicals except for the play God of Carnage which grossed $28.7 million during the season.

With the Variety recap, we now know what became of almost all the "too soon to tell" shows--called "holdovers"--from the 2008-9 season. There were 16 holdovers at the end of the season. One show is still running and still hasn't paid back so is still too soon to tell: Rock of Ages. Of the other holdovers from the 2008-9 season, six are hits. Of those, four are still running: Billy Elliot, Hair, Next to Normal, and West Side Story. One other hit, The 39 Steps, transferred from Broadway to a commercial off-Broadway run when its ticket sales went below the "stop clause" in its Broadway theater license. Nine of the holdovers closed without paying back their investors.

The hit percentage for the 2008-9 season was 27.9 percent. How does the 2008-9 season compare with the eight seasons tracked in Stage Money? A little lower than average. We found that between the 1999-2000 season and the 2006-2007 season, hits averaged nearly one-third of commercial Broadway openings. This difference is not significant in itself, however, because there was great variety in the season outcomes Stage Money tracked. For example, the 2003-2004 season had only 20 percent hits. The 2005-2006 had over 40 percent hits.

The numbers of openings is so small that a single show success or failure can change the look of this statistic. For example, should Rock of Ages, the remaining show that is too soon to tell from the 2008-2009 season, pay back its investors, the hit percentage for the season would be 30.2, very close to Stage Money's average over six seasons of 32.3 percent.

There Are Many Ways the NFP and Commercial Theaters Can Dance

2010-05-24T11:53:00.005-04:00

In a chapter of Stage Money titled "Shall We Dance: The Commercial and Not-for-Profit Relationship," we explore the many ways that the commercial theater--namely, Broadway and touring--and the NFP theater are connected. A May 16th article in Sign On San Diego, a web presence of the San Diego Union-Tribune, laid out the breadth of the connection as it manifested itself in two shows that played in San Diego NFP theaters and have gone to or are going to Broadway. The piece by James Hebert is titled "Diversionary Theatre Basks in Broadway Glow."

Hebert compares the Diversionary Theatre's staging of Yank! which is slated to open on Broadway next season with La Jolla Playhouse's developmental staging of Memphis, currently on Broadway. As Sign On puts it, "If 'Memphis' rode a rocket from San Diego to Broadway, 'Yank!' took Manhattan by Greyhound bus."

First, the rocket. La Jolla has three stages, ranging in size from 388 to 492 seats, an annual budget of about $15 million, and has developed many shows that wound up with Broadway runs. In addition to Memphis, La Jolla has developed successful Broadway shows like Jersey Boys, The Who's Tommy, Big River, and I Am My Own Wife, and Broadway flops like Jane Eyre and Dracula, the Musical.

As noted in Stage Money, La Jolla usually enters into enhancement deals with Dodger Productions, a Broadway producer. In an enhancement deal, the producer makes a donation, enhancement money, to support a production in a NFP theater which the producer wants to bring into New York. Enhancement money can be substantial. Jersey Boys, for example, received $900,000 in enhancement money. When the deal is right, both sides benefit. The commercial producer gets to see the material before an audience for a lot less money than a Broadway opening or even a commercial out-of-town tryout. The NFP gets a bigger budget than normal, the excitement of premiering a new script, and the potential to receive a small share of the gross of the commercial run. For Jersey Boys, La Jolla received one percent of gross receipts up to recoupment and one-and-one-quarter percent after. As of the week ending May 16, 2010, Jersey Boys has grossed $260.5 million on Broadway alone.

The website for Memphis describes the story in breathless style:

He's a young, white radio DJ named Huey Calhoun (Chad Kimball), whose love of music transcends race lines and airwaves. She's a black singer named Felicia Farrell (Montego Glover), whose career is on the rise, but who can't break out of segregated clubs. When the two collaborate, her soulful music reaches radio audiences everywhere, and the Golden Era of early rock 'n' roll takes flight. But as things start to heat up, whether the world is really ready for their music - or their love - is put to the test.

StageGrade, a site that scores and averages reviews for New York shows on and off-Broadway, gave Memphis an average grade of B. The musical has been nominated for eight Tony Awards. As of the week ending May 16, having run for 34 weeks, Memphis has grossed more than $19 million.

The Diversionary Theatre which staged Yank! in 2008 is in a different league than La Jolla. Diversionary bills itself as the third oldest gay, lesbian, bisexual, and transgender focused theater company in the US. It runs one theater, seating 106, on a $600,000 annual budget.

The Yank! website describes the show thus:

YANK! is a love song to Hollywood's "it takes one of every kind" platoon flicks and to 1940s Broadway. Suffused with songs (swing, big band, boogie-woogie) it explores what stories get told in wartime, and how WWII became the great catalyst in bringing gay men and women together.

One San Diego reviewer raved, "Diversionary’s fun Yank! is as good a show as it is an idea… Yank! wins on virtually all counts, putting a fun and human face on gender identity at a time this culture couldn’t begin to fathom its import."

Before San Diego, the musical was staged by the Brooklyn NFP Gallery Players in 2007 and at the NY Musical Theatre Festival in 2005 where it won the audience award for best musical.

