Here’s something I should have asked Santa for . . .

I get a lot of emails and phone calls and Game of Thrones-like carrier ravens from folks asking me my opinion on shows they’ve been offered a chance to invest in.  “Is it a good show?”  “Will it make money?”  “Will $50k get me opening night tickets???”

And I do offer my advice (as you may recall from that $50k Opening Night Ticket blog).

Yesterday, a financial dude I know was telling me about this new 3D printing stock that he thinks is going to skyrocket (If you don’t know about 3D printers, you should – they are tomorrow’s rage.  They cost as much as a small car right now, but so did VCRs when they first came out).

My FD (which is my abbrev for Financial Dude, because IB (Investment Banker) makes me think of IBS, and while FDs have given a lot of people IBS over the past 4 years, it still makes me a little blechy), recommended I take a peek at the stock.

“Where should I look at it?”

“Check it out on Morningstar, or Moodys or Yahoo Finance, of Motley Fool, or . . . ”

There are a thousand third party/objective sites that analyze and screen stocks and even rate them to help investors make their decision.

Wouldn’t it be cool if there was one for Broadway investing?

Imagine a site that listed all the details of an upcoming show and give it 1-5 “marquee” rating, on the probability of recoupment.

Cool, right?

Some people would love it.  Some would hate it (guess who?).  But if done properly, I think in the long run it would actually help drive more Broadway investment dollars our way.  Because the Broadway investors I talk to every day, just want as much info as possible.  I find that investors invest in ultra risky, 1 “marquee” ratings, all the time.  They just like to know those risks up front.  And the more they know, the less likely they are to be upset if the money isn’t returned.

I know, I know, you’re probably saying I should start this site (and believe me, the thought has crossed my mind).  But I can’t. It would have to be a panel of objective third party experts.  Besides, I wouldn’t be able to show my face at certain cocktail parties if I had to give a show a 1 marquee rating.  :-)

 

(Got a comment? I love ‘em, so comment below!  Click here then scroll down to say what’s on your mind!)

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14 Responses to What Broadway Investors Really Need.

  1. Great idea, Ken! I totally understand why you can’t (and shouldn’t) start this yourself, but I hope someone out there reading this can and will!

  2. LA Producer says:

    Absolutely brilliant idea! Wonder how it would work with revivals where the show is already well known? Would these be considered “blue chip” shows?

  3. Rich says:

    An intriguing, but IMOP an ill-conceived idea. The financial medias’ recommendations of public securities is usually predicated on a fluid market. Importantly, recommended company(ies)must be in business (trading)and have a performance track record before third-party trading advice becomes relevant; thus, a proposed Broadway co-opting of this model assumes intelligence prior to performance, i.e. a play’s capitalization. A possibly more relevant model, a potential IPO, also assumes substantial performance information available on the target prior to going public. In either case, what comparable degree of advance investor-oriented information is likely to be known/revealed by 3rd party media,i.e., not privy to pre-screened potential key investors? Subjective analysis on re-couping potential? Well fine, but any twerp(s)could then kill a play’s capitalizaion(& thus its staging)upfront based only on subjective, non-performance related BS. Sorry, this dog don’t hunt!

  4. Paul Mendenhall says:

    It would only work if it’s predictions proved reliable; which they probably would not. For example, take two shows that anyone playing the odds would have certainly said would make oodles of money: “The Little Mermaid,” and “Tarzan.” The Disney pedigree, name recognition, the previous huge successes of “The Lion King” and “Beauty and the Beast.” They should have been slam-dunks. Both bombs, that lost fortunes. And look at all the huge successes no one could have foreseen. Would investors have taken a chance on them if some agency gave them a low rating? Theatre is too unpredictable an art-form to ever be amenable to that kind of analysis.

  5. John David says:

    Ken,
    Your idea is powerful, insightful and brilliant. Pumping more information into a system almost always makes it work better. True your proposal will not solve every problem — what does? — but anything that will make the process more transparent will bring in more people, more money and more creativity. There is good we cannot even foresee that will come from this. We are in a era of instant communication and yet Broadway financing is so often still the same black box it has always been. It does not have to remain that way. Thanks Ken, great stuff!!

  6. Marina Barry says:

    Very very cool idea! I think you are on to something again Ken – definitley going to stay tuned for this one.

  7. janis says:

    Gee, that sounds sort of like something I recommended on the survey. Probably didn’t come from me at all, but the blog, as usual, makes me think and writing things down organizes my thoughts so…

    The idea of developing some form of science based on historical data for investing in Broadway shows might be a terrific idea. Maybe it just needs to be structured properly.

