PRODUCER’S PERSPECTIVE Ken Davenport, Broadway, Off-Broadway, Theater

I don't care who Cubby is, I want to know who his parents are.

Because whoever created Cubby Bernstein has come up with the most creative viral marketing campaign I've seen on Broadway in awhile (Cubby has already received mentions in the The NY Times, Playbill, etc.)

And Cubby is even twittering!  Can you believe it?  A Broadway campaign that is WITH the times!

Rumors have it that Cubby is the brainchild of Douglas Carter Beane and the folks at the other roller-skatin' musical, Xanadu (a check of WhoIs.net is of no help in determining who Cub's biological parents are).

(update: episode 2 confirms that this a Xana-oriented)

Cubby has our attention.  And now let's watch and see how effective he is in doing his job. 

The fun stuff should be just beginning . . .

What would I love to see?  Cubby sitting in a seat at Radio City on Tony night next to the Producers of Xanadu.  Take this all the way, guys.  Take it all the way.

Advice From An Expert Vol 2: A Gamblin' GM speaks

I jokingly twittered from a casino in Palm Springs last week wondering if the odds on the craps table were better than the odds of investing in a Broadway show.

Well, craps and Broadway are no joking matter to my good friend and uber-General Manager, Mark Shacket, who is currently in office at Alan Wasser Associates, one of the largest General Management firms on Broadway.

Mark worked it out . . . so I thought I'd include his musings on the subject as volume II of our Advice From An Expert series!  Enjoy!
 

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CRAPS - EXPECTED LOSS

If we assume the following things:

- that a typical craps table rolls the dice every 30 seconds
- that the point or seven hits every 5 rolls (meaning each "cycle" from the coming out roll to the end of the session is 5 rolls on average)
- that you play the pass line bet with maximum allowed odds every time, with max odds 3X-4X-5X (House edge: 0.37%)
- that you make 2 place bets every "cycle" (Average House edge: 4.06%)
- that you make a hard way bet every other "cycle" (Average House edge: 10.10%)
- that you make 2 prop bets every "cycle" (Average House edge: 12%)
- that your craps session lasts 2 hours

then the expected loss for your 2-hour session is 37.48%.

BROADWAY - EXPECTED LOSS

If we assume that for every 10 Broadway musicals produced, the following results are achieved:
- 0.25 musicals are HUGE hits (Wicked, Phantom): 1000% return
- 0.75 musicals are big hits: 250% return
- 1 musical is a hit: 130% return
- 5 musicals lose some money: 60% loss
- 3 musicals loss everything: 100% loss

And we assume for every 10 Broadway plays produced, the following results are achieved:

- 0.25 plays are HUGE hits: 250% return
- 0.75 plays are big hits: 150% return
- 1 play is a hit: 120% return
- 5 plays lose some money: 60% loss
- 3 plays lose everything: 100% loss

then the expected loss for your average Broadway investment is 36.88%.

(It should be noted that the above assumptions are based on little more than my whim.)

Therefore, Broadway has a slightly better expected return than craps (36.88% loss for Broadway vs. 37.48% loss for craps).  Ken's question was which has "better odds", and these figures suggest Broadway investing has better odds.  But not so fast!  Broadway investing may have a better average return, but the mean return is far lower.  What does that mean?  Let's look at an easy-to-understand example:

The New York State Lottery paid out 54.7% of their receipts in prize money.  Does that mean that if you play the lottery regularly that you can expect to make a return of $0.547 on each dollar?  No!  In fact, your return will almost certainly be far less than that.  Consider how much of that 54.7% payout is paid to the small handful of multi-million dollar jackpot winners.  That will most likely not be you.  So playing the lottery may have an average return of 54.7%, but the mean return (what the majority of people experience) will be much lower, since they don't share in the big payouts.

The Broadway investment analysis above assumes you can invest in every Broadway show evenly, which you can't.  Broadway's average loss is mitigated in large part by being able to invest in the huge hit.  In fact, if you remove only the huge hits from the equation, the expected loss on Broadway jumps to 52.50%!  But because investors can only put their money in select shows, there is a good chance that they will never find the very rare, huge hit.  Note that 8 out 10 times you invest, you will lose 60% or more.  So the average return on Broadway may be slightly higher than on craps, but the expected return (ie, the mean return; what most investors will experience) is much lower.  Broadway is therefore a far RISKIER investment than craps, even though the overall average expected loss rate is lower.

