Thursday, November 13, 2014

President's Page: A Lesson in Broadway Investing

An investment in a Broadway show is a lot like owning a horse or a boat: it seldom pays off and it costs a fortune to keep up with.  Why then invest in a Broadway play?  For the same reason we buy that boat or invest in a thoroughbred colt – because we love it.

The facts are pretty well known to investors like me who for some reason invest our hard-earned post-tax money into a Broadway musical, which incidentally costs a total average of $14 to $17 million to produce.  A play will cost far less because you typically do not have an orchestra, as large of a cast, or the royalties that need to be paid to the composers.   

Here are the hard facts:
  1. Attendance on Broadway for 2013 – 2014 was 12 million theatregoers.
  2. The total gross for New York’s “Great White Way” for the same period of time was $1.27  billion... BILLION.
  3. The proportion of shows that break even, not necessarily make a profit, but just break even is 1 in 5 or just 20%.  But if you luck out and get in on a show like THE BOOK of MORMON you could recoup and start getting the profit checks after as few as 9 months.  Then, the checks keep coming in for years.  
  4. The biggest loss ever recorded was for the $75 million SPIDER-MAN which lost it ALL!!!  Personally, I think the number was much higher, but the producers decided to tell a little white lie to cushion the blow.
  5. The hottest ticket in New York right now is for THE BOOK of MORMON at as much as $477 a ticket.
So if you have a comfortable amount in the piggy bank – why not?  Or if you'd rather increase your odds of return, you could go out in your backyard with a fistful of coins, throw them up in the air and what stays up there is your profit.  

Pat Halloran
Orpheum President and CEO

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