    I’m imagining something like Certified Broadway Investment Planners (CBIP’s), just as there are Certified Financial Planners (CFP’s). I’m pretty sure my financial planner knows little more than I do about what will actually happen with a specific investment, but he knows a lot about the history of various investments and he can view the investment of my money without the emotional attachment I have to it. And most of all he can reference volumes of historical data which gives me more confidence about putting money in a potential opportunity.

    A Certified Broadway Investment Planner (CBIP-Boy that sounds official) could at least inspire confidence in investors and maybe increase the volume of money investmented in Broadway shows.

    CBIP’s would need extensive training in the history of different types of Broadway shows and at least a degree of experience with them. A test would need to be developed for certification by a board established for that purpose.

    Even though there may be little science at this point, there’s certainly a lot of statistics and more could be developed to help guide investors.

    Investing in Broadway is probably not a lot riskier than investing in the stock market at this point. When my stocks plummet, as they occasionally do, my CFP rambles on about how historically stocks have always been the highest performing and best investments and how I should just diversify and be patient, all possibly a bunch of baloney, but at least it makes me feel more confident and often inspires me to invest more. Maybe a similar system would increase confidence in Broadway investing and ultimately increase the volume of funds available to various productions.

    Like CFP’s, CBIP’s would need to first determine the investor’s objectives and develop advise based on what the investor is seeking. For some, profit might not be the primary objective.

    When almost any investment is safer than a Broadway show, it seems unlikely that financial gain would be a common objective.

    I would love to think that investing in the art of theater would be the most common objective, but investors in other forms of art must have great faith in their artistic taste and extreme passion for the work of an individual artist and I would asume tht would be rare in an art form so dependent upon the talent of many different artists. I doubt that investing in the art of theater, though a much touted ideal would be common enough to greatly impact a scientific model.

    Instead celebrity might rank high as an investor objective. In fact, based on the number of shows developed from well known (celebrity) movies or not developed at all unless a certain star celebrity is attached, one might assume that celebrity or contact with celebrities is a very common objective.

    A lot of investors might just want to be a part of the inner workings of theater or some might be in it just for those opening night tickets or backstage passes.

    Oh well, it’s just another weird our of the box idea, and it’s really late so my mind is wandering. But you never know when a late night wandering of the mind might turn out to be a world changer.

    Keep up the good work Ken. Thanks for encouraging wild off the wall ideas and late night rambling.

  8. janis says:

    Please forgive the late night typos.

  9. Every time I watch the show “Shark Tank” I keep thinking of strategies/reports, etc that I would bring as part of a presentation to get one of them to invest in a theater company or Broadway show. I bet if you brought this idea to them Ken as a service, bundled in with some equity in your company – you could get a shark to invest in it.

  10. Casey says:

    That website would need to do many things. First it sohould be a place where one can register their musical for revue. A place where critics can see what musicals or plays (in the making) are being performed. Then the critics can enter their review and star number. You then would need an accountant or accountants who could give an estimate of how much it cost and would cost to bring it to Broadway. I am sure you know many people who could get this wbstie rolling. Share the idea with them. You can own the website, just not run it.

  11. Hmm while I can see some merits, we don’t want theater falling into the pit of what Hollywood has become, with investors only looking at the safe bet (i.e,. revival) paralleling Hollywood studio (action, appealing to young males, or sequels) output resulting in big-time mediocrity (Look at most films released in 2012) and ignoring the unique, ‘indy’, truly creative plays.

    • I agree.

      Clearly formula matters, however, I don’t want to lose the “passion” of my investors, who fall in love with, and believe in, the project.

      The safest bet, isn’t always the most beautiful art. I’m not certain I’d enjoy dealing with investors who didn’t “get it”— at least to some small degree.

      A Broadway investment “Angie’s List” is too subjective.

  12. I’ve worked for the financial ratings service for about 8 years. I think your idea is a wonderful one. I am quite familiar with the ratings process done for financial instruments. The issue you might have with “rating” a potential broadway show would be the cost. As you probably already know, each financial security is broken into different categories based on their characteristic, IE Muni, Corp, Structured, etc. A group of individuals are selected to analyze and investigate those securities. The ratings services are paid by the issuers of those securities, a “pay to play model”. This sort of model has drawn huge criticism. People wonder, does XYZ company get a better rating b/c they paid a higher fee to the ratings service? Are the ratings objective?? You could you have this problem with a ratings service for theater, but you could possibly build a competitve business where you could employ tons of theatrical students from college who might not have the chops to make the “pros” but have enouch insight/education on theater. I’d be happy to brainstorm with you anyone on this idea, as I think the pros out weigh the cons into creating a ratings service for investors on upcoming threatrical projects. I think it would really seperate the mice from the men.

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