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.

Curtains closing. But what is missing?

Look at these three clippings announcing the final curtain of Curtains:

The New York Times

Broadway.com

Playbill.com

What is missing from each of these announcements?

Ok, you don’t have to read them all, I’ll tell you . . .

There’s no indication of whether or not the show recouped or not.  Which means . . . it didn’t.

Sad.

This is what’s wrong with the the current economics of our industry.

Here’s a show that got some decent reviews, has stars (including one that won a Tony for his performance), ran more than a year, had decent word of mouth.  It wasn’t a great show, but it was fine.

I wouldn’t expect stellar profits from a show like this, but I would expect to break-even, wouldn’t you?

Maybe it will, eventually, through subsidiary rights and additional companies all over the world.  But we should work hard at making our investors whole based on the Broadway experience alone (the more we give them back, the more they’ll put it back in).

A great show (as determined by the audience) should produce great returns.

A decent show, should produce decent returns.

An ass show, should produce ass returns.

Or that’s my goal anyway.  I hope it’s yours (except for the ass part).

Another pricing post. Don’t “cry” – this one is only $54!

I couldn’t help but continue with my pricing motif when I saw the Cry Baby marquis this weekend advertising “All Tickets for Previews Only $54!”  (The show is set in 1954. Get it?  1954.  $54.)

The hopeful Producers of Hairspray II are betting that this reduced price (about the same as what the price would have been at the TKTS booth) will pull in more of an audience during the ever important early weeks, when a show’s expenses are high and grosses are low.

But will it work?

By slashing their prices across the board, they have eliminated the consumer’s option for choice, which breaks my Kardinal Kenism:

There is always someone who wants to fly first class.

First class may seem out of reach for most of us, and a full price ticket might seem too expensive for an unproven show in previews for most of us as well, but data shows there is always someone who will buy it, no matter what the price is.  They just want “the best.”  Dance of the Vampire, Moose Murders, Carrie . . . all of the biggest flops in history had full price ticket buyers during previews.  Stupid ones, but still.  My opinion?  Just take the money.

The other problem with across the board pricing strategy is that your
TKTS price is proportionally adjusted.  So, the Producers of Cry Baby aren’t only losing income from the potential $115 ticket buyer who is now
paying $54, but they’re also losing money from the people who would have
paid $57.50 at the booth (50% of $115) who are now going to pay $27 (and remember – at the TKTS booth, you don’t see the actual prices display . . . only 25%, 35% or 50% off, so the customer thinks they are all the same).

The Producers of Baby are smart people.  They understand the above theory.  But obviously they believe two things:

  • They believe they are going to sell approximately 2x the number of tickets from this promotion than they would have sold using traditional pricing.  Even if they sell the same, they will have double the butts in the seats.  And more bodies = more word of mouth.
  • The public discount will allow them to spend less on advertising so they can avoid certain email blasts, direct mail, etc. which reduces their overall expenses.

Time and Variety will tell how this theory works, but if I were playing my favorite game, I would have made a different call.

I would have priced it more traditionally, based on my first class rule above, and because I don’t believe that the price is that remarkable of a call to action.

Then I would price the entire house for just the first preview at $19.54.

That’s a price worth talking about.  And it would have gotten the most people in to the see the show early, so they would hopefully stop talking about price.

And start talking about the show.

This just in . . . theater tickets are expensive.

Ok, you knew that already.

But here’s something you may not have known . . . They’ve always been expensive.

Hal Prince once gave a speech where he confirmed my theory that people have been complaining about theater prices since The Black Crook opened.

Yet one of the most common complaints I still hear at meetings regarding the problems of Broadway and the theater in general is that tickets are too expensive and if we could only fix that, the theater would be restored to its past glory!

Sorry, not gonna happen.

As Hal insinuated, it’s time we acknowledge that theater tickets are expensive and get over it, because it’s not gonna change.

Theater tickets are a high priced commodity.  They are a luxury good.  But are they too expensive?

Let’s compare Broadway theater tickets to other live entertainment options:

  • A recent scan of the web found me a pair of Bon Jovi tickets for a top price of $129.50 in Wisconsin (something tells me people in Milwaukee may earn less than people in New York City so $129.50 might feel like a heck of a lot more to them).
  • The Yankees offer a bunch of different ticket options, including SEVEN price levels at $100 or higher (up to $400).
  • Top price for Ka in Las Vegas?  $169.50.
  • Disney World?  $71.

Our ticket prices are not out of line.  They are even cheap by some comparisons (something tells me those $400 Yankees tickets will go faster than premiums to A Catered Affair).  And most Producers (as they should) have a small allocation of much lower priced seats to offer those who can’t afford the high priced options (lotteries, rush, etc.)

People will pay the $125, $250 or sometimes even $500 for the
right ticket to the right show, which demonstrates that people are not
price resistant.

They are value resistant.

We need to stop worrying about how to decrease prices and start worrying about how to increase value.

Your customers will pay top dollar plus for an experience that they believe is worth it.  Your job is to make the value of your ticket seem even higher than the price your customer is paying so it seems like they got a bargain.

Oh and to all the people that say we need to cut the price of the ticket to
save the American theater, I point to all of the shows that have
discounted tickets down to the $20s and $30s to “save their show” only
to still see them close (there is no value in a crappy show).

And, vice-versa, every time I’ve raised prices on a Broadway or Off-Broadway show, attendance never drops.

The day of the $1,000 theater ticket will be here some day, and as depressing as that sounds, don’t worry.  It’ll still be less than what a lot of people pay for tickets to the Super Bowl or The Kentucky Derby.

I’ve got the mouse on my mind.

I was looking at a bunch of different Broadway budgets recently and I wanted to compare the budgeted breakevens with what the market was currently bearing.

I wanted to see what shows were grossing over $700k, even in the tourist-free winter months, so I flipped open my Variety and here’s what I found:


Broadway Grosses w/e 02/10/2008
Wicked                            $1,310,705
Jersey Boys                     $1,127,362
The Lion King                      $962,925
The Little Mermaid              $889,942
Mary Poppins                     $731,687

What’s interesting about this?

The mouse has 3 of the 5 shows above $700k.

And this list looks very similar if you look at the week before.  And the week before that.  AND the week before that.

Leverage works.  So well, in fact, that it’s a little scary.

You know what else is interesting?

Of these five musical behemoths, only 2 got good reviews from the New York Times.

SIGN UP BELOW TO NEVER MISS A BLOG

X