BroadWAY INVESTING FAQs
how does BROADWAY investing work?
Generally, a show has a budget and they try to raise enough money to capitalize the budget. Many top Broadway shows may need to raise anywhere from $8,000,000 to $14,000,000 or more. There are typically one or more lead producers, who may put their own money, or open the opportunities to other co-producers or investors to "buy in" to the company. Like a business model, the show is set up as a corporation usually, and broken into shares based on the total capitalization of the show, called "units". Producers may offer one unit for $25,000, which gives the investor a certain interest in the production. When the show starts to make money beyond its operating expenses, the money generally goes to pay the investors back first. Once the capitalization has been recouped, the investors are generally paid back. Thereafter, the next step is the profit.
There is typically an investor pool and a producer or creatives pool (writers, choreographer, director, etc.). When a show is profitable, the profits are then typically split 50/50, with 50% going to the investor pool and 50% going to the producer pool. The profits are then split within each pool based on the shares in each pool.
EXAMPLE: Let's say a show has a capitalization of $10,000,000 with $25,000 per unit offered, and an investor buys 1 unit. If the show is profitable, the investor is paid back the $25,000, and then continues to receive a portion of the profits. 50% of every dollar profit goes into the investor pool, which is divided between the investors based on the number of units they own.
Every show is different, but the concept is fairly general. The idea is to pay the investors back first, and then the producers share in the profits if the show is successful. It is very risky of course, because if the show is not successful, you may lose your investment, or may lose part of it. The good news is that you should not be responsible for the losses beyond what was invested.
WHO INVESTS IN BROADWAY?
There are soooo many different types of investors in the Broadway theater space, and there is no one answer as to why they . There are many, many reasons why people invest year after year in theater and Broadway. There are Broadway investors who are attorneys, doctors, real estate developers, house flippers, Silicon Valley successes, real estate investors, cattle ranchers, teachers, oil industry business people, hedge fund financial people, wealth management consultants, entrepreneurs, and more!
WHY do they invest?
1. THE LOVE OF THEATER
A theater lover investor just loves theater. There is excitement meeting Broadway stars, going to Opening Night, getting invited to the Opening Night Party, getting perks like exclusive merchandise, having access to VIP house seats, and being a part of the Broadway ecosystem.
2. TO BUILD A COMMUNITY
Broadway brings like-minded people together. Investing in a Broadway show may give access to other investors at show events, like preview performances, meet and greets, social events, and opening night festivities.
3. DIVERSIFY YOUR PORTFOLIO
When investing in NFTs and stocks, there is often the simple buy and sell scenario. Investing in Broadway, although it is high risk, can offer incredibly high rewards. There are also exclusive perks that come with Broadway investing that a professional investor may not get anywhere else, like Opening Night tickets, hanging with Broadway stars, and watching a show develop from in the room.
4. You could win a Tony Award!!!
It's an OSCAR for theater! Investors at certain levels are eligible to receive Tony Awards, and can even take one home.
5. make a whole lot of money
Broadway is a very risky investment, but it can also be incredibly lucrative. Some people invest in Broadway for the love of the arts. Some people invest for the chance of a big return. Wicked, Hamilton, and Book of Mormon are BILLION-DOLLAR shows, whose investors are still making money every single week.
Overall, while there is a risk you may lose your investment, there are often lots of perks that come along with investing in a Broadway show, which may include:
Opening Night tickets
Access to VIP house seats
Opening Night party
Access to invest in Broadway tours and cast recordings
Meet and greet with the Broadway cast
Exclusive merchandise, like opening night gifts
Being called a Tony-award winning producer
Great networking opportunities
Free preview performance tickets
Getting lots of perks and getting your money back if the show recoups
Turning a profit on your investment if the show makes money
Getting an inside view of the Broadway community and how shows are made
where does the money go?
Putting on a Broadway production requires a huge team of people, working in many different departments. The bigger the show when it comes to spectacle, cast size, and runtime, the more money is needed to bring it to life. Typically funds go to the following:
1. Physical Production (Venue, Sets, Lighting, Sound Equipment, Props, Backdrops, Animatronics, Union Staff, etc.)
2. Creative Staff (Directors, Choreographers, Music Directors, Dramaturgy, etc.)
3. Musicians (Rehearsal Players, Orchestra, and other Instrumentalists)
4. On-Stage Staff (Actors, Dancers, Stage Managers)
5. Pre-Production Costs (Marketing/Publicity, Housing, Labor, Stagehands, Rehearsals, etc.)
6. Administrative (Accounting, Legal, Insurance, etc.)
DISCLAIMER: Any content on this website is for informational purposes only. THIS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITY OR UNITS IN ANY ENTITY. Any actual investing in a particular show or other entity would be conducted between the investor and the production company or associated producers. Nothing on this website shall constitute a solicitation for investing or an offer to invest. See additional Disclaimer.