Who the furkus is Burton Turkus?

Burton Turkus was an attorney, an author, and most influentially to our industry, an arbitrator.

Waaaay back in the days of the original Promises, Promises, in April of 1963 to be exact, Mr. Turkus presided over an arbitration between, well, just about every theatrical union, and the then named, League of New York Theatres.

Here’s what went down 50 years ago . . .

There was a 13-day strike in 1960 known as the “Broadway Blackout” which was the result of the failure of Actors’ Equity and The League to come to terms on a new agreement.  The biggest outstanding issue?  The creation of a brand new pension fund for the Actors.

The Actors got their pension fund as a result of the walkout.  As part of the agreement, they graciously agreed to help The League lobby the City of New York for the removal of the 5% Admissions Tax that was levied on all theater tickets at the time.

The theory was . . . if they could get rid of this 5% tax, they could use that 5% to pay pensions to all the unions.  The league would be happy because they wouldn’t be paying any more than they already were.  And the unions would be happy, too, because they would all get pensions.  Happy-happy, joy-joy!

Well, it wasn’t so easy.

The two sides were successful in getting the City to do away with the tax on tickets (!) . . . but there was a disagreement in how much of that 5% should go to AEA, and, consequently, how much of the remaining amounts should be distributed to the other eight unions involved.

Make sense?

Simplified:  The 5% tax went away.  So they had a pot of 5%.  But how to whack it up?

Enter the esteemed Mr. Turkus, who, in the “Burton Turkus Award of 1963” (as it is affectionately referred), created a system for determining who got what.

First, the actual net “tax relief” that we ended up with after the repeal was a net of 4.5%, not 5%, or “the 045” (as it is also affectionately referred).

Next, in order to distribute the funds accordingly, BT examined the books of Broadway shows to determine what percentage of gross payrolls was attributed to the actors, what was attributed to the musicians, the stagehands, and so on.  These percentages make up the guts of the “Award”.

A complex chart was created which awarded different percentages of “the 045” to the various unions, depending on a few factors, like whether it was a play or a musical, and even how many musicians a show had.

Confused yet?

Let me use a specific example, using modern day numbers:

A production grosses $1,000,000 for a week.

4.5% or .045 of $1,000,000 is $45,000.

$45,000 is then allocated towards the pension of our various unions.

In a musical with over 16 musicians, The BT Award allocates Actors’ Equity 50% of the $45,000 or $22,500.  Local One gets 15% or $6,750.  Local 751, the Treasurers, got 1.88% or $846.00 and so on, until the entire $45,000 is distributed.

This happens every week on Broadway to this day!

Now, IF on your show, your 045 monies don’t pay for pension that you are responsible for, you still have to make up the difference (if the Treasurers actual pension on the salaries was supposed to be $1000, then you got billed another $154).  The .045 only contributes towards the pension due, but it doesn’t necessarily cover all of the pension due.

Why is this history lesson relevant?

The wise Mr. Turkus, who ended one of the most bitter disputes our industry has seen, and is known as a hero in certain circles, created this chart using the payroll allocation formulas that were in front of him at the time . . . that are now almost 50 years old.

Back then, the Actors made up the bulk of the payroll, which is why they got the bulk of the 045.  Things have shifted just a teensy bit over the years, and salaries for some of the other unions have increased dramatically . . . which has thrown the whole 045 off its axis.

It’s very common now that the amount due to Actors’ Equity greatly exceeds that amount that is actually due.  So you could “overpay” by thousands of dollars . . . and the 045 ain’t a Discover card.  There’s no cash back.

At the same time, shows can often have a “deficiency” to Local 1, meaning that their 045 contribution fails to pay for the entire pension due, which then means that the show has to make up the difference.

So, while you’re overpaying to one union, you’re underpaying to another, and you cannot apply the overpayment from one to the other.  You gotta make good on the underpayment, and the overpayment stays with the union.  (I remember Show Boat having a million-dollar overage at one time!)

Now, Actors’ Equity, recognized the issue over the years and created opportunities for Producers to use their “overages” on National Tours of a show after they play on Broadway .  They’ve even used that overage for a reduction to their health payments at one time.

And that’s all good . . . but I don’t think it’s enough.

I’ve got another idea.

It’s time for a Burton Turkus, Jr. to come in, toss out the archaic old formulas and come up with something new.  And maybe this one can also handle the annuities that shows also pay to the unions.

I know, I know, the unions that are getting the overages aren’t going to take to this very well.  (I think my phone has started ringing already)  Why would they?  I wouldn’t want to . . .

But it is the right thing to do.

