Podcast Episode #249: Answering 10 FAQs on Broadway Investing

ESTIMATED LISTENING TIME OF THIS EPISODE: 21 Minutes

 

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ABOUT THIS EPISODE:

Before I crowdfunded Godspell, I had a thesis.

“There are thousands of people out there who would love to invest in Broadway shows . . . they just don’t know how to do it, or who to talk to.”

Sure enough, when we announced our plans for Godspell, thousands of leads poured in. In between placing all those return calls I remember thinking, “Huh, will you look at that . . . I got this one right.”

Of course, not all those people invested (in the end we had about 750 investors), but thousands expressed interest and proved my thesis correct.

And all those thousands of people had questions.

Five years later, people still have questions about investing in Broadway shows. As I’ve spoken to more and more potential investors, I’ve noticed that many of the questions are the same.

That’s why I’ve created this FAQ for Broadway Investing. So whether you’re a potential Broadway Investor looking to dip your toes into our theatrical waters, or whether you’re a Producer looking to raise money for your show, I think you’ll find these Qs and their appropriate As helpful.

 

Mentioned In This Episode:

 

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My mission is to get more people talking about the theater.  The more people talking about it, the more people who want to make it, perform it, support it, etc.  And that’s how theater not only survives, but thrives.

The biggest compliment you can give me is by sharing this podcast.

I thank you and the theater thanks you!

What you’re worried about when raising money.

Last week, I posted a question to find out what was worrying TheaterMakers about raising money. In a pandemic.

We had a slew of responses . . . which inspired me.  

Why?

Because it told me how many of you out there are taking your art into your own hands, and making it happen. Because what I’ve discovered by interviewing hundreds of successful TheaterMakers, is that success came the fastest to those who did just that.

And when you inspire me, I want to help.  

But first, here are the Top 3 Things That Worried TheaterMakers About Raising Money right now:

  1. How do I find people who want to invest . . . in a pandemic?
  2. How do I get investors to invest right now . . . while we’re in a pandemic?
  3. How do I make “The Ask” . . . in a pandemic?

You get the theme.  And I’ve got some answers for you.

I’ve been talking to investors over the last few months about how THEY are feeling right now and what is motivating them to invest (many ARE). I’ve also been chatting to many of my peers about how their work of raising funds for their productions is going – and their feedback has been super insightful.

I’m putting together all their thoughts and my thoughts into a Special Report on what is a very important issue. (Let’s face it – without investors and investment – whether that’s in grants, donations or commercial investments, theater can’t be made.)

The report will drop on August 17th at 8am EST. In 2021, I’m more mindful of everyone’s inboxes than ever . . . so if you want the report, click here and sign up. I’m going to deliver it only to people who want it.  

If  you’re looking to raise funds for the theater in the next 1-3 years, then click here. It’ll help.

And to kick off some assistance, I’ll give everyone who signs up and needs some help right now, a free copy of my book, “How To Raise Money For The Arts . . . Or Anything.”

Click here.

What does the Bitcoin frenzy mean for Broadway?

Here’s something only a handful of people know: a few investors of mine have used Bitcoin to invest in one of my shows.

It was something we were going to release when it happened because I thought it was a sign of something to come.  Turns out it was.

We ended up not releasing the news because, well, the investment didn’t work out so well.  (sigh)

But the investments happened.  And I’m pretty sure that it was the first-ever Bitcoin investment in a Broadway show.

But it doesn’t look like it’s going to be the last.

The idea for taking the investment came from one of my investors, actually.  She also advised me to buy some.  I did.  And it dropped.  And I sold it.

(Side note . . . it turns out that “buy and hold,” which is what every savvy financial advisor since the invention of financial advisors has advised, is a decent strategy.)

Bitcoin is back in the news, especially with yesterday’s revelation that the world’s 2nd most infamous tweeter, Elon Musk, announced Tesla invested over a BILLION DOLLARS in the cryptocurrency.

What does this mean for Broadway?  And Broadway investing?

Will you be able to buy tickets for Broadway shows with Bitcoin? Could SeatGeek, the new ticketing platform on Broadway, be the first to accept this alt-coin?

If Football players can get paid in Bitcoin, will certain Broadway stars want their cash in ‘coin?

And more investors jump on the train that my investors choo-chooed and invest in Broadway shows with alt-currency?

The answer to all these questions is Yes.

But not for a while.

Broadway doesn’t move as fast as electric car companies, or national sports leagues.  We’re slower to adopt new technologies.

Which is too bad, really.

