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.

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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.)

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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.

We wrote the book on Broadway Investing. Literally.

Let me take you back in time . . . to when I was a young pup, looking to get into the game of producing and investing in Broadway shows.

I looked everywhere for a guide on how to get involved only to find . . . there was jack @#$% available anywhere on how to do it.

I eventually figured stuff out on my own, through trial (and quite a few) errors, and I vowed that one day when I knew more, I’d go public with the info in the hopes to help of helping folks avoid the mistakes that I made.

In the midst of all this, I crowdfunded my Broadway revival of Godspell in 2011.  Thousands of people expressed interested in investing, which made me realize just how many people out there were interested but had previously been hesitant to start investing.  Not only did they not know the ins-and-outs, but they didn’t know how to get started investing in an industry that has such a high-risk reputation.

Flash forward to today, when Broadway investing has become more popular than ever, thanks to the booming Broadway box office and the lightning rod of press we’ve received from hits like Hamilton,  telecasts like Jesus Christ Superstar, and more.

More people are interested . . . but based on the questions people ask me, there still wasn’t much information to be found.

That made me nervous.

See, while I love that people are interested in investing in Broadway, I want to make sure that when they do invest, they do so with the information they need to invest (combined) with the right expectations and the right strategies to maximize their chance of a positive experience, financially, artistically and emotionally.  (I often say that investing in Broadway is the riskiest investment you’ll ever love to make.)

So I thought . . . there should be a book about Broadway Investing.  I know when I get involved in a new area in my life, be it golfing or parenthood, I read a book about it.

But there wasn’t one on Broadway Investing.

So I wrote one.

And I’m thrilled to say you can pre-order it right now on Amazon.com . . . for only $2.99.

The price will jump up to $19.99 when we’re officially on the “shelf,” on March 15th, but since I think the information in the book is important for anyone even remotely interested in investing in Broadway (and for those of you looking to raise money from investors as well), I wanted to offer a super low opportunity for you to get it now.  In fact, this is as low as Amazon will allow, actually.

So if you want to know . . .

  • What happens to your money after you invest.
  • How does money get returned to you?
  • What are the perks and benefits you MUST ask for when investing in order to maximize your returns?
  • The biggest mistakes first time Broadway Investors make
  • My strategies for picking shows that decrease your risk and increases your chance of finding a big hit.

. . . then click here and grab Broadway Investing 101 for only $2.99.

Oh, and as a bonus, each purchase includes a link to an online appendix that includes tons of free materials including sample documents, budgets, exclusive research from actual investors, and more.  It’s the only treasure chest of information available that is especially for the current or future Broadway Investor.

So grab the only book available all about Broadway Investing . . . and let me know what you think.

I hope it helps you find the next Hamilton.  🙂

Get it for only $2.99 until March 15th here.

UPDATE:  The book has already been put on Playbill.com’s list of books to read this Spring!

Free Webinar Alert: The Ins-and-Outs of Co-Producing on Broadway.

There are two kinds of Producers on Broadway:  Lead Producers and Co-Producers.

Do you know the difference?  (This is a quiz.)

A simple analogy might be that the Lead Producer is like the Chairman/woman of the Board of a Non Profit . . . and a Co-Producer is like the Board Members.

But it ain’t so simple.

Co-Producing on Broadway has become an important niche in our industry.  It’s where most Broadway Investors graduate to, and it’s where most Lead Producers come from.

The Lead Producing Path often looks something like this:

Broadway Investor -> Broadway Co-Producer -> Broadway Lead Producer

Since Broadway shows have become more expensive over the years, Lead Producers have “sub-contracted” out the financing to more “Board Members” than in previous decades.  That’s why I get so many questions from readers and podcast listeners like, “How do Broadway Co-Producer deals work,” or “Who are the other names above a show’s title,” and “How do I become a Broadway Co-Producer?”

And, as I said on a recent “Office Hours” call for my PROs, if I get the same three questions on the same subject from three different people, then I know I haven’t done my job in getting people the info they want.

That’s why, next Wednesday, February 7th at 7 PM EST, I’m teaching a FREE webinar entitled . . . “Co-Producing on Broadway:  So You Wanna Be a Broadway Bundler.”

During the webinar, I’ll break down . . .

  • Strategies for choosing the right show to Co-Pro.
  • How to negotiate the best deal (and what those deals are anyway).
  • How to be a Co-Pro without having to invest your own $.
  • The risks and the rewards (and we’re not talking just cash).
  • A Co-Producer’s role in the production before and after it opens.

And, of course, I’ll take all your questions at the end of the session.

To join me and learn more about Co-Producing on Broadway, just click here to sign up for this one hour webinar, next Wednesday night at 7 PM.  It’s free.

See you there.

WEBINAR:  Co-Producing on Broadway:  So You Wanna Be a Broadway Bundler.
DATE:  Wednesday, 2/7/18
TIME: 7 PM – 8 PM
COST:  FREE

To register, click here.

Which Broadway show would you rather invest in?

“So . . . who’s in it?”

This is the most common question I get whenever I’m raising money for a Broadway show . . .  whether I’m talking to a new Broadway Investor or a seasoned angel.

And it’s a good question.

But it’s not a great question.

When I’m evaluating a Broadway Investment opportunity, I have a very specific due diligence process that I go through to rate the risk of the production.  Because all opportunities carry risk . . . including walking down the street.  The real question is how risky is each opportunity . . . and what’s the upside?   (Is there a Pinkberry across that street???)

And the “Who” in this moneyball-like equation is a factor, for sure, but it’s not the most important one.

So when I get this question these days, I usually return the question with a question.

“Let me ask you,” I say, “Which of these Broadway shows would you rather have invested in:  Hamilton, Dear Evan Hansen, Come From Away, Rent, Les Miserables, Phantom of the Opera, A Chorus Line, etc . . . or . . . INSERT NAME OF STAR-DRIVEN VEHICLE HERE.”

Who’s in a show may give an investor some comfort when a show is launched, but since all shows carry risk, and since the upside on star vehicles can be so limited thanks to the shorter runs and the higher salaries, the savvy investors go drilling for the real oil, which isn’t located in Star Town.

The gushers aren’t dependent on stars.  In those cases, which are the ones we all want, the ones that send out double-digit distribution checks every month, the show is the only star.

So the next time you’re raising money, remind your prospect that having Madonna in your show may make it easier for them to write a check, but it will mean they won’t get many back.

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Interested in learning more about topics like this? CLICK HERE to join The TheaterMakers Studio, an online community, certification training program, and resource for playwrights, producers, directors, actors, and theater makers of all kinds!

 

 

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