Musicals are expensive to run (weekly nuts)- Page 2

[Phantom of London]

Posted: 6/16/14 at 4:13pm

All the kudos to the O/P as compiling a post like that would take a very long time to put together.

If we look at Motown that hasn't announced it has recouped as yet, don't know why some pretty impressive figures.

The show has taken just over $82m in ticket sales in just over a year it has been playing, so lets be hypothetical and say the show cost a whacking $18m to put on, the same as Billy Elliot, if we deduct this off $82m, then the show has made $64m all of which it costs to run the show a week, it has been playing just over 65 weeks, which would be it has a mind blowing $1m a week operating costs and rising as the show hasn't recouped as yet.

So what could happen here:

The show has an astronomical weekly operating cost $1m a week

The figures the producers supply to the Broadway League are wrong.

The show has already recouped but hasn't announced, like Memphis and Rock of Ages did.

[Liza's Headband]

Posted: 6/16/14 at 4:27pm

^ Those numbers are not correct. Further, to your point here: "If we look at Motown that hasn't announced it has recouped as yet, don't know why some pretty impressive figures."

You have failed to account for Berry Gordy's piece of the pie. The royalties being paid to Berry Gordy are, I can safely assume, astronomical. Since his Motown Recording Corporation owns the entire catalog, he probably had more leverage in negotiations to demand a higher royalty percentage which, in turn, led to a much higher percentage wherein a show like ROCK OF AGES, for example, features music from dozens of songwriters and copyright publishers. So while also costly, probably not as costly as something like MOTOWN. I imagine that applies to JERSEY BOYS, as well.

[binau]

Posted: 6/16/14 at 6:07pm

The problem with this is that unless you are intimately involved with every single aspect of the production, or know one of the Producers, these numbers will never be accurate. CapN already mentioned "variables" and that's exactly what we have here. "

Yes I do agree, as mentioned these are just estimations. However, I think they are close enough to at least have some value - e.g., the calculated N2N figure is pretty close to the N2N report in the NYTimes.

Thank you for mentioning a few of the variables though, I can definitely address some of your concerns.

"You do not take into account holiday weekends, shortened weekly performances, and other scheduling adjustments that would dramatically shift or alter the weekly nut at least several weeks out of an entire run or year"

I do actually take this into account. However, it is crudely and assumes that for example 4-performance weeks performances would entail half the weekly running cost and 1-performance weeks would be 1/8 the cost, and 9-performance weeks would be 9/8th the cost. I imagine in reality it’s not this simple. I also don’t know if it would have a massive effect. For example, if I pretend that N2N had 8 performances every week during the time it took them to recoup (they actually had 5 non-standard weeks with more or usually less performances than , I would calculate their nut to be 256k instead of 260k.

Since you do not have access to the royalties agreement, it's also difficult to offer a full picture on the weekly gross. For certain weeks, creatives and/or writers will waive royalties in exchange for a higher licensing or mechanical (or DPD) license percentage. For certain productions, there may also be significant royalties paid to a licensor or publisher, as is the case in "Jersey Boys" for example, which could impact the weekly nut. What makes this even more difficult is that there are silent investors on Broadway and, yes, they do exist. They do not attend the pressers or the awards shows. They, too, would have to be accounted for in the weekly nuts.

This means the weekly nut can change considerably week-to-week.

Thank you temms and Liza again I do agree that the nuts are going to change considerably week-to-week, so it may make it difficult to know precisely how much a show cost last week vs this week. However, I am careful to claim that these are the “average weekly nuts” across time.

Your example RE: amortization is an interesting one. For the purposes of this nuts, I am personally assuming that a producer only announces a show recoups when they have paid off every expense (including royalties etc.,). This is just an assumption I am just going to accept because we don’t have any other information and logically/the traditional use of the word “recoup” would suggest this is the case.



That GETLEMEN’S GUIDE couldn’t be more timely. The article suggests that in 33 weeks they did not returned a single dollar of their investment. If we assume that they have at least broken even, I would estimate their average weekly nut to be about 457k, about 56% weekly potential gross (I think this is a conservatively low estimate because if they had a 1 million reserve they might be using it). If you graph their profit/loss it is clear that the Tony awards probably saved this show.

