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Broadway Musicals and the Money They Make

By Todd Brabec, ASCAP Executive VP of Membership and Jeff Brabec


With eye-catching headlines like "Broadway Rockets to All-Time High," "Cats Sweet $1.2 Million," "Phantom with $16.5 Million Advance," and "The Lion King earns $1,000,000 in a Week," the Broadway theater has always held a certain glamour and fascination for both writers and those willing to invest their money. The production of a Broadway musical is an extremely expensive undertaking, usually requiring from $5 million to $20 million to open in New York. In this world of multimillion-dollar investments, enormous profits, and equally enormous losses, the bookwriter, composer, and lyricist of a Broadway musical can earn unbelievably large amounts of money during the New York run, as well as for many years after the final curtain goes down on Broadway. Many composers and lyricists in this field are governed by the minimum compensation standards and guidelines for the participation of income of the Dramatists Guild contract. The Broadway Opening: After the out-of-town pre-Broadway run, the musical normally enters New York for previews. Once the musical opens, the writers are guaranteed a minimum royalty of 4.5% of the weekly gross box office receipts until the show's costs have been recouped, and 6% of such receipts thereafter. For example, a hit musical on Broadway will usually take in from $600,000 to $1,000,000 per week in ticket sales. If the writers were sharing the guild's postrecoupment minimum of 6% (2% each to the composer, lyricist, and bookwriter), the weekly writer royalties for each would range from $12,000 to $20,000 each. And by multiplying this figure by 52 weeks, each writer would receive from $624,000 to $1,040,000 in annual royalties from the Broadway run of the show alone, not to mention the substantial amount of money being generated by touring productions of the musical throughout the world. 2007 Todd Brabec, Jeff Brabec For more information, check out the book Music, Money and Success: The Insider's Guide To Making

Money In The Music Business (Schirmer Trade Books/Music Sales/502 pages) available for sale at
Amazon.com, Barnes & Noble, Borders, Music Sales Group and www.musicandmoney.com.

The tills are alive


The musicals business is bigger, more global and more fabulous than ever May 4th 2013 |From the print edition

IN MEL BROOKSS film The Producers, two men plot to make a fortune from a flop. They raise more money than they need to stage a musical, by selling all the shares in it several times over. Then they try to make the worst show ever: Springtime for Hitler. They assume it will close in a night and they will be able to abscond with the cash, since no investor will demand a cut of nonexistent profits. To their horror, the audience loves it. Musicals are risky in real life, too. So when David Geffen, a showbiz mogul, approached Mr Brooks about turning his movie into a musical over a decade ago, Mr Brooks dragged his feet. Mr Geffen tried to convince him it was worth the hassle: he had made more money on the musical Cats than on any film he had ever made. This helped win over Mr Brooks, says Alan Schwartz, his lawyer. They put The Producers on Broadway (see picture). Mr Brooks made a packet. In this section
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You cant make a living, but you can make a killing, goes the Broadway adage. Musicals have odds like venture capital: only one in ten makes money, and two out of ten lose it all. The hits, however, are huge (see table). Cats probably made a 3,500% return for its initial investors. Since it debuted in London 27 years ago The Phantom of the Opera, a musical by Andrew Lloyd Webber, has grossed $5.6 billion worldwide, more than any film or television show. Musicals had their first big boom in the 1940s, when Rodgers and Hammerstein wrote South Pacific and Oklahoma!. In the 1980s Mr Lloyd Webber and Cameron Mackintosh, another Brit, invented the mega musical, with big-budget shows such as Phantom and Mr Mackintoshs Les Misrables. Now the business is belting out high notes again, with new shows, new markets and new interest in old hits. Unlike films, musicals can run in theatres for decades. The Lion King, based on a Disney film, has prowled on Broadway since 1997. Shows can charge a lot for all that jazz. A ticket for the The Book of Mormon on Broadway can cost $477, plus fees, and even more if bought from a tout. Musicals in America will probably generate $1.9 billion in revenue this year, according to IBISWorld, a research firm; most of that will come from tours beyond Broadway. Once a musical has been