With all due respect to the great Mr. T, the 045 has to be readjusted, reconfigured, or simply trashed sooner or later.  These aren’t the days of  the original Promises, Promises anymore.  Our economics are vastly different now, and we can’t rely on economic formulas designed in the days when a brand new Ford Mustang cost $2,495.

Mr. Turkus deserves to be in the Broadway Hall of Fame.  But his Award needs to be retired.

If you would like to read the actual Burton Turkus decision from 1963 (it’s quite fascinating) and see the percentage distribution charts, click here.

Comments
  • RLewis says:

    Let me see if I’ve got this straight:
    Since other union pay-rates have increased much more than that of AEA salaries, and producers pay their staffs more than ever, and have bigger staffs, when performer salaries stagnate; now therefore, the 045 should be scrapped so that producers can keep actors from having a minimal pension?
    Or, since talent/personnel per show keeps getting smaller and smaller (both casts and musicians) to save producers money, then pensions should be reduced so that producers keep more of their profits?
    Seems kinda wack.

  • JCohen says:

    What RLewis said.
    And the original Promises, Promises was in 1968.

  • mbwiles says:

    Absolutely right, Ken.

  • Doug Hicton says:

    Ken, I hope you’re not concluding that the pension plan and “those damn unions” are the sole factors that have led to higher production costs. Please don’t be that guy. There’s also inflation to consider, and we can also point to excessive and expensive advertising campaigns in print and broadcast media. Garth Drabinsky can largely be blamed for that, since he put promotion into overdrive and made the weekly nut for his shows stupidly large, and other producers followed suit. (Plus, he siphoned off a bit of the cash for himself, which didn’t help matters; thankfully most other producers didn’t follow THAT example.)
    I realize that some share of production profligacy has to be borne by the end-users, theatregoers. But ticket prices have skyrocketed over the last few years ($125?! For ONE seat?! Tsk tsk…), while cast sizes, and in the case of musicals, orchestras, have shrunk. The original production of A Little Night Music had an orchestra twice the size of the current revival, and the tickets were about a tenth of the current price. We’re getting much less for a whole lot more.
    Can’t we at least try to do more with less for a change? I know there’s nothing we can do about inflation, but just cut down on the prime-time airtime and full-page ads — I’m not saying to stop completely, but be smart about it. Then we can afford to mount larger shows with orchestras that don’t sound anemic, and also cut prices to a less alarming level. Or if it’s not feasible to do both, we could try one or the other.
    Once the audiences know that they’re no longer expected to pay an arm and a leg to see rinky-dink productions — or if they do pay exorbitant prices, that they’ll be sure to see and hear something they’ll remember for years, something with real production value — they’ll come flooding back to the theatre and you won’t be able to keep up with the demand.

  • Pensions should without a doubt NOT be reduced. They just shouldn’t be overpaid. That’s the problem with the .045. It overpays.
    Imagine that your landlord charged you an estimate on top of your rent for your electricity bill . . . but it was more than what you used every month. Month after month. But he kept it. You’d be mad, right?
    You owe him what you used. What you agreed to pay. But I’d bet you’d be pretty upset if he kept more than you agreed to pay.
    The problem isn’t the unions at all. The problem is that times have changed, and we should change with them.

  • Hey Doug,
    Check out my comment to RLewis. I don’t think the unions are the issue here at all. I don’t think I ever said, “those damn unions,” so you’re obviously quoting someone else. 😉 I’ve been a member of 2 theatrical unions (AEA and ATPAM) in my day, and I thought they served both sides very well.
    My issue is with the 045 and its allocations.
    Think of it this way . . . what would our economic system in this country be like if we used the same tax code as we did in 1963?
    You are so dead on. Economics change. So the rules that we set up to control them need to change as well.

  • Doug Hicton says:

    No, man, not quoting you at all when I say “those damn unions”. You’re right, I’m quoting someone else — actually a whole lot of someone elses. I just was cautioning you not to fall into the same mindset as those someone elses, easy though it is to do. And for a lot of people, it’s the black and white conclusion they almost invariably arrive at. I’m relieved and happy that that’s not your position.
    As to what your economic system would be like if you still had an Eisenhower/Kennedy-era tax code, with 80-odd per cent tax rates on the very wealthy instead of what it is now, I’d venture to say that your national debt would be considerably smaller and the US government might even be running a yearly surplus. And you wouldn’t be owned by China. That’s just my guess.

  • Kelly Allen says:

    I really appreciate “lessons” like these. Very clear and helpful. Have you done something like this to explain royalty “pooling”? I think it could use the same kind of elucidation.
    Great job, Ken. And INTERESTING!

  • Agreed. I think it’s extremely useful to have posts like this regarding the more technical and producorial aspects of theatre-making. Keep ’em coming.
    – Timothy Childs
    http://iblogbroadway.com/

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