Because look what Forbes Advisor, Taylor Tepper says about investing in Bitcoin:

“But when it comes time to actually plan out your future, it is something that should be viewed as a speculative bet as opposed to one that you can really rely on. You should go into that with every pretense of ‘this money could be worth nothing tomorrow.’ So that is money that you can afford to lose.”

This is the same thing I tell my new investors before they write a check.  And it’s what I recommend new producers tell their investors as well.

So . . . there could be a crossover in risk appetite between Bitcoin investors and Broadway!

The big difference between Broadway investing and Bitcoin?  Well, you can invest ANY amount of money in Bitcoin . . .  you don’t need to buy a full coin (now over $40,000 – thanks Mr. Musk!).

While it is possible to purchase partial shares of Broadway shows, those partials very rarely go below $10,000. My crowdfunded Godspell was that rare experiment that allowed the micro investor to get involved.

That proved, and this Bitcoin phenomenon proves, that keeping your investment minimums high may not be the way to raise the most money.

What about you?  Do you own Bitcoin?  Are you considering it?  Would you also invest in a Broadway show?  Are the two similar to you?

Comment below.

– – – – –

If you’re looking to learn more about how I crowdfunded Godspell, check out the courses on investing and raising money in the TheaterMakersStudio. For less than the cost of a ticket to see a Broadway show, you can learn how to raise the total cost of that same Broadway show.

7 Predictions For When Broadway Comes Back. Part I

I spend a good 25% of my day thinking about what we’re going to look like on the other side of this thing.

It’s not the healthiest activity to engage in. Things change so fast, it’s hard to know where we’ll be tomorrow, never mind next March (fingers crossed).

But I do it anyway. And I know you do too.

So I thought I’d share three predictions that I see coming as a result of the Broadway shutdown.

Oh, and big ol’ disclaimer . . . every time I make a prediction, by the time I finish making it, something changes.  So I promise to have another set of these suckers in a few months.  Make sure you get ’em by signing up here.)

Here are my predictions as of today:

1. More shows will come in cold.

We’ll have a lot fewer out-of-town tryouts in the coming years, especially in the short term. In fact, I’ve heard rumors about a few new shows that have already committed to coming straight in.

Why? Won’t we still need the creative R&D?

Yes! But the current, previous out-of-town model will be too expensive in the new Broadway economy (see Prediction #2).

And, the out-of-town tryout will also be too . . . well . . . out-of town! Even with a vaccine, trust in travel isn’t going to appear overnight. I expect artists will prefer to keep their circles smaller and stay-at-home, if they can.

Which brings me to . . .

 

2. Everything will cost less . . . because it will have to.

Costs have risen like a rocket over the past several DECADES.

It was hard to keep a lid on ’em, to be honest, since the mega-hits were earning so much mega-profit.

Vendors, unions, and everyone who makes a living on Broadway set their rates based on the best possible scenario, not average scenarios. So, as long as one out of five shows continue to recoup, it’s hard to make the argument that expenses are out of whack. (We’ve had a 20% success rate since we started keeping track!) 

But that potential has changed. Tourists account for 65% of our audience, and right now many can’t come to the city without quarantining for 14 days! Unemployment is 50% higher than it was in 2008. And our audience has said they’re not sure when they are going to come back.

Does that mean we do nothing? NO. We need to produce shows. We need theaters lit. The ONLY way we get back to where we were before and beyond is to raise the curtains. When our audience hears the roar of the crowd and smells the greasepaint, they will run back.

But how do we do that if the risk is HIGHER than it was pre-Covid? You stimulate the production by decreasing the costs . . . across every budget line.

 

3. Broadway Investors will get better returns.

And hey, hey, Broadway Producers (this guy included), don’t think you can ask everyone else to cut expenses and not cut your potential as well

Because here are two truths . . .

First, you know what is going to be hard to do in the next year? Get people to invest in Broadway.

You know what helps stimulate investing in Broadway . . . or in anything? Giving Broadway investors better returns.

We’re asking for the people we “deal” with to change their models . . . we’re going to have to change ours.

 

Phew . . . this is a lot to digest. My anxiety level just spiked and I have three predictions to go!

I’m going to go drown that anxiety in a big, sugary coffee from Starbucks. I’ll tell you the other three things (including the BIG ONE) in tomorrow’s blog.

Don’t want to wait? I already wrote the other four predictions. If you want them now or are afraid you’ll miss them tomorrow, then fill in the form below.

But don’t say I didn’t warn you! Anxiety ahead!

