Is Brexit good or bad for Broadway and the West End?

Since the citizens of Great Britain voted to leave the European Union last Thursday, there has been a lot of talk about what the Brexit means for the future makeup of the United Kingdom, the political balance of NATO and even the presidential election here in the states.

But what the heck does it mean for Broadway and the West End?

Let’s start with the West End, cuz that one’s easy . . . it’s not good.

More restrictions on border crossing will simply mean fewer people crossing the border (which was one of the reasons for the Brexit in the first place).  And the West End, just like Broadway, relies heavily on the tourist trade.  Except that the UK doesn’t have 50 states like we do . . . so international traffic is even more important.  Fewer tourists mean fewer audiences.  Period.

In addition, leading economists agree that there will be an “immediate slowdown of growth,” and that Britain is going to get poorer.

That means less capital for new businesses (including shows) . . . and less disposable income for the locals to spend on shows.

In the worst case, a recession will hit Britain . . . and the theater industry as well.

Now what about Broadway?

Well, there is an argument that some of the tourists that were thinking about a trip to Londontown might now jump across the pond instead.  (Not only because it’s going to be harder to get to the UK, but I have a feeling a lot of Europeans are just gonna be POed at GB for leaving their club . . . and are gonna take their Euros to someone else’s party).

In the 2014-15 demographic study, we saw 18% of our audience comes from other countries.  I’m predicting that could grow a percentage point or two in the next several years as a result of Brexit.

Creatively, we get a lot of great product from the West End . . . and I’m also predicting that will slow down.  The big non-profits in the UK have received so much government support in the past (making us very jealous), allowing them to develop terrific productions that have proven both artistically and commercially successful, like War Horse and The Curious Incident of the Dog in the Night-Time.  But, in recessionary times, guess what is the first thing that gets cut from governmental budgets?  A-R-T-S.  Arts.  I’d expect that non-profits will be tightening their budgetary belts.

And, of course, our own stock market is tanking along with the rest of the world markets.  It was down over 600 points on Friday, or a whopping 3.4%, and was down another 260 points yesterday.  That means US citizens are poorer.  And when US citizens are poorer, guess what is the first thing that gets cut from personal budgets?  B-R-O-A-D-W-A-Y.

I expect the markets will stabilize shortly . . . but even if we gain a few European tourists over the next several years, the Brexit is bad for our industry.  And, in a year where I’m already predicting a correction (thanks to the upcoming Olympics and that little election that no one has been talking about), the timing couldn’t have been worse.

 

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Comments
  • Frank says:

    Yep… theater owners and producers better be putting some cash in reserve, because this season is going to be a tough one on Broadway. The roll over effect of one down season is that the next two or three years will also be affected… especially where London transfers are concerned.

    Will consumers demand cheaper options? We’ll see.

  • Mark Etherington says:

    But will the drop in the value of the pound make London a more attractive place for tourists from other countries to visit? Even if the UK restricts immigration it is unlikely to close its doors to holidaymakers. West End tickets may look cheap to our European and American friends.
    The drop of the value of the pound versus the dollar makes America is less attractive for us Brits to visit now. I couldn’t afford Hamilton tickets before, but now they’ve even further out of reach.

  • Carvanpool says:

    The list of correct predictions is very short.

  • Rich Mc says:

    Since you have again chosen to inject politics into your PP blog, as a long-time subscriber (& POG) I feel entitled to a rebuttal.

    I think Brexit, long term, is the best possible outcome for the UK, for three reasons:

    1. The Brexit Brits boldly took charge of their own national sovereignty which had been gradually eroding for decades. Key decisions impacting all EU member countries are routinely made by non-elected EU elites residing in Brussels. This is the very antithesis of Democracy; it was a rare day indeed that the national citizen interests of any given member country were upheld by these disinterested parties. To their profound credit, the man-in-the-street UK citizens largely understood & rebelled against this.
    2. The immigration policies you correctly alluded to, allowing member country citizens to routinely cross over & into any member country‘s boarders and effectively obtain permanent residency, had been destroying member countries’ millennia –old cultural identities. This was exacerbated greatly by EU rules allowing a massive influx of non-member immigrants (e.g. Syria, Afghanistan) into member countries. (We’ve seen the adverse results of this.) And, restricting these folks will not impact London’s EU tourist theatre. The true theatre-going foreign tourists will simply obtain visas going forward, and attendance should not diminish substantially.
    3. The tremendous cost of belonging to the EU, both in regular annual payments and in anticipated massive subsidies to keep laggard member countries (e.g., Greece, later, Spain, Italy, etc.) afloat. These costs currently trade off with the presumed positive benefits accruing from EU membership as a trading block, but expected draconian increases & defaults would very likely have had a net negative impact on the British economy & citizens over time. (They surely will on remaining solvent EU members.)

    Thus, there will be some short term, pain while the ROW adjusts. Longer term, the UK citizens are far better off with Brexit, along with their UK theatre.

  • RICK says:

    THANKS KEN!

  • Suzanne Friedman says:

    Hmm- you are making it kinda gloomy! In 2008-2009, we experienced the worst financial recession of our lifetime, and Broadway was only modestly affected.

    Found this article from the March 10, 2009 (the lowest point of the financial recession) edition of the New York Times that supports this assertion. Think it’s right on the mark. Long but worth it! Lets’ hope history repeats itself!

    The revival of “West Side Story” has drawn well in previews, showing that difficult economic times need not sink Broadway. Credit Hiroko Masuike for The New York Times
    Preview performances of the new Broadway revival of “West Side Story” have lifted spirits across New York theaters: drawing gross revenues of more than $1 million in each of its first two weeks, the show demonstrates that the appetite for plays and musicals is alive and well despite the recession.

    “West Side Story” is but one show — and a gold-standard audience magnet at that — but its gross receipts represent a clear fact amid the uncertainty about the near-term future of the Broadway economy: Audiences have not given up on the theater at this point in the downturn, and producers haven’t either.

    No major new Broadway production has been canceled because of economic or budget concerns so far this spring. Opening nights abound, from “33 Variations” starring Jane Fonda on Monday to “Blithe Spirit” with Rupert Everett and Angela Lansbury this Sunday to “Hair” on March 31.

    Over all, Broadway is on track to have 43 productions open during the 2008-9 season, an unusually high number at any time, but especially during a recession. By comparison, 36 shows opened during the 2007-8 season and 35 the year before.

    “Most of these new shows were being financed before the stock-market meltdown, or decided to go ahead even if they weren’t at 100 percent financing” as the extent of the faltering economy became clear this winter, said Charlotte St. Martin, executive director of the Broadway League, the theater industry association. “So there’s a lot of reason to feel good about the spring season and the commitment to New York theater.”

    At the same time, many of these shows — including most of those still to come — are star-driven productions that are only starting to build advance ticket sales, making it far from clear whether Broadway marquees will be bright or dark through this summer and into the fall.

    A rehearsal of “Hair,” which is now in previews. Credit Sara Krulwich/The New York Times
    “Hopefully, this run of new plays and musicals will sustain and flourish, but most of the new productions already have a closing date,” said Emanuel Azenberg, the Broadway producer who is casting Neil Simon’s “Brighton Beach Memoirs” and “Broadway Bound” for revivals next season. “What I’m wondering is, will we have more than 12 shows running on Broadway on Sept. 15? I just don’t know.”

    Some shows are filling more seats than others, but the latest data on Broadway attendance indicate that ticket discounting and other steps to attract audiences are generating some positive results. Total gross revenue for this season stands at $713.7 million so far, compared with $682.8 million at the same point last season. The 2007-8 total was diminished, though, by the stagehands’ strike that shuttered much of Broadway for 19 days.

    This January and February, compared with the first two months of 2008, there was a 27 percent reduction in the number of “playing weeks” on Broadway. (The 26 Broadway shows running last week represented 26 playing weeks, a business term used by the theater industry.) Despite that cut — due partly to the many productions that closed during those two months — Broadway shows experienced only a 14 percent slide in attendance over the same period.