In March 2010, with some enhancement money, Yank! opened off-Broadway at the NFP York Theatre Company at a cost of about $450,000. Writing in Variety, Steven Suskind raved, "'Yank!' is the most intriguing new American musical to reach New York in several seasons.…'Yank!' is a bright, original and moving winner of a musical that earns its exclamation point." StageGrade's average of 15 reviews for Yank! was a B+. It was nominated for a number of Drama Desk Awards but received none.

Now Yank! is slated to go to Broadway with the hot Chicago director David Cromer set to direct. The star role is played by Bobby Steggert, who has been nominated for a Tony for his performance in the revival this season of Ragtime. The budget is low by Broadway musical standards, about $5 million.

On Broadway today, that probably passes for bus fare.

The Book Is in Print

2010-05-22T09:46:00.004-04:00

Stage Money is available now from USC Press and should be available from Amazon in a short while. Hooray!

The cover includes a quote from Steven Adler, author of On Broadway: Art and Commerce on the Great White Way and Provost of Earl Warren College at UC San Diego:

"Stage Money offers a concise yet deftly drawn introduction to producing professional theater in America. The authors wisely situate the world of producing in the larger landscape of doing business in America, and the result is an eminently readable and intelligently written addition to the literature."

It's about the Budgets, Stupid

2010-05-16T11:03:00.002-04:00

"Budgets" is not a misprint in the title of this post, for a commercial theatrical production has two budgets, the start-up budget that covers everything up to opening night and the operating budget, the weekly "nut" that the box office must bring in to let the show break even for that week. Some producers maintain that the start-up costs are less important than the running costs. With low enough running costs and sufficient demand for tickets, one can pay off even large investments. What if both budgets are record-settingly high?

Michael Riedel of the New York Post wrote again last week about the travails of the musical Spider-Man: Turn Off the Dark. If you've been following the story, the Julie Taymor-directed, Bono and the Edge of U2 fame-composed comic book musical was making structural changes in the Hilton Theatre for the show to go into rehearsal but in January 2010, the producer discovered there wasn't enough money from investors and the construction stopped. According to Riedel in his piece "Spider-Man's sticky figures," the show is on again, still with an estimated start-up budget of $50 million, by far the largest investment of any Broadway show in history. Bono brought in a Canadian concert promoter, Michael Cohl, to take over the producer's reins.

Riedel also reports that the operating budget for the show will be $850,000 a week before royalties, making the weekly nut more than $1 million including royalties. In the week ending May 9, 2010, only seven of the 35 shows running on Broadway grossed more than $1 million. The musical beloved of tween girls, Wicked, had the highest grosses, just more than $1.5 million in its sixth year. Wicked's start-up costs were about $13 million and it recouped in 14 months. Should Spider-Man make $1.5 million weekly grosses consistently, it could pay back its investors in two years or so.

But Riedel reports that the Broadway Spider-Man is not interested in payback in New York City alone but is really intended to establish the brand name so the show will then tour. But the show is not planing to tour in the usual musical touring venues with 2,000 to 3,000 seats, but in coliseums with 10,000 seats and more. In addition to the huge number of seats in those venues, the show is described as a sort of Cirque du Soleil extravaganza, the sort of show that could not tour in legit houses. The scenery and special effects wouldn't fit.

Maybe the show will work in coliseums. Bono's band U2 is one of the most successful touring acts in the world. The latest tour, lasting in three segments from June 2009, through October 2010, is on track to gross $750 million.

Riedel quotes a producer not connected with the Broadway Spider-Man, "'They're trying to sell it as a rock concert. ...But you're not going to sell out a 10,000-seat basketball stadium unless Bono and The Edge are playing the songs. Basically, it's gotta be a U2 concert. Nobody's going to sit in nosebleed seats to see a Broadway musical.'"

As they used to say on the evening news, time alone will tell.

The Value of Stars on Broadway

2010-05-16T10:22:00.005-04:00

We've noted previously here about star salaries on Broadway and the impact of stars on Broadway box office. We noted that when David Hyde Pierce went on vacation from the Kander and Ebb so-so musical Curtains box office grosses for that show dropped by $240,000 a week. Today's New York Times reiterates the subject, demonstrating again that stars are potent marketing tools for the commercial theater. In an article called "The Cost of Stardom" the Times notes that when Catherine Zeta-Jones went on vacation from the currently running revival of the Sondheim and Wheeler musical A Little Night Music, box office grosses dropped from $917,526 to $485,701, a drop of more than $430,000. That's a plunge of nearly 47 percent!

Note that the percentage of available seats sold declined only a little bit, from 94 percent of house to 91 percent. But average ticket price dropped from more than $143 to just less than $72. The list prices for A Little Night Music range from $52 to $137. When Ms. Zeta-Jones was appearing on stage, the theater sold some premium tickets, whose prices range from $237 to $367. But when she was on vacation, the theater discounted a lot of tickets, probably on the TKTS booth.

Discount tickets for the show were not available on the TKTS lines last week, according to the Theatre Development Fund website. For the week ending May 9, 2010, A Little Night Music filled more than 93 percent of seats with an average ticket price of a little more than $115.

A Fantasticks Return

2010-05-03T10:46:00.001-04:00

In our book Stage Money, we note repeatedly that the little off-Broadway show The Fantasticks has been an outlier--a very unusual example--in the financial history of commercial theater in America. An article in today's New York Times confirms the rarity of the Jones and Schmidt musical once again. Here on the "Stage Money" blog, we will extend the gray lady's analysis.

