Sorry Rent-Heads . . . no day but tomorrow.

While the characters in Rent can live the words of a Godspell tune and live day by day by day by (repeat ad naseum), your job as a Producer is different.

Your job is to look at tomorrow, and then take steps today to make sure you’re around tomorrow.

According to Riedel, the producers of Young Frankenstein have looked at their forecast and have realized that they need to make some significant changes in order to maintain economic viability.  That’s what big business does.

What is unique about YF‘s situation is that they are going after the actor salaries.

Contract re-negotiations on Broadway are always difficult, as, naturally, everyone wants to see an increase after a job well done and after a year of service.

Your job as a Producer is to figure out how much you can afford, based on several factors including:

  • The economic forecast of the show and . . .
  • The cost of replacing the actor.

Failing to secure an actor during a renegotiation means you have to replace him/her.  And that can be expensive.  It’s your responsibility to do that math.  Add up the costs for rehearsal space, casting, rehearsal musicians, new photos, rehearsal salaries and, gulp, new costumes!  An additional $1000/week or $52,000 (plus benefits, etc.) in additional salaries may sound like a lot, but depending on the role, $52k might easily be eaten up in replacement costs.

However, new cast members sometimes gets new press, repeat customers (casting is one of the few things we can do in the theater to update our content), etc.

Up to you to choose wisely.

YF is doing the fiscally responsible thing for their investors . . . however, it ain’t gonna look that way to the artists when they hear they’re getting a cut instead of a bump, no matter how much they are being paid now.  One of biggest issues we have in our industry is that businessmen and artists have a hard time speaking the same language, which creates a natural adverserial relationship.  It’s hard for each party to even understand what the other goes through every day.

What would I do to make sure this bad medicine goes down smoother?

Take it myself first.

Riedel suggests this as well, and I have to agree.  And it would be the first thing I’d say in a negotiation.  “I’m reducing.  We’re all reducing.  So we’re asking you to reduce as well.”

Much harder to counter that argument.

And sometimes you gotta take the shot in the arm, to show your kid you’re willing to endure the same pain.

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Only 2 days left to play The Producer’s Perspective Tony Pool!  You can win an iPhone!  Play today!

Will that be cash or cash?

You won’t hear that line when you’re standing in line at the TKTS booth anymore, if the current test taking place at the South St. Seaport location is successful.

Yep, that’s right, the “trailer” (as it’s commonly referred to), will take credit cards when the new location opens in Duffy Square (a year and a half behind schedule).

My response to this adoption of credit card technology?  Welcome to 1983, TKTS booth!

Ok, sarcasm aside, I am thrilled that thousands of theatergoers will finally be able to pay with plastic instead of paper.  But why the decades of delay?  This is a perfect example of our industry lagging behind the technological times, and suffering for it.

In Influence (my favorite sales book of all time), Cialdini discusses credit cards in depth, and cites studies that demonstrate that just accepting credit cards and displaying a credit card logo got consumers to spend more money . . . in cash!  People spend more when they use credit cards, it’s that simple (NYC cabbies take  heed – you will get  bigger tips, so stop telling me your machine is broken).  Why do you think cruise lines don’t accept cash on board but only let you put expenses on your cruise charge card (one of my employees is on a cruise right now – I should ask for her expert opinion as to whether she would have ordered that many Daiquiris if she paid in cash).

Add that to the zillion other reasons people like to use credit cards (postpone payment, get rewards, avoid ATM fees, loss prevention, fraud protection), and it’s no brainer that it crushes the few potential concerns the naysayers have had:  transaction times might be longer (I’d like to see data on that, because it seems issuing changing and having a buyer dig out bills would take longer than a swipe), there is a cost (happily borne by the shows and TDF can probably turn a deserved profit), and my favorite . . . that paying with a credit card is too easy for the consumer and that they should have to go through some inconvenience to get this discount (as if standing in line for hours isn’t enough).

Here’s my response:  When people want to give you money for your product . . . take it!

Why make it more difficult?  Especially when you’re selling a product in an extremely competitive and economically challenged market.  Selling bottles of water in the desert and there ain’t an oasis in sight?  You can restrict your method of payments to gold bullions or tea leaves for all I care.  But selling perishable inventory without any other major revenue streams?

