LAST CALL for our Broadway Investing Seminars.

Note to self . . . when you don’t do things for a long time that were very popular, and then do them later on, they tend to be popular again.

This happens to be the theory of why certain Broadway shows are revived.

And this also seems to be why we’ve had so many folks register for our two upcoming seminars about the ins and outs of Broadway Investing.

As I wrote here, I used to do these seminars twice a year for people who were interested in learning more about Broadway Investing, and for those folks who were looking to raise money and wanted to know how Broadway investing worked so they could explain it to their investors.

They were always popular.

I stopped doing them for a while, focused on publishing this book on Broadway Investing (the only book on Broadway Investing, I’m proud to say) . . . but the seminars are back, baby!

And based on the signups we had when I first announced it, both upcoming sessions are going to sell out, so I wanted to give you a LAST CALL before the seats are gone.

Here are the dates:

Tuesday, March 10th at 7 PM (extremely limited availability)

Monday, April 6th at 7 PM (limited availability)

Click here to sign up now and join other theater fans like you interested in learning more about . . .

  • How profits are split for Broadway Investors (including how Producers are paid)
  • Finding projects to invest in (including my strategy for picking a winner)
  • What besides profits you can hope to get from investing in a Broadway show (yes, we’re talking perks!)
  • Tax implications of Broadway Investing
  • And more . . .

Oh, and everyone who comes will get a free copy of the book, Broadway Investing 101.

I expect March 10th to sell out in the next 48 hours (and I’m keeping these seminars intimate to make sure I can answer everyone’s questions), so sign up now.

Last call everyone!

www.BroadwayInvestingSeminar.com

Putting The Fund in Funding on Broadway

I never believed in them.  For Broadway anyway.

Sure, investment funds were fine when you were buying a basket of boring stocks to prepare for your retirement, but for Broadway?  For any kind of art where so much emotion is involved?  One of the key criteria I recommend in this book before anyone invests in a Broadway show is to make sure you love the show.  I never thought investors would take to getting in a bunch of shows at once, especially if that fund was blind.

In fact, after I crowdfunded Godspell, a whole bunch of my micro-investors (customers, in this case) suggested that I start a fund.  “Nah,” I said.  “People want to know what posters they are going to hang on their wall.  They won’t want to do this.”

Idiot me was telling my own investor/customers what they would do and wouldn’t do.  (That’s like Ben & Jerry’s saying, “No, you won’t like that flavor,” after some of their most passionate cone buyers tell them they would.)

Flash forward five years later, and one of my most trusted mentors/Broadway investors suggested it again, AND said she’d start it off with a check.

This time, I listened.

I called the same terrific lawyer who helped me through Godspell, and I popped open a trial “starter” fund to give it a whirl.  (Sometimes you may have to beat me over the head with an idea to get it to take root, but, once it does, I get that seed to sprout pretty damn fast.)

In this case, the fund was for “Front Money” only – the earliest investment dollars a Broadway Producer needs, which historically has been the hardest money to raise on Broadway.

And, yet, this Front Money Fund was the easiest money I had ever raised.  And it’s also the reason I have four new musicals debuting in the next 18 months (more about that later).  Because when you give an Artrepreneur capital, they’ll make stuff with it!

When I asked why they liked the fund concept, my investors, of course, talked about the diversification.  If 1 out of 5 shows was the average rate of recoupment on Broadway then this was an easier way to play the numbers and reduce the risk.  They also talked about some of the other perks, like watching the shows develop and having additional rights to invest.  But, they also said it just made it easy to get involved with many shows at once, since they would have probably invested in them at some point anyway (these were my most trusted and loyal folks, after all, who always get first access to my stuff.)

At the same time I had my success, I noticed, other funds of all kinds starting to pop up on the market from blind funds, to rolling funds and, even, a fund just for projects led by women.

As Broadway has gotten hotter, and more and more people look to get involved, I’m predicting more and more funds will pop up.  And why not?  After all, they should mitigate risk AND make things easier.  (Most of the funds that have popped up are too early in their life cycle to have heard any real results – so I’ll have to update this blog in a few years.)

While I do believe “blind funds” will always have a greater challenge in raising monies than those funds where you know the shows you are investing in (most traditional mutual funds aren’t blind, after all), the truth is the success of any fund will depend on the same thing that those traditional funds depend on . . . who is running it.

What do you think about Broadway Investment funds?  Fad or a fantastic alternative?

– – – – –

Looking to learn more about Broadway Investing, including how funds work, and whether they’re for you?  Click here to register for my only Broadway Investing Seminar, coming up on March 10th and April 6th!