branded a success, producers roll out national tours. Apart from holiday weeks it is hard to do $2m weeks for big shows on Broadway, says John Gore, the boss of Key Brand Entertainment, a musical production, touring and ticketing firm. On the road you can have $2m weeks all year long. Musicals have long toured in English-speaking countries, Japan and Europe. In Germany, where musicals grossed nearly 600m ($455m) in 2011, nearly a tenth of the population goes each year. It is the third-largest musical market after America and Britain. Western musicals are spreading to South Korea, Brazil, Russia and other emerging markets. China and India, which are starting to build big theatres, could become lucrative within five years. Western musicals either run in English with subtitles or are put on by actors in the local language. It helps to have been a hit on Broadway, but it is not essential. Disneys Tarzan, a musical about a brawny man who swings on vines, fell flat in New York but soared in Germany. In mature markets popular television shows, such as Any Dream Will Do, in which people vie to be cast in musicals, have attracted a younger crowd into theatres. People have now grown up with musicals, and the audience has expanded vastly, says Mr Mackintosh. And people are willing to fork out for a night out. Spending on Broadway musicals was resilient during the downturn, partly thanks to tourists. Big shows are doing well even in crisis-hit Spain, notes Mr Mackintosh. The business today is not all song and dance, however. Margins are not what they were. Labour costs, especially in unionised New York, have risen, as has the price of theatre rentals, sets and costumes. David Ian, a British producer, reckons that putting on a musical is three times costlier than it was 20 years ago. When I first started, if you had a hit show youd expect to make your money back in 20-25 weeks, he says. Now youd absolutely expect a year. Producers are losing more of their profits to intermediaries. If you want to make money off of theatre, open a ticketing company, harrumphs one producer. Musical-goers now expect more spectacle. Spider-Man: Turn Off the Dark is thought to have cost $60m, because actors fly across the stage. Other big musicals have seen their budgets scale skyscrapers, too. Opening a big musical on Broadway can cost $10m-15m, and then another $500,000 a week to run it. So producers and investors crave recognisable brands. Of the four Tony nominees for best musical, announced on April 30th, two were well-known films (A Christmas Story and Bring It On) and one a famous childrens book that had also previously been filmed (Matilda). Juke box musicals, which weave popular songs into a threadbare plot, are also in vogue. Critics say Book of Mormon was an unlikely hit, but its writers had South Park, the TV show they created, behind them.

The Latter-day Saints go marching in An industry once composed of scrappy producers has become more corporate. Hollywood studios have muscled in. Studios have always licensed rights to their films; now they are trying to produce them on stage. Disney led the way. Universal Pictures struck accidental gold with Wicked (the studio had bought the rights to turn the book, about the Wicked Witch of the West, into a film, but was later approached to make it into a musical, which has grossed $3 billion). In May Warner Bros will help bring Charlie and the Chocolate Factory to the West End. More musicals are opening in non-traditional towns and moving to Broadway and the West End after kinks have been worked out. A revival of Dreamgirls, with music by the Supremes, opened in South Korea and came to Broadway later. Chinese producers are hoping to develop a Chinese-language show, Shanghai, Shanghai, and eventually take it global. Stage Entertainment, a European production firm, worked with Sylvester Stallone to turn Rocky, a film about a boxer, into a musical. It opened in Hamburg, in Germany, last year. Next year Rocky: Das Musical will open in English on Broadway. A hit about hitting people (while singing) may sound odd, but this is an odd business. The producers in The Producers speak for the whole industry when they ask: Where did we go right?

Product placement
On Broadway How to hedge a toe-tapping, finger-snapping, big-budget gamble Jul 28th 2005 | new york |From the print edition

PUTTING on a Broadway show is one of the bigger gambles in America's entertainment industry, with investments running into the millions of dollars with little assurance of a return. It can take at least two years for a successful show to pay back its original investment, and only one out of five shows manages even that, according to the League of American Theatres and Producers. Given the dicey economics of the New York stage, especially for musicals (which can cost around $10m to put on), it seems understandable that producers are becoming more creative in how they raise funds. This creativity resulted in a fairly controversial move in May, when a Broadway revival of Neil Simon's Sweet Charity tweaked a line of dialogue that had referred to whiskey: Grand Centenario, the tequila?, a waiter now asks. Mr Simon himself agreed to this change, which mentions a sponsor, and the tequila's logo decorates the set. This bold move came not long after Yahoo! and Hormel Foods, maker of Spam, sponsored the triumphant Monty Python musical, Spamalot, and Turtle Wax endorsed (but was unable to save) the ill-conceived Good Vibrations. While sly marketing strategies have long inhabited film and televisionto the dismay of Jonathan Adelstein, a commissioner at the Federal Communications Commission, who has called for a probe of more covert pitchesmany have taken an is nothing sacred? attitude to the brandishing of brands on stage. In this section
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New York theatre: Broadway is bigger than everApr 24th 2003

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Marketing companies claim to be exercising (relative) restraintthough for how much longer? We are extremely careful not to go out of our way to take a product and squeeze it into the show, says Tanya Grubich of the Marketing Group, which manages marketing campaigns for such Broadway shows as Wicked, Avenue Q, and The Producers. Instead, they claim, they search scripts for items that can be sponsored, typically through a donation, and contact businesses to arrange partnerships and product tie-ins. (Cash deals are rarer than barter arrangements, although some have netted a production as much as $1m.) Baz Luhrmann's La Bohme involved a deal with Montblanc, a maker of fine pens, to feature an antique company sign on stage in exchange for window displays and a special pen in Montblanc stores. Alas, the 2003 show still lost around $6m

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