The piece by Patrick Healy, entitled "'Fantasticks' Pays Back for 50 Years," focuses on one couple who invested in the original production in 1960. (On the web, you'll miss the great subtitle in the print edition: "For a Small Investment in 1960, the Checks Follow, Follow, Follow.") Marjorie and the late Malcolm Gray have received checks from their original $330 investment for fifty years and will be entitled to a share in subsidiary rights for another ten years. In all, over fifty years they received about $80,000 total, an average of $1,600 per year. Mrs. Grey notes, "We would've been happy to earn our $330 back and get free tickets to a couple of performances, but the 'Fantasticks' money helped put our three children through college and paid for trips to Guatemala, Costa Rica, Israel. It's certainly been handy to have around for 50 years."

What do we have to add? First that the Grays had the right idea to begin with: investing in the commercial theater is highly risky and one should be prepared to lose one's entire investment. Payback is a small victory in itself and then there are the intangible benefits, such as attending a show you helped finance.

To understand the Gray's returns, we really need to look at the effect of time. Their original 1960 investment of $330 would be the equivalent of $2,330 in 2010, using the CPI as a measure of inflation. More important is the average compounded rate of return the investors received. This is to say, if the Grays opened a bank account of $330 in 1960 and took out neither capital nor interest and today the account held $80,000, this is the interest rate the bank would have had to offer. But no bank has ever offered anything near this interest rate. The average compounded rate of return for investing in The Fantasticks for fifty years has been 111.6 percent per year. This is a rate of return that few investments ever match.

This example supports the contention of Stage Money: the risk of investing in the commercial theater is high but the returns on successful investments appear to be commensurate with the level of risk.

Broadway Theater Owners and Their Influence

2010-05-02T13:40:00.003-04:00

The New York Times has an interesting article today about the problems producers have now in licensing a Broadway theater for a show, because so many are dominated by long-running hits. But the piece leaves out an important detail that Stage Money reveals. The oligopoly of theater owners restricts the competitiveness and thus the future of commercial Broadway theater. And our claim about the constraint resulting from Broadway theater ownership patterns was echoed by a venerable producer in a recent interview.

Start with the basic numbers. There are now 40 Broadway theaters, ranging in size from the Helen Hayes with 597 seats to the Gershwin with 1,933 seats. Five of the Broadway theaters are owned or operated by not-for-profit organizations. The Shubert Organization owns and operates 17; the Jujamcyn organization owns five; and the Nederlander organization owns nine. One is leased by the city to the Disney Corporation, one is owned by Key Brands Entertainment and the remaining two are independent. Of the 35 commercial Broadway houses, only 11.4 percent are independently owned. The remaining 88.6 percent are held by just three entities. This is the "elephant in the room" that the Times article ignores.

The Times piece by Patrick Healy, "In Broadway Lights: No Vacancy," starts by noting that the late Horton Foote's trilogy, The Orphans' Home Cycle, had the investors lined up for a Broadway transfer but couldn't find an appropriate theater. Fifteen of the 40 Broadway theaters, Healy writes, are occupied with long-running shows like The Phantom of the Opera, Billy Elliot: The Musical, Mamma Mia!, Jersey Boys, The Lion King, In the Heights, Chicago, and would-be long-running shows such as Come Fly Away and Hair. Meanwhile two delayed shows have tied up two more theaters, Spiderman: Turn Off the Dark for the Hilton Theater and Love Never Dies, the Phantom of the Opera sequel, for the Neil Simon Theater.

For producers, it's not just finding a theater, but finding the right theater, meaning one that is large enough for the budget, small enough for the play in some cases, and attractive to directors and stars.

Philip J. Smith, chairman of the Shubert Organization, told the Times, "I've never seen it more competitive, or the supply-and-demand imbalance more stark."

As Stage Money points out, Smith should know about supply-and-demand. Between the Shubert Organization, Jujamcyn, and Nederlander, their exists an oligopoly on Broadway theaters. An oligopoly exists when a small number of suppliers control the bulk of supply of a good. Not as potent as a monopoly, an oligopoly can still control prices, even without direct collusion.

In the January-February 2010 issue of The Dramatist, the journal of the Dramatists Guild, Emanuel "Manny" Azenberg is interviewed about being a commercial producer. Azenberg produced many successful Broadway shows and is best known for being Neil Simon's producer. "There was a real balance, I think, probably from the 1920's through somewhere in the 1970's. There was an equilibrium between all the economic forces: the unions, the guilds, the theatre owners, the producers," Azenberg told playwright David Ives. "The theatre owners took themselves out of the equation, ... Now there are three theatre owners and it's a tripartite oligarchy....[I]n the long run it's that imbalance that screws everything up."

Azenberg traces this change to the miserable period in the early 1980s when Broadway theater was in deep financial difficulties and many producers found they couldn't compete. The theatre owners stepped in, investing money in productions that sometimes they suspected wouldn't make money for the investors but would make money in license fees--i. e. "rent"--for the theatre owners. The owners saved the Broadway theater you might say, but they also made money for themselves and realized their bargaining power. After that period, Azenberg maintains, "[Y]ou didn't negotiate a contract, they [the theater owners] dictated their contract. It's the same today. It used to be competitive. It's not anymore."

Studying economics is frustrating for many students but economic principles underlie business, even show business.

What Is a Broadway Theater Worth?

2010-03-28T20:02:00.006-04:00

That is, what is a Broadway theater building worth?