Can’t make those dates and still want to learn more . . . maybe because you’re looking to invest in your first Broadway show, or maybe because you want to learn the investing process because you need to raise money for your show?  Read Broadway Investing 101, the best seller now available on Amazon.com!

 

Something I haven’t done in awhile.

For those of you new to the blog, one of the first things I did on Broadway that got some national (and even international) attention was my crowd-funded Godspell

One of the reasons I chose that massive legal and logistical undertaking was because, well, Stephen Schwartz told me that Godspell was about a community of people coming together . . . so I wanted to bring together the largest community of Broadway Investors ever (I’m a big fan of marrying your marketing message with your artistic message).

And the other reason I did it was because I had this theory.  See, I believed there were thousands and thousands of people out there who were interested in investing in Broadway shows, but . . .

1) They didn’t know who to talk to about it.

and . . .

2) They didn’t know how it worked!

The response to the Godspell offering was overwhelming, to say the least, and it proved my theory correct.  Investing in Broadway shows has, in the past, been for a very select group of folks, and often we kept more people out than we invited in.  And even when new folks got into the ‘club’ they often didn’t know what was happening after they wrote the check!

Since then, Broadway has gone through one of the biggest booms in its history and interest in Broadway Investing has skyrocketed.  Because when any industry posts numbers in the billions as we have, people come from all over hoping to find “the next Hamilton.”

And whenever you rush into anything, you can often make mistakes.

That’s what led me to develop a workshop on Broadway Investing several years ago, and eventually publish this book, Broadway Investing 101, a best seller on Amazon.com and the only book on Broadway Investing on the market.

But books are no substitute for the live, in-person, experience, right?  (We all love the theater, don’t we?)

That’s why, we’re reviving the Broadway Investing Workshop!  And we’ve got TWO dates coming up . . .

Tuesday, March 10th at 7 PM

Monday, April 6th at 7 PM

In this Broadway Investing workshop, you’ll learn

  • The myths of Broadway investing, and how exactly the money flows
  • Who to talk to and where to find Broadway investment opportunities
  • How to decide if an investment opportunity is right for you
  • Simple strategies to mitigate your risk and increase your chances of profitability
  • How to maximize the perks of Broadway investing

If you are interested in learning more about Broadway Investing, whether you’re thinking about investing yourself or if you’re just curious about how shows like Hamilton are funded, click here to join us for either date.

The seminar is $99 and we’re keeping the group small to make sure I can answer all your questions.

Oh, and everyone who comes will get a free copy of my book.

So grab your seat now.

 

(Interested in learning about Broadway investing, but can’t attend the live seminar on March 10th or April 6th? Click here to get your copy of my book “Broadway Investing 101: How to Make Theater and Yes, Even Make Money” on Amazon.)

What is the recoupment rate of REVIVALS in the last ten years? Part III

When I first started producing shows and had to talk to potential investors, I put musicals into two different metaphorical buckets to make the risk levels easier to understand.

I described the two categories of musicals (original and revival) like this:

New musicals were like stocks.  More risk, but a potential for a greater return.

Revivals of musicals were like bonds.  Less risk, but the upside was limited (lack of subsidiary rights participation, shorter runs, etc.)

Since then, I’ve produced new musicals and three revivals (Godspell, Spring Awakening and Once on This Island).

My experience with these shows as well as watching what has happened with the other revivals over the past few seasons has given me that reach-for-the-Tums uneasy feeling.

So, for this third blog in our three-part Recoupment Study (See Part I and Part II here), I decided to dig into the recoupment rate of Broadway musical revivals over the last ten years.

Here’s what I found out.

In the past ten seasons on Broadway, the recoupment rate for Broadway musicals is . . . drumroll please . . . 18.52%.

Did you pop a Tums yet?  Cuz I just downed four.

See, we know that the average recoupment rate on Broadway is 20% . . . and sure, sure, this revival recoupment rate isn’t that much under 20%, but it is under!  And we’re talking about revivals!  The “bonds” of Broadway!  A revival has brand awareness!  It also has a limited upside!  So it should be less risky.  But, in the past several years it has been more difficult to get your money back on a revival than a new musical.

Argh.

I wasn’t satisfied with just this info, so I decided to dig into this subject a little shallower . . . meaning I examined the data over the last 5 years to see if I could see a trend from the 10-year span to the five-year span.  What did I discover?

In the past five seasons on Broadway, the recoupment rate for Broadway musical revivals is . . . drumroll please . . . 16.67%.