What can we learn from this?  Well, first, only invest in hits.  But there's another important thing to remember: When you're rolling the dice on the felt, you have absolutely no information about what the next number rolled will be.  But when you're rolling the dice on a Broadway investment or producing opportunity, you have plenty of information to consider.  Who is the producer and what is their reputation and track record?  How does the budget look to you?  What does the current marketplace look like? Are there other similar shows on the boards and how have they performed? Who is in the cast or on the design team?  Is the script well-structured? Is the show marketable?  Read, learn, and study everything you can about your investing or producing opportunity and you will be sure have more than your share of the success.

- - - - -

Thanks, Mark!  See you at the tables!

Theater things that don't make sense: Vol. 2. Interested?

Do you get excited when you get a big tax refund? 

You shouldn't.  It means that you just gave the government an interest-free loan for the year.  If you're a smart saver, you'd be much better off doing some recalculating of your weekly withholding.  Why?

Because the money is always better off in your pocket then the government's, because you can do something with it:  invest it in a stock, a show, or just let it sit in your savings account earning a few percent in interest.

What does this have to do with theater?

Well, when a show like our non-nominated friend, Young Frankenstein, announces that they have an advance of $15 million dollars, have you ever stopped to think where that money is?  And how much interest it's earning?  And who is getting that interest?

On a hit show with a $10 million dollar advance, you could earn a 2.4% annual yield or $240,000 with a crappy Chase savings account.  That could be 30 - 50% of the costs of running your show for a week.

And imagine the interest rate you could demand if you took a bunch of advances for Broadway shows and put them together!  Well, that's what happens.  And imagine what an aggregate $35 - 50 million dollars earns.

Advance ticket sales are not held by the Producer.  Since the theatre owner controls the ticketing agent (and may actually be the ticketing agent), the theatre owner controls the interest.  They are earning money on the money people have paid to see your product.  Doesn't compute, does it?

Cash management is the key to big business.  There's a reason why one of the most successful businessmen I know recommended a book to me called Buy Low, Sell High, Collect Early, Pay Late.  There's a reason why the on-trial bosses at Livent never offered direct deposit (checks never get cashed right away, which means money sits in their account).

There's an argument out there that Producers shouldn't hold on to advance sales, because they might try to dip into the money to cover losses or expenses, and because the shows come and go so quickly.

This is true, but it's also true for every company out there. 

You pay for your plane tickets in advance, don't you?  You don't see a third party holding on to the funds until after you travel before delivering it to the airline. 

You buy stuff online that doesn't arrive for weeks from companies with only a web site, but credit card companies give the merchants the money sometimes as early as the next day. 

Once again, traditional business methods that allow companies to get a leg up aren't allowed on Broadway.

At least one of the major theater owners splits the interest with the Producer, but not the others, that I know of.

Should they?  Maybe.  Or maybe they'll argue that there are costs with keeping track of all that cash and costs of doing the ticketing that service fees don't cover, and that $240k has to pay those administrative fees (cough, cough).

So I'm not saying it doesn't make sense that we don't get the interest (although I encourage all of you to ask for the split - we need every ancillary revenue stream possible).

I'm saying that it doesn't make sense that we don't control the ticketing . . . and then the interest just happens to come along with it.

The Tony nominations are in: we were all wrong.

The nominations were announced this morning, and here are the four shows with a shot at the fat trophy this year:

Cry Baby
In The Heights
Passing Strange
Xanadu

Ok, ok, so in my prediction, I knew I was hanging out on a limb by choosing YF over Xanadu, but the shock of this set is Cry Baby getting a big nod over YF and A Catered Affair.  I can't help but think that Brooks backlash had a big part in the YF snub, but the ignoring of A Catered Affair (in so many categories) will be the talk of Joe Allen's for days to come. 

Unfortunately, the nominators fooled all of you as well.  Only one of you chose Cry Baby as a nominee (Kudos, Catherine bdg), and most of you chose Affair.