In Stage Money, we use some public figures to estimate the value of a Broadway theatre--read the book to find out what sources--and estimate the value of a Broadway house as being between $6 million and $20 million. A recent article by Michael Riedel in the New York Post, "The Broadway Gem You Will Never See - Unless You Pray," suggests our estimate may be low.

The reasons the value of a Broadway house is important is detailed in a section of Stage Money titled "Broadway and the Shubert Interests." We report there that the NFP Shubert Foundation in its IRS filing in 2005 puts the fair market value of its wholly-owned for-profit business, the Shubert Organization, at a little over $49 million. The Shubert Organization owns 17 Broadway theaters, plus the Telecharge ticketing service and interests in varied proportions in three theaters elsewhere in the US. The Broadway theaters that the Shubert Organization owns are worth then on average less than $2.9 million each ($49 million divided by 17 theaters). There are many co-op apartments in NYC that are priced higher than that! Because the unusual relationship between the NFP Shubert Foundation and the commercial Shubert Organization may be an example of what economists call a "moral hazard," the issues of values and profits and their distribution is a matter of concern. The discussion is too long to repeat here; read the book.

Riedel writes in the Post about the former Mark Hellinger Theatre which since 1989 has been the interdenominational Times Square Church. First leasing the theatre, the church bought it in 1991 for $17 million. Using the CPI as a measure of inflation, that purchase price is about $27.5 million in 2010 money. The church has refused offers to buy the building. Producers estimate its value as about $40 million today. Broadway theaters are worth more in today's cleaned-up theater district than they were in the dismal 1980s-1990s.

Of course, the only true way to know the value of real estate is to witness an arm's length sale. Every piece of real estate has a unique value and since the sale of the Hellinger, almost no Broadway theaters have sold individually. Moreover, the Hellinger is considered a gem of a theater. This is the theater that hosted the original production of My Fair Lady. Philip J. Smith, chairman of the Shubert Organization, told Riedel, "It [the Mark Hellinger] is the theater to have. We chased it twice, but the church wouldn't sell. If they ever do, you can put us at the head of the list." It seats 1,600 and has a 45-foot deep stage. Today, the largest capacity Broadway theater is the Gershwin, owned by the Nederlander Organization, which seats 1,933. Only nine of the 40 Broadway houses seat more than 1,600. Three of those are owned by the Shubert Organization.

As we've noted before, Michael Riedel's column is a great place to find information about the business of the New York theater. We recommend it.

Defining Professional NFP Theatre

2010-03-20T11:53:00.003-04:00

In Chapter 6 of Stage Money, we layout the problem of defining professional not-for-profit theater. The NFP part is easy, since NFPs must have a 501(c)3 certification from the IRS. The word "professional" is trouble. In the NFP theater world, there are troupes that are clearly amateur, where no one--or almost no one--is paid. Then there are theatres, such as the members of the League of Resident Theatres or LORT, where at its highest standing, LORT-A, everyone is a member of a professional union. Such LORT theatres are clearly professional. Between these extremes is a continuum of different mixes of volunteer and professional.

We've just read a 1995 article by Joan Jeffri, "Nature's Journeymen: The Education and Training of the American Artist," available at Columbia University's Research Center for Arts and Culture site, that offers a structure for considering the definition of professional. Jeffri identifies three different definitions of professional which she says are "constantly being meshed, confused, or used interchangeably." They are

Occupational measures, such as, hours worked and money earned,
Credentialing, holding a license to practice a profession, such as, a lawyer passing a state bar exam, and/or
Quality of work performed.

In Stage Money, we identified membership in the Theatre Communications Group or TCG as the closest clear and distinct identifier of professional NFP theater status. This mark of professionalism is not the same as credentialing but resembles it in some ways. Using TCG as a proxy for professional NFP theater is far from perfect, as the book discusses. For just one example, 18 of the 77 LORT theaters have not chosen to be members of TCG.

When friends reviewed early drafts of Stage Money, the use of this proxy was controversial for some. We now realize the problem was that our friends had an unspoken definition of professional as reflecting the "quality of work performed." One actually said, "I've seen the work of --------- theatre. It may belong to TCG, but it's not professional." If we had Jeffri's parsing of the definition of professional, we might have engaged our friends in a more meaningful discussion of professionalism in the NFP theater.

As to the quality of the art created by America's NFP theaters, we are not qualified to judge. What night was the company unprofessional in quality? What production? What play? All the time? Never? We don't think anyone is qualified to attest to the quality or lack of quality of even a few NFP theaters let alone all. And if anyone did, he or she would surely get a battle from others who had the opposite opinion.

Who Works Off-Off-Broadway?

2010-03-05T10:40:00.004-05:00

The Innovative Theatre Foundation has conducted a number of interesting and important surveys about off-off-Broadway. The most recent survey, "Demographic Study of Off-Off-Broadway Practitioners," dated January 2010, looked at the artists and staff who work off-off-Broadway. They collected over 4,000 completed surveys. That's an impressive number but the survey cannot be considered representative of the universe of off-off-Broadway workers because the survey distribution wasn't random. Be that as it may, the Innovative Theatre Foundation's data are the best available.

The survey found that off-off-Broadway workers resemble the averageUS resident a great deal, in terms of average age, breakdown of percentage by gender, and yearly income. The income finding is a conundrum, as only ten percent reported work in theatre as their sole source of income. Also, just over 50 percent of respondents live in Manhattan, where a US average income is not enough to live an average lifestyle.

