What if we had a S&P for Broadway?

Here’s a biz idea for some budding entrepreneurs out there: create an S&P for Broadway investments; an “official” ratings board that grades investments on the same AAA scale that screwed the financial markets this week.

I have consultation clients that come to me all the time asking for my “yea/nea” vote on whether they should invest in a show that they’ve been pitched.  I spend time with the financials, research the show’s history, the creative team, etc. and apply all of the tactics I teach in my Broadway investment seminar and then give my consensus.

But what if there were an independent entity that offered a more formal grading system?  This “S&B” would have a General Manager, a Marketing expert, a Director and maybe a Casting Director on its board, and they’d scrutinize the show in their areas of expertise and offer up a quantitative grade.  If you were considering investing, you’d pay a small fee for the “research report” and its grade.  And then you’d use that info to help make your decision.

Something that is as artistic as the theater won’t be as easy to assign a grade to compared to something like debt.   But it would still be possible.  The margin of error would just be greater.  And you’d still have to use your gut when making that final leap.

But I’d bet that fewer bad investments would be made, which would be beneficial for us all.  The fewer people that lose money on Broadway, the more people there are to put money in shows in the future.

It wouldn’t be easy for those shows that get stamped with a mediocre grade, though.  There’d be some pretty angry producers out there, I’m sure.  Especially since ratings entities like this one could be wrong.  It happens.

Just ask the S&P.  Remember when it gave an AAA rating to mortgage derivatives?


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  • Erin O. says:

    I’d like to see a Broadway ETF. It’s not really feasible, but it would be a great way to diversify your Broadway investments.

  • Jared W says:

    While I think the goal is noble (decreasing the amount of money lost of shows, which would then enable more shows to be produced), I don’t think this is the way to go about things.
    I feel like this type of system would skew towards revivals and derivative properties, robbing the industry of the creative risk taking necessary to create truly great art. I don’t know how highly something like “Next to Normal” would have scored on such a system, given its unpleasant subject matter, untested writing team, and lack of a big name star (Alice Ripley doesn’t count, as she is most famous for “Next to Normal”). But that show, on top of being a Pulitzer Prize winning work of art, ended up with a long and (I believe) ultimately profitable Broadway run.

  • Rich Mc says:

    An intriguing idea. The question becomes how to assign objective/quantitative assessments to shows, since subjective reviews would vary tremendously. As a potential investor, one parameter I’m interested in is the batting average of the Producer – how many prior shows under her/his stewardship actually recouped and what is Producer’s average investor ROI? [Far from an absolute predictor of success, but one solid benchmark.]

  • Michael says:

    The reason S&P and the other agencies give AAA ratings to mortgage derivatives and other garbage the banks produce is because the ratings are paid for by the banks. No, it doesn’t make any sense but that’s the way things are done on Wall Street. Your idea sounds interesting–just make sure your ratings aren’t paid for by the producers!

  • Alex says:

    Who’s going to do it? The problem with S&P is that if you’re smart and you understand the business – you go to work for the banks because you get paid WAY more than you get paid at S&P or any of the ratings firms. So already you have the B and C students working for the SEC and the Ratings firms – because the real money is in Hedge Funds and Wall Street – so the B and C students are advising on the A students. Ok.
    And as someone else pointed out, the banks pay for this. Who will pay for this and what value is their ratings? S&P and Moodys et. al was dead wrong prior to the financial crisis, they rated all the toxic stuff triple A plus…so…I’d rather make my own decisions about Broadway…I think too, if you rely on the ratings you don’t do your own homework.

  • NYPerformer says:

    Your S&B team should include Broadway ushers. They seem to know before anybody else whether or not a show is going to make it.

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