In 2008, the consumer’s experience and the ease of that experience is vital.  We can’t be snobs anymore and expect them to pick us over the countless other entertainment options in this city (it was only in the 80s that we started allowing people to know their seat location before making their purchase.  Can you believe that?  Who do we think we are?)

We need to get over ourselves.

In 2008, the consumer is in “charge”.

Degrees-R-Us.

According to census data, the percentage of the American population with college degrees keeps rising, with 28% of all workers over the age of 25 reporting having completed their undergraduate education.

According to Broadway League statistics, 76% of our audience has completed college.

Here’s my bullish thought of the day:

If college degrees are rising, and people with college degrees go see theater more than others, isn’t there a tremendous opportunity for the expansion of our audience instead of the decline?

And if there is such a overwhelming correlation between higher education and attendance at the theater, perhaps our audience developmental programs should focus on colleges and universities around the country.

Here’s what I do for the next survey.  I’d find out if there are certain schools sending more people to Broadway shows than others.  If we found a few, I’d develop partnerships with those institutions to continue to expand on what we know is working already.

I call this sort of technique fan-the-flame marketing.  You find out where the spark of your audience is.  Then you go blow on it, until it turns into a roaring fire.

Comps cost money.

If you’ve ever gotten a free ticket to see a show, you cost the Producer money.

With ticket printing costs and liability insurance, you could be looking at fifty cents to a dollar per comp, not to mention the labor associated with filling the orders, etc.

Doesn’t seem like a lot, right?  Well, one of my favorite sayings is that a lot of a little equals a hell of a lot.

It would not be unheard of for a Broadway show to have 10,000 comps during the first year of a run (think papering for previews, trade deals, etc.)

That’s $5k – $10k.  That’s some expensive paper, isn’t it?

So what if we took a lesson from mail order companies that offer FREE products as long as the customer pays for the “shipping/handling”?

Here’s my proposal that I’m going to institute at my shows this week:  Charge $1 processing fee for each comp to cover your costs.  And, if you can get that fee up front, you’ll also get a stronger commitment from the consumer to actually show up for the show, as comp ticket attrition is one of the biggest problems with papering.

The takeaway?  When producing a show and looking to cut expenses, a lot of people just look at the big things.  Don’t.

Termites aren’t very big, but put a whole lot of them together, and your house will be history.

Did I say inflation? I mean Enflation.

Yearly_inflation_rate
In Monday’s post, the article I referred to mentioned a capitalization of Wonderful Town of $225,000 and a ticket price of $7.20 in 1954.

A reader turned me on to a site that could tell us what those numbers would be in today’s dollars, taking inflation into account, using the Consumer Price Index.

The results?

$1,725,934.60 cap.

and

$55.23 top ticket

Oh, if only a major Broadway musical could be done for $1.7 million.  And if only the tickets were only $55.23.

Wonderful Town in 2008 would probably be $10 million, more than 5 times the 1958 version when adjusted.

We’ve got our own version of inflation.  Expense inflation or Enflation as I call it.

Should we be surprised that recoupment is more and more delayed when are expenses are increasing so dramatically?

Yes, it’s the stagehands.  Yes it’s theater rent.  Yes, it’s health insurance.  Yes, it’s advertising.  Yes, it’s everything. And, as producers, we have to look at everything.

Interestingly enough, the article also mentioned a weekly nut for Town of $44,000 (a weekly “nut” on Broadway is a term used to decribed the amount of money required by a show to pay all its expenses, or the show’s breakeven).  .  Converting that to current dollars gets you $337,516.10.  That’s closer (I’d guess that a new revival would cost about $500k/week give/take).

This is a down and dirty statistical analysis, and inflation indexes don’t measure improvements in quality which come with price tags (although, if we can’t financially support it, maybe we shouldn’t buy it – would you buy a brand new computer with the best technology if you knew you might be out of work and lose your house in 3 months?).

However, even with these rough numbers, if I were looking to start addressing where our biggest Enflation has occured (and I am), I’d start with the upfront expenses.

At $15 million dollars a musical, we’re starting ourselves so far in the hole, it’s hard to get even halfway out.

And then we look like A-holes to our investors.

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