The off-off-Broadway community has fewer African-Americans than the US population: five percent vs. twelve percent. The OOB folks are less than half as likely as the national population to be married and much less likely to have children living in their households. OOBers are much better educated than the US population, with 85 percent holding a college degree. The US percentage of college educated adults is 27. Nearly one-third of respondents belong to Actors Equity, with another 16 percent belonging to other theatrical unions, such as American Federation of Musicians, Dramatists Guild, IATSE, Society of American Fight Directors, Stage Directors and Choreographers Society, United Scenic Artists, and others.

We wrote about an earlier survey by the Innovative Theatre Foundation here.

A Recommendation

2010-01-27T12:19:00.010-05:00

Michael Riedel (pronounced reed-el) writes a column for the New York Post about theatre that is not just the usual stuff. Sometimes he shares juicy gossip; other times, he writes about turning points in the business of bringing a show to the commercial theatre. Some examples from just the last 4 weeks:

An account of a backers' audition for the Alan Menken musical Leap of Faith. The musical is based on the 1992 Steve Martin film.
Garth Drabinsky, awaiting sentencing in Canada for investor fraud connected with his theatre producing company Livent, was trying by phone to save the run of the Broadway revival of Finian's Rainbow. The revival, produced by David Richenthal, Jack Viertel, and Alan D. Marks, received strong reviews but built little box office, closing January 17th after 15 weeks and grossing $7.8 million. (We saw it. The material is old-fashioned but this staging, developed out of an Encores! performance, was charming. Jim Norton (Finian), Kate Baldwin (Sharon), and Christopher Fitzgerald (Og) were excellent. As Woody, Cheyenne Jackson is phenomenal: good looking, masculine, a superb singer, and absolutely relaxed on stage.) Drabinsky can't enter the US without being arrested for the Livent debacle.
Riedel has written about the financial problems of Spider-Man, Turn off the Dark a few times. In a piece published January 11, he reports that the show, directed by Julie Taymor with music by Bono and the Edge, is back on, opening sometime in the fall. It's still estimated to cost $50 million, by far the most expensive show in Broadway history.
With the show in trouble in its Chicago try-out, Riedel reported on December 28th that several principals for The Addams Family musical left the windy city for vacations in warm climates.

Reidel's columns are available on the internet at http://www.nypost.com/columnists/michaelriedel. He also appears on a Channel 13 interview show, Theater Talk, which is now in syndication and may play in your market. Highlights are on http://www.youtube.com/theatertalk. He's worth following if you care about the theatre.

Good News

2010-01-21T10:48:00.003-05:00

This blog is about the business and finances of the professional theatre, so this post is off-topic. But I had a small epiphany last week I want to share.

I was in NYC to see some theatre, go to museums, eat some good meals. As I entered the hotel elevator with the New York Times, a gentleman asked, "Any news?" I glanced at the front page, dominated by a photo of the destruction in Haiti. "As they say," I replied, "No news is good news."

As the elevator rose, I turned first to the the Arts section as I always do. Suddenly it occurred to me that the arts are the closest thing we can readily find to good news. Even a theatrical tragedy makes the heart well up at the thought of human creativity crafting a moment of completeness, a story that unlike real life has a wholeness. For those of us who love any of the arts--my favorite is theatre--the experience of the arts is usually the only good news readily available.

NFP Theatres Saw Trouble Even Before the Recession

2009-12-30T10:55:00.006-05:00

It appears that the stress of the coming recession was affecting not-for-profit theatres before anyone used the "R" word.

Theatre Communications Group (TCG) released its latest survey of member NFP professional theatres. The survey covered fiscal years ending between November 2007 and September 2008. Theatre Facts 2008 in pdf format can be viewed here. Sarah Hart, writing about the report in the November 2009 edition of TCG's magazine American Theatre, noted that "not-for-profit theatres can often be like canaries in the coal mine, the first to show the effects of a poisonous environment."

The 2008 survey showed more than half of surveyed theatres ended the year with a budget deficit. In the five years before the opposite was true, most theatres ended the year with a surplus. Cash reserves were the lowest in the past five years when adjusted for inflation. Earned income dropped 7.2% between 2007 and 2008. Expenses rose; payroll for example went up 12.5% over inflation. With expenses rising, the percent of budget covered by earned income fell to 56.5% from 65.2% the previous year. And average endowment income was down.

The managing director of People's Light & Theatre Company in Malvern, Pa, said "I don't think we've ever seen anything like this. This year feels worse than 1990. I'm hopeful, but we may still have hard years ahead." In their 2008 IRS filing People's Light & Theatre reported revenues of $5.6 million and expenses of $4.6 million. Only 30% of income was earned income. It held assets worth about $6.5 million, a little over one year's budget. This is not a theatre in crisis, but it is worrisome that so much of its budget is covered by donations and grants.

The Impact of Brands in Theatre

2009-12-29T10:58:00.008-05:00

Our book, Stage Money, notes that making money on Broadway or off-Broadway is not the only concern of a producer. Another need is to create a brand that can be exploited on the road and in regional theatres. Producers would like always to make money in New York, but they can see long-term returns for shows that at least create an image in the minds of local presenters and artistic directors. On November 20, Variety noted that for writers, too, a brand can mean money down the road, even if the NYC production closes at a loss to investors.

