Investing in Theatre
Important Terms
If you’ve never invested in theatre or Broadway, there are a few terms you need to be familiar with. Here’s a helpful list to get your started:
Accredited Investor – An individual who meets certain criteria set forth by the Securities and Exchange Commission, including earning an annual income of $200,000 or having a net worth of $1 million. There are other qualifying criteria as well.
Advance – The amount of money that a Broadway show has earned in ticket sales before the official opening night. This may be used as a measure of interest in the show and to help determine the marketing budget.
Investor – An individual who provides financial backing for a Broadway show, typically in exchange for a percentage of future profits.
Box Office – The place where tickets are sold for a Broadway show.
Capitalization – The total amount of money that has been invested in a Broadway show. This includes money from angel investors, producers, and other sources.
Company Manager – The person or company responsible for the overall management of a production. The company manager may help prepare the budget, pitch deck, book rehearsal space, assist with casting, oversee fundraising, communicate with investors, help with house seats, work with the marketing company, and more.
Co-Producer – A producer who works with the lead producer on the overall production, and often assists with raising capital.
Deferred Compensation – Money that is earned by a Broadway professional but is not paid out until a later date.
Lead Producer – The Broadway professional who is in charge of raising money for the show and overseeing its production. Think of this person like the CEO.
Limited Partner – An individual who invests money in a Broadway show but does not necessarily have an active role in its production.
Opening Night – The first official performance of a Broadway show.
Out-of-Town Tryout – A period of time when a Broadway-bound show is performed in another city before it opens in New York. This allows for any necessary changes to be made before the show opens on Broadway.
Producer – An individual who is responsible for raising money and overseeing the production of a Broadway show.
Royalty – A percentage of the box office receipts paid out to producers, investors, and the creative team for each performance of the show.
Secondary Market – A place where tickets for a Broadway show are sold after they are initially released to the public. This includes online ticketing websites and resale websites.
Securities – Financial instruments that are used to raise capital for Broadway shows. These can include bonds, stocks, and other investments.
Subscription Sales – A type of advance sales where people purchase tickets for a Broadway show before it opens. These tickets are typically purchased in bulk by organizations or groups.
Tony Award – The highest honor that can be bestowed upon a Broadway show. These awards are given out annually by the American Theatre Wing.
Weekly Grosses – The amount of money that a Broadway show earns in ticket sales each week. This is typically used to measure the success of a show.
Common Questions
Can Anyone Invest In Broadway?
No. There are some restrictions on who can invest. Generally, an investor has to be “accredited”, which means they meet certain criteria. An “accredited investor” is generally one who has either:
Annual income of $200,000 a year for the past two years (or a household annual income of $300,000) with the expectation that it will continue, or
Net worth of $1 million or more, excluding the investor’s primary residence
Recent changes in the law may allow certain others to invest if they meet other criteria. One proposed change allows a “non-accredited investor” to still invest, for example, as follows:
If a non-accredited investor has an annual income or net worth of less than $100,000, then the investor can invest the greater of $2,000 or 5 percent of the lesser of his or her annual income or net worth.
If the investor has more than $100,000, then the investor can invest 10 percent of the lesser of his or her annual income or net worth.
How Much Do You Need To Invest In Broadway?
The average investment unit for a musical is $25,000, but some shows may offer units as low as $5,000 or minimums of $50,000 or more. Investors may have their own smaller investor groups where they share a unit.
There are many shows where the entrance investment is only $5,000 or $10,000. There was a recent news report of a Jersey Boys investor who only invested $12,500, and was able to see nearly 20 times a return on the investment.
Are there other perks besides a financial return?
Yes! Here are a few…
- Amazing Connections: Many investors love the opportunity to meet other like-minded people. Theater is a wonderful common bond for people all over the world to come together. Investors may make great friends and connections through Broadway investing. There are many opportunities to connect, including possibly at the Opening Night afterparty.
- Opportunities To Invest In Other Productions: Many shows start on Broadway with the goal of launching productions into London, Asia, Australia, and national and international tours. The main company may share in those revenues, and investors may also have an additional option of investing in those other productions. This could lead to additional revenue streams.
- Support the Arts: Investment into a Broadway show is an investment into the arts. Supporting the arts allows actors to continue to pursue their dreams with Broadway debuts and performing on national and international stages. Helping Broadway shows to be put on also encourages younger generations to be part of the arts and to support it.
- Be Part of a Broadway Show: When you invest in Broadway, you are essentially buying shares in a company that uses its capital investment to put on a Broadway show. When you purchase a unit (or share) you are part of the company that owns the rights to the show. Unlike most other types of investments, Broadway often comes with great perks. You may get opening night tickets, invitation to the opening night party, exclusive merchandise, backstage tours, access to house seat tickets, invitations to cast parties, and more.
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