Fork over $250,000 and up, and the lead producer may agree to share credit as producer with you. If the show wins a Tony, you can be part of a small crowd of other “producers” who go on stage to claim it.
The producers of Broadway and the brokers of Wall Street, 15 minutes apart by train, don’t socialize much, but they do have one thing in common. They’d love to invest your money for you.
The producers have more to offer than dividends or capital gains. In exchange for your $50,000 check, they might hand over tickets to opening night or introduce you to Sting. They’re also far more likely to lose every cent you invested.
On Sunday, we’ll find out which shows win Tony Awards. Just remember, as the statuettes and whitened teeth gleam in the hot lights: Behind all the glamour is a desperate game of chance that makes Wall Street look like Walden Pond.
“It’s all a crapshoot,” said Jamie deRoy, who has produced “A Gentleman’s Guide to Love and Murder” and “The Addams Family.” “Using your good taste often helps, but not always.”
Most Read Stories
- The five priciest Seattle-area homes last year sold for a combined $113M. Four went to mystery buyers. VIEW
- Special sunglasses, license-plate dresses: How to be anonymous in the age of surveillance WATCH
- Snohomish County elementary school teacher found dead from hypothermia
- New software flaw could further delay Boeing’s 737 MAX
- At gun-rights rally, Washington state Rep. Matt Shea gives fiery defense, talks of nation's 'real enemies' VIEW
Expensive musicals by famous pop stars can close within 17 weeks, as Sting’s $15 million musical “The Last Ship” did in January, while a Sesame Street parody with a small cast of singing puppets, “Avenue Q,” is still sending checks to its original investors 12 years after it opened, earning them an eightfold return.
Do the hits — like “The Book of Mormon,” which four years after its 2011 debut still charges more than $300 for its best seats — make up for the flops? No one really knows. Every production is a private company, generally as open about its finances as murderous Chicago chorus girls are about their crimes.
When shows make back their initial investment, or “recoup,” they sometimes issue news releases announcing this feat. Broadway veterans guess that 20 to 25 percent of shows eventually recoup. But that doesn’t tell you a lot about their overall returns; there’s no Dow Jones Broadway Average to tally up all of those losses and gains.
Broadway shows are expensive, so they need benefactors with deep pockets. A play can cost a few million dollars to put on, while a typical musical costs $7 to $15 million. “Spider-Man: Turn Off the Dark,” which ran from 2011 to 2014, cost $75 million. Those are the initial capitalizations, or the costs to get shows up and running; regular weekly expenses are extra. With all that money to raise, producers generally won’t bother with investments of less than $25,000.
There are also legal reasons. The government tries to protect financially unsophisticated Americans from especially risky investments. The law makes it difficult for shows to raise money from investors who aren’t “accredited,” or with a net worth of more than $1 million or a yearly income of more than $200,000, or $300,000 for couples.
The fabulously wealthy get extra perks. Fork over $250,000 and up, and the lead producer may agree to share credit as producer with you. If the show wins a Tony, you can be part of a small crowd of other “producers” who go on stage to claim it.
Last year’s winner for best musical, “A Gentleman’s Guide to Love and Murder,” had more than 30 producers. You’ll also get to attend some meetings and give advice. They might even listen to you.
Predicting the next hit is impossible. There’s the conventional wisdom: Plays with big stars are the surest bet to break even, but their upside is limited. Once the star goes back to Hollywood, the show may close. A musical is riskier than a play, but a hit can produce profits for decades.
That said, a long-running show isn’t always a profitable one. Sometimes the theater is only full enough to cover the show’s expenses, and not enough to pay investors any profits. Until a show recoups, investors get all the show’s profits. Afterward, they split them 50/50 with the producer.
Sometimes the goal is to keep the show open until the Tony Awards. A big award or an impressive musical number staged on the broadcast can boost sales. The Tonys can also whet the appetites of theater fans in the rest of the U.S. A national tour is a more reliable moneymaker, but it usually requires investors to write another check.
For some investors, the profits are pretty much an afterthought. Maybe they just love the theater and are happy to fund good shows likely to lose money. Producer Ken Davenport proudly noted that his 2013 production of “Macbeth,” a one-man version with Alan Cumming, “got 91 percent of all our money back” — in other words, lost investors 9 percent.
Others love meeting Broadway legends, getting dressed up for opening night, or having access to the best seats in the house for friends and business associates.
Most of all, becoming a Broadway investor can be a fantastic way to network. “You are meeting the crème de la crème of New York City,” Davenport said. “People invest in order to get into those circles.”
Broadway producers may use the Internet for all sorts of things, but rarely for raising money. Shows are financed pretty much the same way they were 50 years ago, face to face and on the phone.
“This is a business 100 percent about relationships,” said Rich Affannato, who has produced “The Visit” and “Peter and the Starcatcher.” Unless you know somebody who knows somebody, you probably can’t invest in the next hot musical.
An exception is this season’s musical revival of “On the Town.” Producers Howard and Janet Kagan raised about $500,000 of the $8.5 million cost through the crowdfunding platform Wealthforge.
The Kagans could also advertise the investment opportunity; until a 2013 rule change, such ads were illegal. “We brought in a lot of investors that never would have invested,” Howard Kagan said. “They didn’t have to know someone who knew me.”