The Cost of Doing Business on Broadway

An American in Paris on Broadway.

An American in Paris is Broadway at its best.

In 2011, the New York Times Arts Beat blog offered an article entitled “The Staggering Cost of Broadway.” In it, writer Patrick Healy referenced the revival of Harold Pinter’s Betrayal, a three-character drama that had recently been produced in London and was transferring to Broadway. In interviewing London producer Sonia Friedman about the hit production, it became clear exactly how costly it is to produce a play on Broadway.

Healy wrote, “This ‘Betrayal’ revival cost £350,000 (about $565,000) to mount in the West End, Ms. Friedman said, and an additional £65,000 ($105,000) to pay weekly running costs. By comparison, she estimates that the same production would cost about $2.8 million to mount on Broadway — the standard amount for a commercial play production — and an additional $260,000 or so to run each week.”

Why So Costly?

It's no secret that Broadway is an expensive place to do business.

It’s no secret that Broadway is an expensive place to do business.

A Broadway show costs, at minimum, $2.5 million to mount. The musical Next to Normal had a production bill of about $4 million and The Book of Mormon cost approximately $9 million. The question is why, and the other question is what effect do expansive budgets have on Broadway?

Why it costs so much has to do, in general, with the high price of doing business in New York City, and specifically on Broadway. First of all, Broadway contracting through unions can be challenging. Union agreements are very specific in terms of not only how much people are paid but how many people must be hired. These contracts cover crews, technicians, musicians, and others. Salaries are high, it’s expensive to build, move, and put in sets and tech shows, theatre rentals are high, and advertising budgets have skyrocketed.

What does the theatre in London have that New York does not? The answer is flexibility in contracts. That lack of “give” in Broadway contracts results in more “take” on the part of producers. From whom do the producers “take?” That would be from those who go to the theatre.

The Cost of Tickets

A fairly simple show with a star is an expensive ticket.

A fairly simple show with a star is an expensive ticket.

In an article published on June 10, 2014, the Los Angeles Times noted that for the first time in the history of the Great White Way the average ticket price for a Broadway ticket surpassed $100. The average cost for a ticket was $103.88, and that was up 5.5% from last season when the average price was $98.42. Of course, that is the average price. Many shows sell tickets for more than $150 a pop and, also, for less than $50.

But the point is it is very expensive for patrons to go and see a Broadway show. A family of four can spend $600 on tickets alone; add in transportation, parking, and a possible meal and the price tag for an evening at the theatre can hit $800 plus.

For the past five seasons, the average rise in Broadway ticket prices has been 6.8%. The average yearly inflation rate for that same period was as low as 1.47% and as high as 3.16%. The average rate of inflation for those five years was 2.04%. Yet, Broadway ticket prices rose three times more than the rate of inflation.

Like the Weather

New shows continue to offer Broadway hope for the future.

New shows continue to offer Broadway hope for the future.

With that being the case, shouldn’t everyone involved in Broadway be asking if something’s askew? People ask, but, like the weather, everyone complains about the prices of going to Broadway. but no one does anything about them. And perhaps like climate change, many seem to care little of the anomaly that rapidly rising ticket prices, associated possibly with the cost of doing business, are having on the Broadway theatre.

The interesting thing is that in some years Broadway ticket sales have been up. In 2013-2014, the number of people who went to a show rose by 5.5% over the year before. However, the year before was dismal as far as ticket sales were concerned. Also, grosses rose in 2013-2014 by 11.4% over the previous year. Interestingly, that’s double rate of the increase in ticket sales.

However, if we compare those ticket sales to 2012-2013, the year before, when they were down by 6.2%, the increase of 5.5% is not as substantial as we’re led to believe. The Broadway League extolled the rise, but put in context it was actually fairly weak.

Consider, if sales were down 6.2% one season and went up 5.5% the next, they were still off by 0.7%, as they had not fully recovered. A healthy season would have seen them rise by 8% to 9%. And although Broadway had not fully recovered from its attendance drop, it certainly did in terms of grosses, as Broadway shows grossed a total of $1.14 billion in 2012-2013 and then $1.27 billion in 2013-2014.

Will Broadway Collapse Under Its Own Weight?

Although a Broadway collapse may seem ridiculous to some, such an event is not impossible. As far as we can tell, most theatre movements, styles and genres, and venues eventually fade away, are transformed into new entities, come a resounding crash. Those in the U.S. that have gone by the wayside include the Lyceum Circuit, Vaudeville, and Burlesque. All were very popular forms of entertainment. We can go back as far as Ancient Athens when Greek Tragedy disappeared from the stage after about an 80-year run. That was, partly, economically based.