Robert Hofler's piece, "Life after death on Broadway: Even flops make money in amateur, stock productions," quotes Joe DePietro, book author of the Elvis Presley musical All Shook Up. Shook grossed over $12 million in 32 weeks on Broadway in 2005, rarely running at 75% or more of house. Ben Brantley reviewing the production for the New York Times declared "Yet another synthetic jukebox musical opened last night on Broadway, fresh off the assembly line" In its annual tote of Broadways hits and misses, Variety called All Shook Up a miss, meaning it did not return its investors' money. DePietro says, "I made tens of thousands of dollars from my first quarterly royalty check for the stock and amateur rights. I could barely make a living with 'All Shook Up' on Broadway. I bought a nice country house [from] 'All Shook Up' in stock and amateur."

The 2000 Broadway flop Seussical gets more than 700 productions annually in the US. Of the 2006 flop The Wedding Singer (picture on left), composer Matthew Sklar says, "It hasn't made me a rich person, but it has allowed me to write two more shows in the last two years. There are usually 60-70 productions of 'Wedding Singer' being planned at a time." The off-Broadway succès d’estime musical The Last Five Years is the financial "bedrock" of composer Jason Robert Brown's career. "If the only validation I got in this business was from the reception of my shows in New York City, I'd be doing something else by now," he said.

Note that usually producers and investors share in royalties for professional productions for 18 years after the first-class production opens but typically do not share in amateur rights.

By the way, I'd post a link to the Variety article, but Variety has essentially closed down its website to all but paying customers.

It Could Be Worse for the Arts; Like Sports

2009-12-22T08:23:00.006-05:00

Anyone who has seen Avenue Q—and if you haven't, you should—knows the meaning of the word schadenfreude. It's one of those German portmanteau words, combining the word for "sorrow" and the word for "joy." It means to take pleasure in someone's misfortune. I think of a quote attributed to Clarence Darrow, the mid-20th century lawyer for liberal lost causes: "I have never killed a person, but I've read many obituaries with great pleasure."

All this is a lead-in to write about an essay by Mike Boehm in the Los Angeles Times concerning the NEA's "Survey of Public Participation in the Arts." Boehm's article, titled "The arts see encouraging news in NEA survey," can be found here. The only encouragement in the NEA survey I can see is that some findings are an occasion for schadenfreude, although Boehm doesn't use the word.

Some parts of the survey were released by the NEA last summer. Those findings are reflected in the Afterword of Stage Money, by the way. The whole report was published November 2009.

The overall finding is that attendance at all arts is down by 4.4%, compared to the survey the NEA conducted six years before. Two arts categories did increase, non-ballet dance performances and musical theatre. The musical theatre as a percentage of the population went down a smidgen but population growth increased the total number of attendees. Since the NEA's first survey in 1982, attendance at musical plays declined from 18.6% to 16.7%. For non-musical plays, the decline was more modest: from 11.9% to 9.4%.

What's the encouragement here? It's this: attendance at sporting events went down even more, from 48% in 1982 to 30.6% in 2008.

I don't find this encouraging. Sports are encountering the same pressures on audience numbers as the arts: competition from television and the internet and to some extent a reduction in free time and spending money.

A principal with AMS Planning & Research, a consulting firm advising performing arts centers, is quoted in the LA Times piece, saying, "A lot of times sports is better on television -- instant replay, the comfort of your chair, the close-ups. An arts experience is essentially a live experience, and it's an intimate experience. I think that's helping to keep people going."

Amen.

The Sudden Death of Brighton Beach Memoirs

2009-11-06T09:02:00.008-05:00

It's always sad when a show closes in its first week on Broadway. Brighton Beach Memoirs grossed no more than $125,000 a week in sales during previews, not enough to cover running costs. The $3 million investment in the revival is lost. People in the business are asking "Why?" partly as forensic discovery: they want not to make the same mistake in the future.

The November 1 NY Times article by Patrick Healy "Neil Simon Flop May Be a Case of the Missing ‘Wow’" was an example of reasons being as plentiful as blackberries. No big star, like Jude Law in Hamlet. No marketing campaign creating the impression that this revival was a not-to-be-missed event. No wow factor. Comedy has changed since the playwright Neil Simon's heyday. The economy has made audiences more choosy about spending $100-plus on a play.

The Culture Monster blog for the LA Times by James C. Taylor, also dated November 1, covers some of the same ground but is more concise. "Everyone knows that the old days of premiering a play on Broadway without a big star are over. Neil Simon used to be a star. He had the kind of name recognition to alone spur tickets sales — but those days are long gone." Taylor sums up the production that opened as "strong if not scintillating."

Michael Riedel writing in his column in the November 4, NY Post puts out new information, suggesting the damning fault that caused the failure could be the NY Times itself. Not its critic but its advertising department. The paper offered the show weeks of ads in the paper and on its Web site at steep discounts. In exchange the paper wanted exclusivity. Brighton Beach Memoirs couldn't advertise anywhere else until after opening night. Most producers know that multiple approaches to advertising are needed. Many producers are openly questioning the value of large ads in the NY Times, a media outlet that was once considered essential for theatre productions.