“Give me the rest of them now, Ken!”

 

FILL IN FORM BELOW:






[SURVEY RESULTS] Will Broadway need an Investor Stimulus Package?

The focus of everyone in the theater industry over the past few weeks has been on two questions:

  • When will Broadway come back?
  • And when Broadway comes back . . . will our audience come back with it?

These are vital questions, of course . . . but there is another super important query that hasn’t been discussed yet.

  • Will the Broadway Investor come back?

Broadway is a collection of small businesses.  And except for a few movie studios and the non-profits, all of the shows are funded by individual investors.  It’s because of said Broadway Investors’ passion and appetite for the arts (despite the enormous risk) that everyone who works in the theater has a job.  Period.  From Producers to Performers to Writers to Ushers to Ad Agencies to Reporters.  Everyone’s salary is paid by the Broadway Investor.

So, if those Investors don’t come back . . . well, I think you get the point.

Will they or won’t they?  And since almost every person on the planet has less money now than they did three months ago, will our investors have enough capital to risk?  Will Producers be able to raise enough to fund a $15mm, $20mm, or $30mm production???  Would the money for groundbreaking productions like Hadestown, Dear Evan Hansen, or even Hamilton been raised in a post-pandemic world?

And if the box office for Broadway goes down (which it’s going to), then the risk of investing in Broadway goes up.  So if our industry has suddenly become higher risk, and our investors have less money than they did, what do we need to do to make sure they continue to invest?

These were the types of questions that I’ve been asking myself as I have been trying to sleep at night.  They are the same questions that have turned my hair a wee bit grayer (as you can see poking out from underneath my hat on my livestream.)

Which brings me to this blog.  See, whenever I have anxiety-inducing questions that I don’t have the answers to, I just ask the people who do have the answers.

In this case, that means asking actual Broadway Investors.

So that’s what I did.

I sent out a short survey to actual, real-life, Broadway Investors . . . both my own, as well as people who I know have invested in Broadway shows, but have not invested with me.  I also enlisted the help of some of my peers who sent out the survey to their investor list.

And while I’ve surveyed Broadway Investors before, I was unsure of the response rate we’d get.  I mean, let’s face it, there are more important things for a lot of folks to think about right now than investing in Broadway.

Shows you what I know, because we had a tremendous response . . . double my usual survey response rate . . . which yielded a sample size of several hundred Broadway Investors.  (The high participation rate also shows you how passionate Broadway Investors are about Broadway.)

Ready for the results?  Here they are:

 

RESULTS OF THE BROADWAY INVESTOR POST COVID-19 PANDEMIC SURVEY

First, we started with some demographic info to get a sense of who the Broadway Investor is, where they are, etc.

1. What is your age?

18-24…0.00%

25-34…5.29%

35-44…13.22%

45-54…16.74%

55-64…33.48%

65+…31.28%

2. What state do you reside in?  (Only reporting the top states)

New York…48.20%

California…14.41%

Florida…5.41%

Massachusetts…3.60%

New Jersey…3.60%

Connecticut…3.15%

Texas…3.15%

Illinois…1.80%

District of Columbia (DC), Maryland, Ohio, Pennsylvania, & Virginia….1.35%

This info is fascinating by itself as it gives you a glimpse of where our money comes from.  Obviously, how these specific states bounce back from Coronavirus will affect the individual investors’ propensity to invest.  So get to it, California!

(And by the way – you can see that the Broadway Investors’ whereabouts coincide with the whereabouts of the Broadway ticket buyer – proving what we all know but sometimes forget – the Broadway Investor IS the Broadway theatergoer.)

Ok, back to the survey.  Now that we determined who we were talking to, we got into their investor history . . .

3. How many shows have you previously invested in?

0…0.44%

1…12.83%

2-5…33.19%

6-10…23.89%

11+…29.65%

4. On average, how much do you invest in each Broadway show?

$10,000-$25,000…40.53%

$25,000-$50,000…33.04%

$50,000-$100,000…12.33%

$100,000-$250,000…7.93%

$250,000-$500,000…4.85%

$500,000+…4.85%

As you can see, once a Broadway Investor gets the bug, there is a tendency to keep investing.  Over half of the respondents invested in more than SIX shows . . . so far!  But, because they like to play the volume game (which also diversifies their investments), an overwhelming majority (almost 75%) keep their investments under $50k.  And in addition to diversifying their Broadway Investment portfolio, they also get to more opening nights.  🙂