Broadway shows are exceedingly expensive to produce, ticket prices continue to rise, and it becomes more and more difficult for producers to make a profit. In Shakespeare’s day the play was the thing and production costs, theatre rentals, and ticket prices were low. We might look to that era for some basic answers to some tough questions.

Will Broadway Ticket Sales See an Uptick This Week?

On the Town sees slumping sales.

On the Town sees slumping sales.

As noted in an early story, the months of January and February can be especially tough on Broadway shows. The week ending January 25 (the 35th of the 2014-2015 season) saw almost every show lose ground. This time of year can be a tough sale due to weather, a lack of excess cash due to the holidays, and the overall physical and mental drain people feel this time of year.

Shows in the Plus Column

Shows that showed in creased sales few and far between. Those productions that enjoyed increased volume included Chicago (0.2%), It’s Only a Play (1.9%), Kinky Boots (2.0%), and Mamma Mia! (2.5%). Beautiful: The Carole King Musical and The Book of Mormon were both stable, with the former selling 93% and the latter overbooked at 102.6%.

The big winner was Sting’s musical The Last Ship, which closed on January 24. That show saw an increase of 4%, selling at 87.6%. Although The Last Ship garnered fine reviews, it just could not find an audience.

Slow Sales Overall

Sting appeared in The Last Ship in an attempt to boost ticket sales.

Sting appeared in The Last Ship in an attempt to boost ticket sales.

The Broadway front is seeing slow sales overall. The revival of On the Town, which received excellent notices, was at 60.3% for the week ending January 25, and the new musical Honeymoon in Vegas, which reviewers loved, came in at 71.3%. It will be interesting to see how Honeymoon in Vegas will perform in the next few weeks, and if, overall, as the weather improves, sales will spike up.

Figures for the week ending February 1, 2015 will include an extra dark night for some shows, which closed down due to the storm forecast. That forecast proved to be much ado about nothing.

Broadway Grosses Unpredictable During January

Honeymoon in Vegas Box Office

Honeymoon in Vegas Box Office

Honeymoon in Vegas, which received great reviews, got a bump in ticket sales.

The ‘dead months” for Broadway begin in January with the start of the calendar year and stretch into early March. It’s a time that can be tough on Broadway ticket sales, as people are often low on cash due to holiday spending. Also, the unpredictable and unkind weather, short days and cold nights, and a general letdown after all of the hustle and bustle that defines the time from Thanksgiving through to New Year’s, contribute to uneven ticket sales.

Mid-January Box Office Figures

Mamma Mia!  Broadway musical

Mamma Mia! saw a decreased os more than 10%.

The box office numbers as reported by Playbill.com for the week ending January 18, 2015, reveal an overall uptick from those for the week ending January 11th. Most plays and musicals showed an increase in ticket sales for the week running from the 12th to the 18th. Where as for the week ending January 11th every show, except Aladdin and The Book of Mormon, saw a decline from the week prior, which included New Year’s.

Shows that experienced a decline in sales for the week ending January 18th were Cabaret (-1.4%), Chicago (-5.8%), It’s Only a Play (-5.0%), Jersey Boys (-6.3%), Les Misérables (-5.9%), The Lion King (-1.0%), and The Phantom of the Opera (-8.8%). Mamma Mia! posted the only double-digit dovetail, with sales down 12.8%,

Shows Trending Upward

Edward Albee's A Delicate Balance on Broadway

John Lithgow and Glenn Close star in Albee’s A Delicate Balance.

Of the 29 shows presently running on Broadway, 21 either showed no decline or enjoyed an increase in sales. That means 74% of the shows experienced either improved or stable tickets sales.

The show that saw the biggest increase was the revival of Edward Albee’s Pulitzer Prize winning drama A Delicate Balance. There was a 10.1% increase in sales, as the John Golden Theatre reached 83.4% capacity. Two other revivals rebounded nicely, as On the Town notched an increase of 7.7%, going from 58.1% to 65.8%, and You Can’t Take It With You received a 7.2% bump, as it went from 61.3% capacity to 68.5%.

Honeymoon in Vegas

The new musical Honeymoon in Vegas, which garnered wonderful reviews during the week, went from 78.5% to 81.5% capacity. It will be interesting to see if what appears to be the first big hit of 2015 continues to see increased ticket sales during what can be the harshest time of the year for Broadway theatres. Broadway producers will be anxiously eyeing advanced sales for the coming months, as well as daily and weekly grosses.