That’s right.  It’s getting HARDER for revivals of musicals to get their money back on Broadway . . . despite their limited upside.

What does this mean?

It doesn’t mean that we should stop producing or investing in revivals.  But if we are going to produce a revival or invest in one, it does mean that we need to structure our deals with the Authors, Stars, Vendors, etc. differently, because the safety of a pre-existing theatrical brand isn’t enough anymore.  Based on this data, Producers and investors are going to need more of a reason to jump into a revival, or they will only focus on new shows . . . and leave the revivals to the Non-Profits.

Or maybe, as Little Shop and Fiddler have proven, the way to produce a revival today is to do it Off Broadway and not on.

But we need to do something, because while I am so proud of the three revivals I produced, one of which got me a Tony Award, the numbers have spoken and they are saying to this Broadway Producer, “Don’t produce another one.”

It’s hard not to listen to numbers.

– – – – –

Want to learn more about investing in Broadway, including how it works and tips on how to pick a “winner”?  Read the only book ever written on the subject.  Click here.

 

3 Ways To Get Broadway Producers to Enhance Shows At Your Regional Theater.

I had the great pleasure of speaking at the NAMT conference this week on the subject of enhancement deals and how they work, and more importantly how they can work better.  (By the way, if you’re a Producer or Theater or well, anyone interested in the development of new musicals, you should join NAMT.  It’s a terrific org and, well, there just aren’t many out there for people interested in developing and producing new musical work.)

Less than half of the theaters in the room who attended the panel had actually had an enhanced show at their theater, so the question came up about what Broadway Producers look for when choosing a place to try out a show.

It’s a timely question for me, as I’m involved in one right now (and tickets are going as quickly as you’d imagine with this team), and I am looking for about half a dozen other regional tryouts for our current development slate.

And, I’ll be as honest here, as I was from my seat on the panel . . . from the Broadway Producers’ perspective (wink, wink) – and I don’t mean just mine because I know a lot of my peers feel the same way – the regional enhancement model has gotten a little out of whack over the years.

In its purest form, it’s a brilliant concept.  It works like this:

A Broadway Producer needs a real audience to try out a show away from the bright lights of Broadway.  That Producer gives a regional theater some cash to add to its budget so it can afford the artists, physical production and more that the Producer wants for that first production.  The regional theater gets an ongoing participation in the future of the show for helping to birth it.

Acclaimed Broadway Director Des Mcanuff was a pioneer of this concept when he was the Artistic Director of La Jolla Playhouse (one of the premiere tryout spots in the country).  So why on his podcast with me did Des call the current enhancement environment “dangerous”?

You’ll have to listen to the podcast to find out.  But as you can imagine it has to do with money.

See, whenever anything is successful when it starts, costs have a way of creeping up over time.

And oh, have they.

Now, that upfront cash payment that Broadway Producers are asked to pay isn’t just a few hundred thousand dollars.  It can be close to 3 million dollars! (And now we see one of the reasons Broadway musicals are getting more expensive . . . because the R&D is becoming more expensive.)

And guess what?  That upfront money is the hardest for us Broadway Producers to raise, because it’s development capital, with no promise that the show will ever even get to Broadway, never mind make money there.  (It’s why I’ve been putting together an investment development fund to help mitigate that risk.)

So if we have to raise more of it, that means, it takes more time, more effort, and we’ve got more on the line.

That’s why so many of my peers are looking at this model and saying, “Hey . . . we’re providing these theaters with a ton of cash, an ongoing royalty, artists who they might not be able to get to work at their theater, actors who may not go there without the possibility of Broadway after it, a world premiere for their subscribers to see, a production bigger than they would build on their own, etc, etc.  Am I getting the same value I got before?”

In fact . . . at the opening night party I was at LAST NIGHT, one Producer just said to me, “Ken, I was just quoted an enhancement figure so high . . . I realized I could do SIX three week workshops IN the city for the same cost!  And my team could stay at home. And I could bring in real theatergoers to see it. Why wouldn’t I do that instead?”

Good question.

The other alternative is simply to do a big commercial tryout in a city like Boston or Chicago or DC.  Sure, those are more expensive up front . . . but less expensive in the long run, because there is no ongoing royalty attached.  A bullish Producer will opt for that every time.

Alternatives are popping up like crazy.  Which is why if you’re a regional theater and you want a show that could go to Broadway at your theater, I believe you have to look at providing more value to those of us raising the capital to make it happen.

Here are three ideas I came up with at the panel . . .

