3 Reasons why Off Broadway is about to boom: Part II
Yesterday I gave you my three reasons why Off Broadway will see an increase in the number of productions in the next 5-10 years.
But, as you’ll recall, I qualified that boomage with a “sort of.”
So why my wavering? Am I “Trumping” my comments? (By the way, I’ve decided it’s time to redefine the word “trump.” No longer does it mean “to get the better of.” Now it means, “to go against one’s previously publicly stated opinion, almost as if you never said it, e.g. “Donald Trump trumped his thoughts on Afghanistan yesterday, having called it a mistake one month ago and now saying it was justified,” or, “I will never trump my thoughts on Donald Trump’s haircut.”)
I promise I’m not pulling a Donald.
I do 101% believe we’re going to see an increase in the number of Off Broadway productions in the short term, just like we’ve seen an increase in the number of Broadway productions over the last 5-10 years.
But, I’m not expecting an increase in profitability.
Just like Broadway hasn’t seen an increase in profitability.
Despite the big boom that Broadway is experiencing, including those multi-million dollar grosses I talked about yesterday, the average number of shows that have recouped their investment on Broadway has remained pretty consistent. The recoupment rate is about 20% over the long term, even though this book speaks about a near 33% recoupment rate over a ten year span (you can see more stats about Broadway shows that recoup on this cool infographic).
What’s happening on Broadway is that . . . well . . . the rich are getting richer. The big fat mega hits are variable pricing until the cash cows come home. And the rest of the market is discounting itself to death to try and capture what’s left of the rest of the market. So, the shows that recoup, REALLY recoup. And the shows that don’t, still don’t (and maybe even don’t get 50% back or 25% back like they might have ten years ago). And that keeps the recoupment rate the same, despite the increase in the number of shows.
The same is going to be true for Off Broadway.
We’re going to see the number of shows increase.
But the same amount will be profitable.
And unfortunately, that number is not 1 out of 5.
I’m not exactly sure what the real number is since Off Broadway keeps even less track of recoupment rates than it does of grosses. But the success rate is much lower.
(Part of the reason why that success rate is so much lower is because Broadway has done such a great job in branding itself over the last several years, that people want to see Broadway more than Off Broadway now – but that’s for another blog on another day.)
Unless . . . unless . . . unless we all realized that Off Broadway recoupment rates were so much lower . . . and unless we did something about those expenses. My favorite statement when I’m negotiating a contract for an Off Broadway show is, “If you can name the last Off Broadway show to recoup, then I’ll pay you what your client wants.” But honestly, it’s not the talent that’s the issue (although some of the unions are so worried about protecting Broadway precedents that they strangle the flexibility that Off Broadway needs to survive). It’s the advertising, the theater rents (and yes I am a theater owner myself – although I’ve been known to cut some very “unique” deals), the rentals, and more. Because there are so many more shows on the boards, all of these folks should be making a lot more money, so they can afford to give some “grants” to Off Broadway shows.
When I interviewed Ben Brantley for my podcast, he said that he thought the most creative stuff in NY theater was happening Off Broadway. It’s true. And the good news is there will be more of these shows in the coming years.
Now we just need more of them to make money.
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