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.

– – – – –

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.

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.)

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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