But since it was such an odd year, I'm going to get everyone that took a shot at the nominees the Starbucks card anyway.  So check your email and have a couple of frappuccinos on me.

Here's some insider Tony nomination trivia:  The Edison Cafe (aka The Polish Tea Room), which has been the preferred diner of Broadway muckety-mucks for decades (and was featured in the Neil Simon Play 45 Seconds From Broadway), becomes a conference room at 1 PM on the day before the nominations.  The cafe closes up, they black out the windows, and the nominators meet there to make history . . . probably over matzoh ball soup.

Love to hear your thoughts on all of the nominations, so let the commenting begin!

The science of storytelling.

I saw a show this weekend that was, um, a little hard to follow.  But so many of the problems with the show could have been corrected had the authors listened to Mrs. Apostolu, my AP Chemistry teacher.

As writers and producers we need to remember that stories aren't created out of nothing.  They are put together.  Made in a lab from our own version of the periodic table of elements.

You can't make salt without Na and Cl. 

You can't make water without 2 Hs and an O.

And you can't make a story without the perfect combination of character and conflict.

Whenever I forget how to balance that chemical equation, I go to this chemistry textbook . . . or, to mix metaphors, the best blueprint for script writing there is.

I'll take the option that sells less tickets.

I got in a conversation about print versus online advertising today, and I posed the following SAT-like question to my adversary . . .  got your #2 pencil ready?

At the very beginning of a campaign, one Producer spends $100k on a print ad that sells $100k worth of tickets. 

Another Producers spends $100k on Google ads that sells $50k worth of tickets.

Which one is more valuable?

A.  Print
B.  Online
C.  Neither
D.  Multiple choice questions suck.

My answer?  B (and D.)

Obviously this is an oversimplification because we don't know all the specifics, but here's my general thinking . . . sure, you may have sold less tickets, but online statistics has taught you a helluva lot more that you can use the future (even on print campaigns). 

You'll sell more because you initially sold less. 

It's education and it has a cost.

Why do you think med school is so expensive?  Because those schools know after you pay them a buttload of cash you can use that knowledge to earn an even bigger buttload.

Speed dating for producers.

My biggest advice to new producers is to follow the famous Nike philosophy (one of the most successful advertising tag lines ever), and get out there, find a show and produce it. 

The rebuttal I hear most often is "Where do I find a show to Produce?"

Well, here's one option.

The New York Musical Theatre Festival is holding their annual Next Link Networking Party next weekend. It's like speed dating for producers, writers, designers, etc. looking to get involved with a project that will go up at NYMF in the Fall.  Bring your business cards, your passion and a goal . . .

Tell yourself you won't leave until you find a show that you want to produce.

Tell yourself you won't leave until you get a producer to read your script.

Tell yourself you won't leave until you do something . . . anything . . . just set it and Nike it.

See?  It is like speed-dating.  The goal is the same.  (Wait for it.  Wait for it.  Good, you got it.)

Next Link Weekend Networking Party

Sunday, May 18th
5:30 - 8 PM
O'Flaherty's
334 West 46th St.

You gotta spend money to make money, right?

Not always.

I consider myself very lucky to have worked on the last Gypsy revival starring the beautiful Bernadette Peters.  It was directed by the cool Sam Mendes, and produced by the gentlemanly Robert Fox (Boy From Oz, Pillowman, The Hours, Atonement).  It was a first class revival, with first class people, and I loved it.

Unfortunately, it closed after a year and a half.  We got great notices and people loved the show, but for whatever reason, we failed to become a must-see (Nine won the Tony that year).

A few years later, here comes Arthur Laurents and Patti Lupone in another revival about the celebrated stripper, and people are buying so many tickets you'd think the show hadn't been revived four times, had two movies and been seen in every dinner theater around the country . . . twice.

After seeing Gypsy so many times during my tenure, I thought I would have been bored watching the new production.  But I was wasn't.  It's a great production of a great show with great performances.

Here's what's I noticed:  The set was smaller in this production.  The ensemble didn't have as many costumes.  There definitely weren't as many vari-lites in the air.  And, what the . . . they didn't even use a real dog or a real lamb!