1. Give us a piece of your upside. 

All the institutions I know project their income down to the dollar (and if you’re not, you should).  They have to pass their budgets by their board. So they know what they need to do to come out for the year. If we exceed your own projections, and you are “in the money,” then give us a piece of that upside.  You want a piece of our upside if we go to Broadway, right? Why wouldn’t you say, “Hey, Broadway Producer, we expect your title to deliver $X dollars in ticket sales. And if we do better, that’s because of your show . . . you deserve to walk away with some of that.” Whether or not the show actually gets to this breakeven isn’t the point.  It’s the concept of saying, “Hey, we’re in this together,” and I can say to my investors, “Yes, the cost of enhancing shows has gone up, but there’s the possibility that we could decrease that cost should we do well enough.” Oh, and newsflash . . . if I participate in the possible upside, I just might be more willing to throw some of my own marketing energy behind your production.

2. Give us another developmental option as part of a package.

Many of the regional institutions I know have budgets for 29-hour readings or one-day readings or some form of development work for new shows.  Offer that to me as an “added value” for bringing the bigger enhancement deal to you. “Hey Ken, we’ll throw in a reading.” Or even, “We’ll put your writers up for a week at our theater six months before they come down to have a writer’s retreat.”Give me a ‘bonus’ that reduces some of my other developmental costs, or just helps make my show better, and the enhancement immediately has more value.  And I think I’ve got a real partner rather than a non-profit who is just looking to pay for some of its overhead.

3. Give us an opportunity to raise some money.

We’re all guilty of this one.  Broadway Producers and Institutions and any org who raises money, guards its investor/donor list like Trump guards his tax returns.  But here’s the thing, Broadway Producers need even more money than ever to get their shows all the way to the Great White Way (partly because of the increased costs of tryouts at regional theaters).  And what one of my esteemed panelists reminded everyone at the conference was that most donors look at their donation to the non-profit very differently from an investment in a Broadway show. In other words, many would be happy to do both! Give us Broadway Producers an opportunity to speak to your board or your attendees at your theater about how Broadway Investing works and yes, even solicit directly for some investment, and you’ll find that we’ll be much more interested in spending time and money with you.  (Because guess who is most likely to invest in your show – people who have SEEN your show!) Don’t be so afraid that you’ll lose folks to us Broadway Producers. Because you won’t. In fact, most likely it will enhance their experience. And since YOU benefit tremendously if the Producer gets the show to Broadway, don’t you want to do everything to make that happen?

And . . . here’s a BONUS 4th way to get Broadway Producers to Enhance a Show At Your Theater.

4. Give Their Investors a Donation Option.

Because of tax reasons, or just the simplicity of not wanting to get another K1, some Broadway Investors actually prefer just making a donation early on in the show’s process.  No, they don’t get an “equity stake” in the show (but there is a way to give them other perks), but if it’s what they prefer, why not let them!  Some non-profits I’ve worked with have had trouble taking a donation earmarked for specific shows. If this policy would conflict with your non-profit by laws, talk to your board about changing them.  Because the more options I have to raise money, the more attractive your institution is.

Right or wrong, the opinion of Broadway Producers is that the scales have tipped too far in the favor of the regional theaters for these enhancement deals, which is why so many Producers are looking for other options.  I know I still love the concept of going to one of the many theaters out there looking to get into this game (and I’m always looking for theaters who have NOT done it before – so if you are one, get in touch with me).

But we have to do something to balance the deals.

The above are just a few ways to create an even better partnership.  And I’m eager to hear from regionals on what we can do to make it more valuable for YOU.

Because our “missions” are the same.  Both Broadway Producers and Regional Theaters want to create new musicals.  Just because we both have to hire lawyers now to hammer out these contracts, doesn’t mean we’re not on the same team.

(Oh, PS . . . enhancements come in ALL sizes. Not every show was designed for Broadway, and I know tons of shows looking to get a start somewhere in this country.  So if you can’t house a Broadway sized show, don’t think you’re out of the game. Off Broadway musicals, one person shows, new children’s plays . . . all need a place to try out.  No matter what the size of your stage, you can find artists and producers willing to share the costs with you.)

– – – – –

We’ll be talking about enhancement deals at my Super Conference on November 16th and 17th.  So if you’re a writer, producer or regional theater looking to learn more about this, come. Click here for more details.

And if you want to watch a webinar that explains what an Enhancement deal is, there’s one in here.

Ken Davenport
Ken Davenport

Tony Award-Winning Broadway Producer

I'm on a mission to help 5000 shows get produced by 2025.

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