The real reason for the failure: all of the above. When we have read of certain upcoming revivals in the past, we have sometimes asked, "Who cares about another company of. . .? " You fill it in from your own list. Ours might include from recent years Grease, Hair, A Chorus Line. The first two of this short list made a profit and the third probably broke even, although we didn't want to see them. The idea of a no-star revival of a Neil Simon play on Broadway seemed like a loser to us from the get-go. On the other hand, one must be prepared to be surprised. We were not the only theatre-lovers who were stunned at the joy in the riotous--and profitable--revival of Boeing-Boeing. When it comes to new productions, revivals or new material, the risk of financial failure is very high. So it is with all new businesses, a topic covered in detail in Stage Money, still scheduled for May 2010 release.

Photo at right: Playwright Neil Simon and

"Creative Accounting" and the NFP Theatre

2009-09-25T11:29:00.007-04:00

We are always interested in financial details about the professional theatre. This month's issue of The Believer has a new feature called "Creative Accounting," described as "an ongoing series that will show where the money goes for all of the major creative industries. Future issues will cover book publishing, television, fine art, and public sculpture."

The two-page piece details the costs--$170,029--entailed by the Civilians, a NYC-based theater company, to commission and workshop a new play. The Civilians are an unusual troupe. In their own words, "The primary activity of The Civilians is the creation of original projects from investigations into real life. Using methods that combine documentary and artistic practices, The Civilians’ process encourages a deep, inquisitive engagement between the artists and their subject matter. The resulting shows are boldly theatrical, often incorporating elements of musical theater."

The play in question, Brooklyn at Eye Level, is about the Atlantic Yards development in Brooklyn. The Atlantic Yards is a mixed-use commercial and residential development project of 16 high-rise buildings, currently proposed in the neighborhoods of Prospect Heights and Park Slope. The development includes the Barclays Center, which would serve as the new home of the New Jersey Nets. Like many large-scale developments, the project is very controversial.

The Civilians divide their project into three parts. Investigation, over $36,000, covered interviewing local children, adults, and real estate experts. An Urban Studies student was funded to provide context on the history of Brooklyn. Transcribing 250 hours of taped interviews was over $2,500. The second part lead to the first presentation, at a cost of over $71,000. Development, another $62,000, included additional interviews and commissioning a playwright, at $10,000, to shape the play. It ended with a second workshop that ran for four days at the Brooklyn Lyceum. The show was not reviewed, but New York Magazine placed it in the "Brilliant/Highbrow" quandrant of its Approval Matrix for December 22, 2008. A fun song from the show, "Four Brooklyns," is online here.

If you don't know The Believer, it is worth a look. Published by the folks responsible for McSweeney's, it describes itself as "a monthly magazine where length is no object. There are book reviews that are not necessarily timely, and that are very often very long. There are interviews that are also very long." It teeters among contradictory qualities: ironic, sincere, trendy, unfashionable, serious, funny, over-serious, and sometimes more than a little cliquish.

Personal Earnings on and about Broadway

2009-09-25T11:01:00.005-04:00

It's raining money for some on Broadway. Daniel Craig and Hugh Jackman, stars of the new drama A Steady Rain, are earning nearly $100,000 each a week, according to Michael Riedel writing in the NY Post.

Although their base salary is only $40,000 a week, they get a percentage of the box office. The play is slated to run for 12 weeks, leading to each actor receiving $1 million by the close in early December. In the first week of previews, only five performances, the straight play sold 100 percent of the house with an average ticket price of $143.35; the top ticket price is only $128--not counting premium seats, which are selling.

The Post adds that Julia Roberts was said to earn more than $150,000 a week in the revival of Three Days of Rain on Broadway in 2006. Matthew Broderick and Nathan Lane each made more than $110,000 a week in The Producers and The Odd Couple. They're probably worth it. When David Hyde Pierce left the musical Curtains for a vacation week in 2007, box office fell by $240,000, according to Variety.

Bloomberg.com reports that Charlotte St. Martin in her second year as executive director of the Broadway League received $340,105 in salary and benefits. Poor Ms St. Martin: she has to work 52 weeks for that!

Incidentally, Michael Riedel's column is often a juicy read. He reports the scuttlebutt, the gossip, the stuff you don't get on the theatre blogs or on Playbill.com. He is also the co-host of Theatre Talk, the NYC public television interview show available on the Web. It, too, is worth a look.

Progress on Stage Money

2009-09-25T10:59:00.002-04:00

Just finished the copyedited manuscript for Stage Money. Hurray!

They're not Scalpers: They're Ticket Brokers

2009-08-30T16:44:00.005-04:00

This Sunday's New York Times had a big article on ticket brokers. Ticket brokers resell tickets at a profit for sporting events, concerts and theatre. When New York state let its scalper law lapse--a law that limited the legal markup over the printed price that a broker could charge--it was only acknowledging that the whole issue of ticket prices has changed.

Ticket brokers work openly on the internet, with names like StubHub, TicketsNow, and Ticketnetwork. As the Times points out, StubHub was bought by eBay two years ago for $310 million and Ticketmaster--the online original seller of tickets to many events--paid $265 million for TicketsNow a year ago. There's a National Association of Ticket Brokers (NATB), of course, and it publishes a code of ethics for the trade.

According to the NATB, their members perform a public service:

We also believe that free market pricing of tickets, (the buying and selling of tickets at their actual market value, and not that of the face value printed on the ticket) is the only way our members may attain hard to get tickets for their clients, . . .