And yet this production is set to out-perform ours.  Doesn't seem fair, does it?

There are probably a zillion reasons why (please feel free to comment your thoughts), including many that we couldn't control.  But having two productions of the same show done in different styles this close to each other is a great test case.

It once again proves that a show's success isn't based on whether or not you build custom made boots or you get them off the rack, or whether you get the super-premium lighting package or just the basics.  Or even whether or not Momma Rose had a real dog in the first scene.

Do you think those are the sort of things people talk about when leaving your theater?

Should we have done anything different on the previous production?  Nope.  It was a stunning stylistic choice and unfortunately it just wasn't as successful as we had hoped.

But it does demonstrate that spending more doesn't always make you more.  In fact, you can afford to spend less, if you're confident you're giving them more elsewhere. 

This also works in the reverse.

Why do you think Wicked is the biggest spectacle we've seen in awhile?

The Enron of Broadway

Early in my career, I worked for one of the most powerful commercial theater companies in the world.

I also worked for one of the weakest commercial theater companies in the world.

Ironically, they were one and the same:  Livent - the producers of Show Boat, Ragtime, Kiss of the Spider Woman, Fosse, Barrymore, etc.

In just over a year, we went from opening our own theater on 42nd St., to having our paychecks stamped Debtor In Possession.

I was reminded of Livent when I read this article that announced that the trial of Garth Drabinksy, my former Tony Soprano, had begun. 

The allegations and the indictments on both side of the border are pretty serious (if Garth stepped into Buffalo he'd be arrested).  I won't get into too many details about what I know, because frankly, I don't want any of those Mounties thinking they should call me to testify. 

But let's just put it this way.  During the big horse race of Lion King versus Ragtime, there was a lot of concern about whether we were out-grossing the animals on Pride Rock.  Frankly, from what I recall, a lot of the Ragtime grosses that were published around that time were just like the best friend I had when I was five.  Made up.

That's not the point of this post.

The point is, after everything that has happened, Garth is still at it.  He's produced television.  A theater piece won awards last year.  For the love of God, he's a consultant!

You should print out that article and hang it by your desk.  If Garth can bring down a company, face jail time, not be allowed in the US and still soldier on?  Then surely a bad review or a lost investment is not going to stop you, is it? 

Garth called me about a year after Livent went tummy-up.  He said, "Kenny, there will never be anything like the shows that I did on Broadway ever again."

I told him he was right.  Because he was.  His passion and super-ego produced some of the most beautiful shows we've ever seen by some of Broadway's greatest artists.  The problem was that the industry couldn't support shows like Show Boat or Ragtime the way he built them.  He built mansions on cliffs.  And the cliffs couldn't hold them up.

Criminal charges aside . . . is it crazy that I miss the guy?  I'd probably still get him his double whipped latte if he asked me . . .

Advertising and asking for anything: Why they are the same.

Conventional marketing wisdom says it takes five impressions before a consumer is primed for purchase.

The same is true when you're a producer and your job is to get people to join your team, whether they are a director, a writer, an investor, or an intern.

Translation?  Getting anyone to do anything is all about follow-up.

A talented up-and-comer was asking me for some advice yesterday and she told me how she wanted a director to read her script, but was dismayed because she had sent the director an email and hadn't heard back.

She sent just one email.  And was praying for a positive response.  That's like placing a 1/4 ad in Time Out and expecting to sell out for weeks.

It's easy for us to take this kind of lack of response as a personal slight, but it's not.  The director is a consumer just like everyone else, and you've got something to sell.  If companies like Apple or Altar Boyz gave up after one impression, no one would sell sell a thing.

Does this mean that you should send four more emails?  No.  Think of asking for anything just like a media plan:  Vary your media.  Email (online marketing) didn't work?  Try another form of direct response, like a phone call (telemarketing).  Or go to a party where you know the person will be and make sure he/she sees you (billboard).  Have a mutual friend mention you to him/her (word-of-mouth).

But don't just give up and think no one wants your product. 

Instead, think of every impression you make as getting closer and closer to your goal. 

And the best thing about follow-up impressions?  Unlike 1/4 page Time Out ads, they are free.

Oh, and they actually work.