    “In other words, even though we had fewer shows playing, we still had a lot of people going to the theater,” Ms. St. Martin said.

    No industrywide data exist on sales of premium tickets — priced from $250 to $350 for the best orchestra seats — in the current economic climate. In interviews, several producers said that the premium market was strong for some shows and weak for others, but ultimately represented a small fraction of overall ticket sales.

    Meanwhile, Off Broadway has fared unevenly. Some critically acclaimed productions that have closed have yet to find sufficient backing to move to another house, much less to Broadway. The Theater for a New Audience’s production of “Othello,” which received several raves, closed last weekend after a scheduled limited run, and is reopening briefly in April in hopes of winning support for a transfer to another theater.

    On Broadway and off, ticket sales are not setting many records in this economy; many long-running shows have started to see a falloff this winter, and one, the musical “Hairspray,” closed for good in January.

    “Our biggest uncertainty is, with all the new shows, how many seats will be sold?” Ms. St. Martin said. “We’re crossing our fingers and hope that the good marketing of our producers and all the excitement of the new shows will get people to the theater.”

    The long-running musical “Wicked,” which routinely brings in the most revenue week to week on Broadway, was down about 4 percent in box office business during the first nine weeks of 2009 compared with the same period in 2008. (The show is still making a healthy profit.)

    The three Disney shows — “The Lion King,” “Mary Poppins” and “The Little Mermaid” — have sold a total of 298,000 tickets during the first nine weeks, compared with 309,000 during the same period last year. The longest-running and most popular of them, “The Lion King,” has held roughly steady, Disney executives said, while “Mary Poppins” is down 4 percent and “The Little Mermaid” is down 7 percent.

    Still, Disney took steps like a “Kids for Free” marketing campaign this winter to help build advance ticket sales as a bulwark against the uncertainty of week-to-week sales in this economy.

    “We sold about 45,000 seats in the whole promotion, which helped our overall ticket sales go better than I would have thought this winter,” said David Schrader, chief financial officer of Disney Theatrical Productions. “We were expecting both domestic and international tourism to fall more sharply. Maybe it will continue to reduce, but even if it does, we’ve taken good steps to protect our shows.”

    Among producers and press agents, concerns about the months ahead on Broadway have less to do with the number of shows opening this spring than with the ability to raise capital to finance new shows for next season, as well as the marketing calculations — ticket pricing, discounts, building word of mouth — needed to draw audiences.

    This spring should provide extensive evidence for what lies ahead, with the large number of diverse shows — from the plays “God of Carnage” and “Mary Stuart,” which had successful productions in London — to original American works like the plays “Impressionism” and “33 Variations” and the musicals “9 to 5” and “Next to Normal.”

    “The biggest concern at this point is how the spring shows do: If they do well, or relatively well, then the shows in the pipeline will go ahead,” Ms. St. Martin said. “If they don’t do well, then we may have a problem for the next season. We just don’t know yet.”

  • Allison DeWitt says:

    As a non-British European, I agree with all your points. I’ve been to London, and to the West End. many times. And now I’m not sure I will feel safe there the next time I go. Attaks on immigrants have already started, and it’s only a question of time until a tourist gets mistaken for an immigrant and is attacked, or even killed. Britain doesn’t feel like a safe place anymore.

  • Iris says:

    Not sure this will effect tourism all that much, to be honest. There are plenty of other countries in Europe that aren’t in the EU (like Switzerland and Norway), and it’s still perfectly easy to travel to. In fact, it’s still easier than to go to the US because all European citizens still need to get and pay for the visa waiver for the USA, which is not required for non-EU countries. And it’s a lot cheaper and quicker to get on a plane to get to London than to New York.
    And the Brexit didn’t really change how the UK people felt towards foreigners from one day to another. It just numbers on it. And I know that a LOT of people desperatly didn’t want it, and that London especially voted against the Brexit with a big majority anyway.
    Also, the memory and attention span of people is pretty short. Even if some people might not book a trip right now because they are concerned they probably will again in a few weeks/months.

    That being said, I think your right about your other points made.

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