Today I checked the three major internet brokers for Broadway tickets. They all had at least some inventory for most any show: Jersey Boys, The Lion King, Billy Elliot, The Little Mermaid, South Pacific, West Side Story, etc.

The most recent Variety gross listing available online now, the one for June 15-21, shows eight shows selling 100 percent or more of house. Of these, West Side Story, The Lion King, Waiting for Godot, and Hair were grossing more than the theatre's dollar potential at 100 percent capacity. This can only be so if these shows were selling premium seats at the box office. (See Chapter 5 "Ticket Pricing" in our book Stage Money: The Business of the Professional Theatre for an in-depth discussion of the economics behind variable pricing. The book will be available next March.)

If one can get a ticket at the box office, why buy from brokers? According to the website of the NATB, there are several reasons:

Say you don't want to stand in long lines for tickets or you just don't have the time. Many times you don't like the seats you get after waiting in lines or after finally getting through over the phone, or ...
You just heard your favorite performer is coming to town and you just have to get those close upfront seats, or ...
Your most important clients or family are coming in from out of town, you may need tickets at the last minute, when only a ticket service can help you, or ...
That basketball game is sold out or it was impossible to get tickets to the Superbowl, Indy 500, World Series, Kentucky Derby, Final Four, or a variety of other World Class events, or ...
You're going out of town on business or vacation and want to surprise or entertain clients with tickets to an out-of-town event, or simple entertain yourself!

Making money by providing convenience to the customer has a long history. Department stores, for example, pay manufacturers much less than list price for their inventory. What they provide their customers in exchange for the price markup is worthwhile, including a considered selection of all the possible merchandise, a chance to see and try on merchandise in a comfortable store close to the customers' homes, and a place to return faulty merchandise that is equally close by.

Broadway producers have long felt that the money ticket brokers make should be flowing into the producers' pockets, hence the introduction of premium tickets. I predict we will see at least one theatre experiment with other variable pricing techniques, perhaps even online auctions for the best seats at SRO shows.

Doesn't the League Defend Its Big Trademark: Broadway?

2009-07-28T11:13:00.005-04:00

By some Internet accident, I came across the news release for the Theatre League's new season. This is not the Broadway League although it calls itself the "Broadway Theatre League" on the press release. According to its website, theatreleague.com, it is "a not-for-profit, tax-exempt, community-based performing arts organization dedicated to the development of professional legitimate theater, both as a cultural and an educational resource," whose "presentations include the top national touring companies of all of the major Broadway musicals of the last twenty-five years. In addition, the League's own in-house producing division mounts annual revivals of classic Broadway fare featuring stars of stage, screen and television." It serves seven communities: Mesa, AZ; Phoenix, AZ; Santa Barbara, CA; South Bend, IN; Thousand Oaks, CA; Toledo, OH; and Wichita, KS.

The four productions of its "Broadway season" include The Wedding Singer, The Drowsy Chaperone, Avenue Q--so good so far--and Rain: A Tribute to the Beatles. This last has not played a Broadway theatre, according to the Internet Broadway Database (www.ibdb.com). Based on the Rain website and the website of its producer The Road Company, the show is a staged version of two Beatles concerts followed by some staging of music from the era when the Beatles did not tour. (The last live Beatles performances were in 1966, except for a one-off performance on the roof of Apple Studios in 1969 made to be part of the movie Let It Be.)

I'm not proposing that the audiences of Mesa, Phoenix, et al, will not be satisfied by Rain, only that it is not a Broadway show. There are 40 Broadway theatres; see the Live Broadway website for a listing.

Otherwise, the Theatre League's press release is scrupulously honest, noting that Avenue Q and The Drowsy Chaperone received Tony awards but that The Wedding Singer was nominated without actually receiving an award. I hope The Wedding Singer works for them. The first tour of the movie-based musical was called "financially disastrous" by Variety, writing in June 2008.

Surveys that Prove the Obvious; NFPs Are Financially Stressed

2009-07-06T13:45:00.007-04:00

More studies have specified how nfp organizations are affected by the recession. The Bridgespan Group survey found 92 percent were feeling the effects of the recession. Johns Hopkins University's Listening Post Project survey found 80 percent of charitable organizations were feeling financial stress with 40 percent calling the stress "severe."

Smaller organizations, measured by budget, were most affected. In the Bridgespan survey, 70 percent of groups with budgets of $1 million or less reported their financial positioning worsened in the last six months, compared to 38 percent for budgets between $1 million and $10 million and 41 percent for organizations with budgets greater than $10 million. The Johns Hopkins survey found theatres and to a lesser extent orchestras most profoundly hurt.

We redacted on June 12 the results of a study showing giving to nfps was down ("Charitable Giving is Down: Bad News for NFP Theatres") The Johns Hopkins survey shows expenses rising too, except where belt-tightening has already been instituted.

For arts groups, one frequent tactic in response to the decline in donations has been to redouble efforts in marketing. This follows at least some of the advice of Michael Kaiser in his 2008 book The Art of the Turnaround: Creating and Maintaining Healthy Arts Organizations. Currently president of the Kennedy Center for the Performing Arts and leader of the recession-inspired consulting effort housed at the Kennedy, Arts in Crisis, Kaiser advises troubled arts organizations not to cut programing and to enhance marketing efforts. (This is a gross simplification of the meaning of Kaiser's very good and interesting book.)