Play Money

So you want to invest in a Broadway production?

included opting out of traditional theater marketing techniques such as direct mail; cutting the number of children in the cast from five to three; and using corporate sponsors for travel and lodging. “I was able to secure sponsorships with companies such as Continental Airlines, Korman Properties, and Verizon,” Jones says. She estimates that eliminating direct mail alone saved the production upwards of $150,000.

Fifty percent of the investors were African American, according to Jones, and mostly included individuals new to Broadway investing. “The investors we found have an affinity for the arts and the prestige of Broadway,” Jones points out. The producers sold the investors on the all-star cast, Allen’s involvement, the idea of the play being a “must-see event,” and the fact that no production of Cat (four preceded the most recent) has ever lost money on Broadway, dating back to the original debut in 1955.

In getting people in the theater, Byrd and Jones sought to bring new audiences to Broadway in much the way recent productions of The Color Purple and A Raisin in the Sun did, making black radio, local newspaper advertising, and Internet advertising more effective tools in reaching the targeted theater-goers compared with direct mail. The production also used the group marketing firm Walk Tall Girl Productions to get church groups, fraternities, and service organizations to attend. Jones also attributes the savings to the play’s general manager, Nina Lannan Associates, which included a reserve in the budget of 10%, which the production ultimately did not use.

In evaluating theatrical productions for investment opportunities, caution is the name of the game. Actor and producer Wendell Pierce, who was a producer on August Wilson’s final play Radio Golf, suggests that it is critical that investors understand how the play will generate income and repay investors. “It’s very important to see the recoupment schedule,” says Pierce, perhaps best known for his role as Det. William ‘Bunk’ Moreland on HBO’s The Wire and who has produced productions with investment units in the $10,000 to $25,000 range. “Look at the schedule, then assume the worst.” Radio Golf, though critically acclaimed, failed to recoup its investment.

Pierce explains that the recoupment schedule illustrates to investors how many weeks it will take the play to break even, and at what theater capacity. He advises potential investors to know the play and to know the product as part of their due diligence process. “Read the reviews for the previous productions of the play,” suggests Pierce, who also encourages would-be investors to attend a backer’s audition at which investors can watch the entire show.

Further, in evaluating the investment agreement, it is also important to understand the various platforms on which the production can play and seek to partake of any pertaining revenues. “You want to make sure that as an investor you are participating in all secondary and tertiary revenue streams worldwide,” Pierce says, “including film and DVD, as well as the licensing agreement with a publisher for productions at colleges and regional theaters.”

Pierce underscores the

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