The Broadway Index Fund – Profitable or Not?

Broadway is a risky investment.


But Broadway can also be ‘wicked’ profitable.


But here’s the question that I’d like to see answered . . . because if the answer is what I think it is, I believe it could:

1) legitimize the business model of the industry

2) bring a whole new crop of investors to our biz

The question is:  is Broadway, as an overall asset class, profitable over the long term?

In other words, if you could buy shares of a Broadway index fund, like you can with the Dow or the S&P, and own a piece of every show, would you end up in the black or the red?

This data could be oh so valuable.  That’s why I believe Broadway should hire an independent analyst to do the following:

Examine the profitability (or lack thereof) of every single Broadway show from a set period in time . . . Let’s say, 1980.  Take the 3% return on one show and add it to the 140% return on another with the 50% return on the next and so on and so forth . . . right through to the current day.  Average it out and bingo . . . we’d see what the overall profitability of the entire industry is over this 30 year period.

My bet?  It would be a positive number, because the number of mega hits (Wicked, Phantom, Les Miz, Rent, etc.) and their massive ROIs would more than make up for the losers, resulting in a profitable industry for investors.

And for an investor, that’s more exciting than a Sports Illustrated Swimsuit Edition at a Boy Scout retreat.

Because then the pitch becomes . . . if the industry makes money, then smart investors that chose wisely, and invested with the right Producers and the right projects, could beat the ‘market’ (just like stock market investors try and beat the indexes) . . . as long as they invested for the long term and diversified over many shows.  But they are starting from a positive place.  The “market” makes money. Now it’s up to you to make it or lose it, just like any other financial market.

Proving to people that your industry and your company is profitable is the best way to attract more capital, which allows you to produce more product . . . including riskier product that pushes the boundaries of what audiences might not expect they want to see (like non-star driven vehicles, new plays, etc.).

What’s the problem with the above?  Well, I’d guess that the biggest obstacle would be getting the Producers (especially of those mega-hits) to share the data on how much they’ve made.  But that’s why an independent analyst would be key.  The data would only be submitted to a third party, non-industry, Price-Waterhouse style team that would only release aggregate results.

It only works if everyone is involved . . . but, frankly, everyone should be.  This kind of data could not only get us a seat at the big kids table . . . but it might even get us double dessert.

What do you think? Think we’d be profitable over the last 30 years?  Last 50 years?  Last 10?

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The Most Performed Play in High Schools – a follow up.

Yesterday, I listed the ETA’s most performed plays and musicals in high schools.

What surprised so many people about this list was that the play that topped even Shakespeare for the number one slot was Almost Maine, a play by the Maine-bred, very talented and oft seen on Law & Order, John Cariani.

The NY Times even wrote an article about the Maine phenomenon.

What is so special about this play being the most performed high school play in the US?

Well, for starters, you’ve probably never heard of it . . . because it flopped Off-Broadway in 2006 after running for only 67 performances.

As the NY Times article details, it lost its entire $800,000 investment.

What the NY Times article did not say was how much of that investment had been recouped since the play has become the most performed high school play in the US.

The article did say that Maine has done well for the author, which is fantastic news, because I’m a fan of John’s and hope that he writes another play soon.

But those author royalties would be buptkus if it weren’t for the original investors and if it weren’t for the original Producer (who, if this is a traditional agreement, won’t see any money until after the show recoups . . . if it recoups).

It’s great that the play has been able to support John over the years, and I hope it continues to do so.  But there has got to be a way that these plays that flop in NYC but have long lives elsewhere can provide some support to the Producers, while at the same time returning as much money to the investors as possible.

The goal of the subsidiary royalty revenue stream for authors is to keep them writing, so they aren’t forced to take a day job.

Shouldn’t there be something similar for the Producer?  Wouldn’t that allow the Producer to produce more often, just like it allows the author to write more often?  And shouldn’t they receive something for launching the project in the first place?

There doesn’t have to be something similar, obviously.  Because there isn’t one.

But that may also be why the crop of career Producers is so small.

Read Almost Maine here.  See what all the high schools are fussing about, and support a new playwright (and hopefully a Producer) in the process.

Read the other 9 most produced plays and musical in high schools by clicking here.

Fun on a Friday: Shut up, Dick!

talking to a lot of ‘people’ lately about their love of theater.

And I’ve heard some incredible, touching stories that could make a Romanian weightlifter cry.

And then I’ve heard stories like this one:

A theater lover was seeing a revival of The King and I many, many years ago.  And . . . well . . . I think I should just let him tell the story in his own words:

Nothing pisses me off more than people who sing along with overtures or songs on stage. Immediately upon the down beat of the overture this gravel-voiced man behind me starts to hum loudly.  I gave him a quick “shh” and turned back to my seat.  He continued a few beats later and I shushed him again.  On his third try I turned to face him and in a stage whisper said, “Will you please stop that awful singing?”

It was then that I realized I had told Richard Rodgers to shut up.

To his credit he apologized.

You know what my favorite part of that story is?  It wasn’t that my new friend taught Dick some good theater-going habits.  It wasn’t that even the Maestro of Musicals knew he was in the wrong!  It was that Richard Rodgers hummed along to his own tunes.  I mean, if the composer gets the songs stuck in his head, you’re on to something!

What I did this weekend.

Here’s what I did:

I wasn’t at the beach.

I wasn’t at the park.

I was at work all weekend long.

No, no, no . . . don’t start playing a violin for me.  I’m not looking for you to throw me a pity party.

Because it was one of the best weekends I’ve had in a long time.

I spent the weekend making calls to some of the hundreds of people that have responded to the PeopleOfGodspell post.

Look, I knew there were people out there that loved theater, but nothing prepared me for some of the conversations I had with the wide variety of people that expressed interest in the offer.

– I spoke to a man who met John-Michael Tebelak a few years before he died, and was so inspired by him and by Godspell that he had gone on to perform in and direct over 20 productions of the show.

– I spoke to a man who was an Arabic language expert in the Air Force and had a masters in theater.

– I spoke to a songwriting couple from Los Angeles who said Stephen Schwartz was their hero.

– I spoke to a Broadway wardrobe supervisor, a Broadway stage manager, another stage manager, a Broadway actor, and more . . . and we talked about how back in the old days, staff members of shows got involved in the business end more often because the economics were so different.

– I spoke to a patent attorney, a trademark attorney, a securities attorney, and a few other attorneys, many of whom called themselves “theater dorks.”

– I spoke to a woman whose dad passed away recently and is looking forward to getting back to seeing shows again soon.

– I spoke to a guy in my home state of Massachusetts who commiserated with me after the Patriots lost to the Jets in the NFL’s Week 2.

So many people from all over the country with one thing in common: a passion for the theater.

Can you think of a better way to spend a weekend?

If I haven’t gotten to you yet, I’m sorry, and I will soon enough.  It’s just hard for me to get off the phone sometimes, despite my assistant screaming at me and threatening to smack me with the long call list.

But I’m getting there.

And having a blast in the process.

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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