Now we started to get to the pandemic-related investing questions in the survey:

5. Before the pandemic, how likely were you to invest in Broadway in the next 12 months?

Definitely…20.18%

Very likely…17.54%

Most likely…31.14%

Not very likely…27.19%

Definitely not…3.95%

6. Now how likely are you to invest in a Broadway show in the next 12 months?

Definitely…2.19%

Very likely…4.39%

Most likely…18.42%

Not very likely…50.00%

Definitely not…25.00%

Ok, here is when you start to see the effects of the pandemic on an individual’s willingness to invest in the short term.  A startling 20% were DEFINITELY going to invest in a show in the next year, and now that has decreased to just over 2%.  Yikes.  And the DEFINITELY NOTS are the reverse ratio, with now 25% saying there is nothing that can be done to get them to invest in the next 12 months.

And 75% of those polled are in the “not very likely” or “definitely not” categories compared to 31% before the pandemic.

Not so good.  But are you surprised?  Everything people like to do, whether that’s investing or eating out, will be done with much less regularity in the post-covid world.

More questions . . .

7. If you were to invest in a Broadway show in the next 12 months, how much would you invest?

Same as my average…38.53%

More than my average…0.92%

Less than my average…26.61%

Depends on the production…33.94%

8. Before the pandemic, what types of shows were you investing in?

Plays…42.99%

Musicals…81.31%

Revivals of plays…24.77%

Revivals of musicals…38.79%

Depends on the production…33.18%

9. Post-pandemic, what types of shows will you consider investing in?

Plays…19.23%

Musicals…43.27%

Revivals of plays…12.02%

Revivals of musicals…21.15%

Depends on the production…67.79%

Looking at what they’ll do in the future, I was genuinely surprised to see that the majority would either continue investing their usual amount, or would vary that amount depending on the opportunity.  My takeaway?  Investors are going to be looking for value.

You can get the same takeaway from the types of shows they say they will be interested in investing in post-pandemic.  Many have lost their passion for one category and stated that the type of shows they will invest in will depend on that production itself.  The show with the most value will win.

10. Complete this sentence: After the pandemic, investing in a Broadway show will be…

Riskier…70.62%

Less risky…0.95%

Just as risky as it was before…28.44%

Duh.

Obviously I knew what the answer would be here . . . but I asked it anyway because I was more interested in the percentage of people choosing the “just as risky” option, which, honestly, was higher than I expected.  There are some optimists out there!

And now . . . here comes the literal money shot question of the survey.

11. Which of the following would increase the likelihood that you would invest in a Broadway show in the next 12 months?  (You may check more than one)

A vaccination…69.34%

Less expensive production costs…54.72%

Less expensive weekly operating costs…54.25%

Economic recovery…51.89%

Antibody testing…46.70%

Stars/Celebrities…21.70%

Other…17.92%

Obviously a vaccination is what will get the world spinning again, not just Broadway.

But most likely, the folks reading this blog aren’t going to be able to control when we get a vaccine.  That’s why we need to focus on what we can control.

Which brings us to the 2nd and 3rd most popular answers to this question . . . over antibody testing or even economic recovery . . . decreasing our costs.

And it makes sense.  Because when an industry’s risks go up, the savvy investor (which is what we obviously have here), doesn’t just run for the hills, never to return . . . they say, “Show me you’re doing something to balance this increased risk, and I’ll come back.”

And that, all you Broadway Investors out there, is something we can control.

 

So, overall, what do I think now that I’ve done this survey?

Well, some people might look at all of the above responses to this survey and get depressed.  I didn’t.  In fact, after seeing these numbers, I am JUST starting to sleep at night (the hair isn’t going changing back from grey, however).

What I see in the data above is that the Broadway Investor will return . . . we just need to make it more valuable for them.  They see it as riskier.  We immediately make it less risky by reducing the costs (as they are asking for), and by doing what our job has always been . . . to find them great shows by great writers with great actors that they can’t NOT invest in.

It’s not going to be easy.  It’s going to take all of us working together.  But this is not only what our Employers (aka Broadway Investors) want, but it’s what they need to keep playing our now even higher-risk game.

And if we don’t, well, a whole bunch of us might be looking for new jobs.

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Interested in learning more about investing in Broadway shows, including how it works, as well as more strategies to reduce the risk and increase your return?  Click here to get the bestselling and only book on the subject.

 

P.S. Join me and tonight’s guest, Kerry Butler, on The Producer’s Perspective LIVE! tonight on my Facebook page at 8pm EDT.

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