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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Comments
  • Joe Carraro says:

    I agree. I’m involved in a a similar situation.
    I was pleasantly surprised a few months ago to hear from a known Producer/Manager who became very excited about getting my CONVERSATIONS WITH AN AVERAGE JOE produced on Broadway to take advantage of the timeliness of the election season and its relationship to the play. He had hoped to involve NY celebrity sponsorships, but thought it best if we set up its structure first with a director and location, and actors he had worked with before who had expressed an interest. He then set up meetings with a Tony award winning director who was equally excited about the tie in with the political season, and I agreed to work on changes made by dramaturgs, and we were ready to begin. Unfortunately, there was a contract misunderstanding and with the advice of some at the Dramatists Guild, I needed to start over.
    So now, what started out to be an anticipated relevancy to the election, became the perfect fit for the most exciting and publicized election we have ever had and I knew I could generate the publicity necessary to bring immediate success by appearing on national and local TV and Radio shows talking about its content.

    And, after each performance we were planning on a Q and A with the audience to discuss the ideas and solutions presented in the play. I had contacted a few of those early announced candidates for President and already had four who wanted to appear, with others interested. Considering the number of candidates and the buzz created by the debates, this would be an ideal opportunity to create publicity for them and the play.
    But now I’m in New Mexico, running out of time and. while there is a lot of interest and excitement because of its political nature, it currently lacks the organization to get it produced on a time. So not having a whole bunch of money I was going to hire a director to work with actors who applied from Backstage with the Guid supplying contracts. While I realize that you are too busy to take on such project, I am interested in hearing about your theatre spaces since the places recommended to me may not be a good fit.
    Thanks–
    JOE
    (505) 453-7822

  • Marshall says:

    I have a daughter producing Off-off-off Broadway plays (although their theater IS in the heart of the theatre district) and I truly hope you’re right Ken.

    But isn’t the cost of everything just going up in NYC? Every visit to the Big Apple I feel I’ve been fleeced! When will the unions begin to boogie with the smaller shows? At least Equity has scales (at least here in Big D) depending on the show/venue. They seem to want their members to work. Why can’t the other unions think along the same lines? Or let their journeymen work at reduced rates?

    For what you guys spend opening a new B’way musical, ($12 mil?) I could shoot three (3) movie musicals that would look/sound pretty damned great! And with everyone and their brother and bastard step-brother and his favorite rock star and HIS famous actor/writer friend all writing musicals, finding properties wouldn’t be that hard. Of course finding the next “Springtime For Hitler” becomes the challenge. 😉

    One other thing: What if it becomes too darn expensive to live in New York and people start moving away? Is the tourist trade enough to support both on and off Broadway?

    Love your thinking and look forward to your email every day!

  • Brock Lee says:

    Another good one Ken. The first thing that come to my mind on this topic is the perceptions people have of Off-Broadway Shows. The feeling people get when they hear and see those words and how we can change that. After all, there are great Off-Broadway shows, just not in the larger venues.

    Although Off-Broadway is referring to any theater outside area of 5th & 9th from 34th to 56th / 5th to Hudson from 56th to 72nd isn’t it really the size of the theater(<499 seats) that we are talking about? Not the quality of the show.

    We need to redefine what "Off-Broadway" means. Depict it as the launching point that it really is for great shows that get a smaller start. Redefining the smaller theaters and shows with more flattering terminology, really capturing the essence of the material, not the venue. Changing the way people feel and think about these shows. Not treat them like the red headed step children they're not.

    Thanks for sharing Ken, look forward to seeing You soon!!

    • David Merrick Jr. says:

      Brock,

      Most (if not all) of the desirable OB theaters these days are in the theater district, not outside.

      These days, OB really means under 500 seats…technically speaking.

  • Tim Barden says:

    I’m trying to imagine what this is all going to look like in another 10-20 years. The impact of technology is disrupting many business models in a wide variety of industries. I suspect it’ll be a factor here as well.

    It’s never been easy to make a living in the arts. That’s not likely to change. But, the number of talented, creative folks who have for one reason or another not found success in major markets like NY or LA don’t disappear when they throw in the towel. They’re out there, and they still want to create. JOBS and crowdfunding don’t have to be limited to projects happening in area code “212”. It’s cheaper to produce new works elsewhere and the obstacles to doing so are evaporating. I can produce a workshop in our 80 seat black box theater in Vermont and live stream the piece to a population of potential backers anywhere in the world for peanuts (we’ve done it with CD Release parties). Once, the penetration of internet video in households reaches the tipping point we’ll see monetized, live streaming theater, some of it great, some horrible, sourced from everywhere. New talent wants to be seen and the internet will become the great equalizer for access to audiences.

    Although we’re a small performing arts school in Vermont (with an 80 seat black box theater). We’ve got students on Broadway (Fun Home, The King and I) and our 20 yr old, Kerstin Anderson, is Maria in Jack Lord’s Sound of Music tour. My point is that talent lives everywhere. I’m guessing (and hoping) that soon, it’s going to be easier to create everywhere.

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