5 Reasons why The Shuberts buying New World Stages is great for Off Broadway.

A rumor hit the street last week that the Shuberts, one of the five families on Broadway and the majority landlord (with 17 of the 40 Broadway houses flying their flag), is in the final stages of inking a deal to buy the phoenix-like Off Broadway multiplex, New World Stages.

This will be the third ownership change for New World in just a decade.  It started out as Dodger Stages, before becoming New World (owned/operated by Stage Entertainment), and now, I assume it’ll be Shubert Stages?

I’ve got a long history with those stages as well, having been one of the first tenants with Altar Boyz, as well as running My First Time there for two years, marketing a bunch of other shows, and, of course, General Managing the first Broadway to Off Broadway transfer with Avenue Q.

So what do I think of the keys changing hands yet again?

I think it’s good.  Very good.  And here are my five reasons why.

1.  OFF BROADWAY JUST GOT RIPPED

The Shuberts have muscle.  When you own as much real estate in Times Square as they do, when you have as much of an impact on the city’s economy as they do, when you can get house seats to a play with Hugh Jackman, important people like Mayors and Governors and other policy makers take their calls.  Commercial Off Broadway has never been jacked before.  And now, it’s got P90x-like muscle behind it.

2.  CAN’T GET IN TO SEE A BROADWAY SHOW?  HAVE YOU TRIED OFF?

Off Broadway has always been the little runt of a step brother to Broadway.  One of the reasons it has become more challenging to sell shows Off Broadway is simply because Broadway has gotten so good at selling tickets to Broadway shows.  But now, The Shuberts, who also own the majority Broadway ticket-seller, Telecharge, has a vested interested in selling about 1,897 tickets a night to Off Broadway shows (that’s the combined capacity of New World Shubert Stages – which is bigger than any Shubert Broadway house, btw).  Expect a lot more marketing synergy between Broadway and Off.  It’s like our big brother actually likes us now and is gonna introduce us to all the cool kids.

3.  DOWNSIZING WILL BE IN

When we first moved from Broadway to Off, it caused quite a stir in the biz.  But now, I’d imagine it will be often talked about conversation . . . especially when shows are looking to leave their Shubert houses on Broadway.  It could become SOP for the bosses-that-be to offer an Off Broadway stage to a successful show whose run has expired on Broadway.  With more Broadway shows Off Broadway, more tourists will come, and discover all the other shows that Off Broadway has to offer.

4.  THEY’VE GOT GREEN

Last year the Shuberts awarded $22.5 million to non-profit theater and dance companies all over the country.  And, of course, they’ve been known to invest in Broadway shows that go into their Broadway houses as well.  I’d expect that they could stimulate Off Broadway production with a little cash infusion as well to help fill their theaters.  Since it’s getting harder and harder to raise money Off Broadway since the recoupment rates are so low, their dollars could help a lot of shows get off the ground.

5.  WHAT THEATER CRUNCH?

There are a lot of Broadway Producers knocking on the doors of the Great Broadway Oz these days, looking for theaters.  I honestly believe that The Shubes don’t like turning people away.  Now, they may not have to . . . with the right show they might convince Producers (and the stars as well) that they should play Off Broadway first, and then jump to Broadway when a house is available (and maybe even guarantee them a house as part of the deal).

 

All good stuff.  And plenty more too.

Or maybe The Shuberts will just add a couple of seats to those 499 houses and make them Broadway Theaters.  🙂

What do you think about the impending purchase?  Good?  Bad?  Ugly?

 

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Comments
  • Thank you so much for this. There have been grumblings in the community that big brother is taking over little brother’s terrain, so I’m glad to hear a fresh perspective that foresees a thriving future for Off Broadway theater. I produce on the non-profit side, myself, but any growth in the 499 seat or less sector is great news! Thanks, as always, for sharing your insights.

  • senorvoce says:

    Hopefully, turning the whole place into a full union house would help by creating more good paying middle class jobs.

  • Shauna Hagan says:

    What a great perspective. Can’t wait to see what happens!

  • I think this is a great move. Your reasons are all good, and I especially agree that some of those off-Broadway house might be Broadway houses. On the way, the Shuberts will expand the Broadway brand.

  • Not a good purchase, a great purchase! The bottom line is the Shuberts are smart and have the muscle to nurture Off-Broadway shows that could move to On… Can’t wait to see how this develops, keep us posted Ken!

    Thanks,

    Thomas and Judy Heath, Playwrights

  • senorvoce says:

    And then there’s this:

    Broadway’s Shubert Organization Netted $35M For Air; Now It’s Heading Underground

    By JEREMY GERARD | Friday July 25, 2014 @ 1:25pm PDT
    Tags: Broadway, Joop van den Ende, Off-Broadway, Shubert Organization
    COMMENTS (0)
    Broadway’s Shubert Organization Netted $35M For Air; Now It’s Heading UndergroundEXCLUSIVE: Why did the Shubert Organization, which owns 17 of Broadway‘s 40 designated theaters, sign off on a deal to buy New World Stages, the five-theater underground off-Broadway complex owned by Dutch entertainment mogul Joop van den Ende? Sources tell me the answer has nothing to do with the arts and everything to do with real estate — along with the unique, not to say wacky, world according to Shubert, a $410 million nonprofit that coincidentally owns the most powerful commercial theater company in the U.S.

