Tuesday, August 24, 2010

Fun Fact of the Day: The Gamble of Investing in a Broadway Show

It is no secret that investing in a Broadway show can often be a big risk, but in actuality, 2/3 of all Broadway shows fail to make back their initial investments. In theatre lingo, we call it "recouping" when a show makes back the money initially put into it by investors. At that point all the money that the show makes above its weekly "nut"--or the sum total of its weekly operating costs--becomes profit for the show's producers. So what this basically means is that for every mega hit like The Phantom of the Opera that recoups and makes a huge profit every week, there are two shows like The Little Mermaid and 9 to 5 that are forced to close on Broadway before making back their initial investment. I should note that while some shows fail to break even on Broadway, they often have great success with national tours and subsequent regional productions.

So why do producers continue to invest in Broadway shows? Because for every Taboo and Caroline or Change, there is a Wicked.

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