    The company, whose Image (3) GerardColumn_badge__140512224655-150×150.png for post 735293theaters housed Les Miserables, A Chorus Line, Cats, Fiddler On The Roof, Amadeus and countless other legendary shows, has been Broadway’s reigning landlord for nearly a century. In recent years, the Shubert Organization has sold air rights above its landmarked Times Square theaters to the tune of $50 million. This spring, the Witkoff Group, a building consortium, paid $18.3 million for 45,000 square feet of air above the Shubert-owned Booth and Gerald Schoenfeld Theatres on West 45th Street. That deal will allow Witkoff’s project, the Times Square Marriott Edition hotel at 701 Seventh Avenue, to grow to 500 feet high.

    Broadway Theater Exteriors And LandmarksAround the same time, Shubert sold the air above its Broadhurst and Majestic Theatres, on West 44th Street, to Algin Management, which plans to build an apartment tower on the site of the shuttered Roseland Ballroom. Pricetag? $17.5 million. (Earlier deals, dating back to 2008, bring the total Shubert take on air rights transfers to about $50 million, according to public records.)

    Like quantum physics and the recipe for Twinkies, “air rights” is something many have heard of but few understand. Put simply, the right to sell the oxygen above Broadway’s landmarked houses was the city’s way of compensating the theater owners for constraining their right to develop their property. The landlords can’t alter the physical buildings, but they can sell the space above them to developers who want to build elsewhere in the district.

    Although that right was established more than two decades ago, the heat-up of the market has moved the owners to sell. The air rights for the Seventh Avenue site, according to the Wall Street Journal, citing public records, went for a breathtaking $409 per square foot — double the asking price just two years ago.

    What does this have to do with New World Stages? That’s where Shubert’s status as a nonprofit comes into play. If you think “air rights” is a bizarre notion, that’s nothing compared with the fact that in a setup unmatched anywhere else in IRS-land, the Shubert Oganization — a commercial operation — is a wholly-owned subsidiary of the Shubert Foundation, a 501 (c) (3) tax-exempt corporation that supports theater and dance companies around the country.

    According to tax records I obtained for the year ending May 31, 2013 — the most recent available — the Shubert Foundation had assets in excess of $409 million (that would be the theaters, along with other real estate holdings and investments) and had doled out $21.5 million in grants.

    “Ma Rainey’s Black Bottom” Opening Night PartyThe Internal Revenue Service looks askance at nonprofits swimming in dough, and Shubert chairman and CEO Philip J. Smith and his troops (who are officers of both the Shubert Foundation and the Shubert Organization — are you still with me?), finding themselves with a $35 million windfall, had to stash the money somewhere.

    Conveniently, sources tell me, van den Ende was looking to unload the off-Broadway site and concentrate on producing (an idea which so far has resulted in the $16-million flop Rocky). The Dutch billionaire’s stake in New World goes back to a co-production deal his company Endemol had with Dodger Theatricals, when they were first converted from discount movie houses back in 2004 at a cost of more than $23 million (the theaters were originally called Dodger Stages).

    Shubert has a mixed track record producing off-Broadway (its own Little Shubert Theatre on West 42nd Street has had trouble booking shows since its debut in 2002). But New World Stages has overcome birth pains to become a place where shows can be successful — especially when they have a Broadway pedigree, such as the long-running Avenue Q. An investment matching what Dodger/Endemol spent originally on New World Stages repurposes a hefty part of the money from the air rights sale, while giving Shubert a new revenue stream.

    “Dividing The Estate” Broadway Opening NightAnd the rest of the money? Two sources tell me that Shubert has gone to contract for a warehouse building at 604 West 48th Street, for $11 million. That deal will become a matter of public record any day now and the seller declined to comment. I’m thinking that the Shubert Foundation will soon enough benefit from the Shubert Organization’s sale or transfer of that building. Because as my friend Gerald Schoenfeld, the late Shubert chairman, used to say frequently, “there’s no profit like nonprofit.”

  • Stephen Russell says:

    Wow, the Shubert Org. has done such a good job at managing The Little Shubert! Sounds like a horrible idea.

  • Scott says:

    Great perspective on this transaction!
    Especially the marketing muscle to put behind the shows at this complex, and the spillover to other off-bway awareness/venues.
    Personally,NOT a fan of the union idea from the commentor above. New World Stages is already a very expensive venue to rent, and it would only raise prices for producers/shows.
    Turning the spaces into BROADWAY space (to make them eligible for Tony awards, and Broadway marketing) would also be quite compelling (and yes, it would then need to be union)

  • jo ann greene says:

    Would love to win 2 tickets to love
    Letters. Brian denney is awesome!
    Our anniversary is 10/25

    T

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