Updated On: 6/16/14 at 06:07 PM

[Phantom of London]

Posted: 6/16/14 at 6:38pm

You have no clue if my figures are correct or not, the gross is taken from BWW, of course the cost to mount the production are only assumed, if it is lower than my assumed figure, then that makes the weekly cost for this higher and could be then going over the $1m a week, which is preposterous, at these figures any producer worth their salt would of walked away, but alas it looks like they have got away with it and it should recoup.

The article in the New York Times on Gentlemens Guide just highlights, how even for a small show on Broadway, the costs are astronomical, I wouldn't open a show on Broadway, a producer is better off opening a show in London, where costs are a lot lower.

[LizzieCurry]

Posted: 6/22/14 at 5:16pm

Interesting stuff here, with data! http://www.latimes.com/entertainment/arts/la-et-cm-ca-jersey-boys-musical-20140622-story.html

[Bettyboy72]

Posted: 6/22/14 at 7:42pm

I hear Hedwig has been busting his weekly nut. Rocky has a huge weekly nut but hasn't been able to bust it.

[haterobics]

Posted: 6/22/14 at 7:48pm

It does seem hard to play with these nuts, since we're just kind of grabbing randomly and blindly without knowing exactly how big they are or how they prefer to be manipulated.

[ErinDillyFan]

Posted: 6/23/14 at 10:20am

The amortizaton model is an interesting one. I believe Spiderman used that model and is why I think that show came closer to recouping than people believe.

There are other aspects to the financing of shows that don't show up on the bottom line. Shows often have investors that benefit from shows in ways that aren't direct returns from ticket sales. Theater owners will invest in shows, so that they are receiving income from the theater rental even if the show is losing money. Investors can also have contracts to do marketing for the show, so those particular investors make a margin on the marketing costs. And the return on investment is only calculated on ticket sales, whereas, there are often huge returns on merchandise like T-shirts, CDs, magnets, etc.

[neonlightsxo]

Posted: 6/23/14 at 10:24am

"The show has already recouped but hasn't announced, like Memphis and Rock of Ages did."
You're right about Rock of Ages, but not Memphis. Memphis just barely recouped and they announced it.

http://variety.com/2012/legit/news/broadway-s-memphis-recoups-1118057222/#

[Patti LuPone FANatic]

Posted: 6/23/14 at 2:52pm

What would be the weekly nut for "Chicago"? I get the sense that the producers could be more generous with salaries. Just wondering...

[haterobics]

Posted: 6/23/14 at 3:08pm

"What would be the weekly nut for "Chicago"? I get the sense that the producers could be more generous with salaries."

Assuming they could, why would they?

[binau]

Posted: 12/5/14 at 4:08pm

According to the NYTimes when Matilda started performances, Matilda's nut was meant to be 600k. However, given the time it took to recoup I disagree and it looks like their expenses blew out to the over 800k mark (consistent with Billy Elliot)


http://www.nytimes.com/2013/03/24/theater/matilda-arrives-on-broadway-with-big-dreams.html?pagewanted=all&_r=0

I estimate Matilda's average weekly nut is about 838k. They've had a few rough weeks as of late. It also makes weekly nut 71.50% of (91%) of their gross potential. Very expensive show to run.

Updated On: 12/5/14 at 04:08 PM

[neonlightsxo]

Posted: 12/5/14 at 4:19pm

qolbinau, I was thinking the same thing, that the nut must be very high for them to have taken so long to recoup. Thanks for sharing.

[yankeefan7]

Posted: 12/6/14 at 12:13pm

I am not in the business so my question may seem silly. Does money shows get from merchandise sold at the show get included or is it just ticket sales?

[theatreguy]

Posted: 12/6/14 at 12:26pm

qolbinau - I've read that Matilda has a different financing structure from most shows and that the investors were being paid back at a lower-than-traditional rate. Basically, that the RSC were taking a larger portion of profits up front. Wouldn't that make for a slower recouping time without raising the weekly nut?

[binau]

Posted: 12/6/14 at 5:51pm

I guess it depends on whether you would consider such an expense as part of the weekly nut. Given that seems to be an ongoing expense involved in running the show I personally would...

[Up In One]

Posted: 12/8/14 at 9:46am

Yeah very odd that Matilda had to run 90 weeks at 87.67% of its gross before it paid back its investors. If the summary numbers at the bottom of the Broadway world gross sheets are correct that was with an average of 95.7% attendance. Expenses, which must include payments to the original production company in the UK and the crazy amount of advertising the show has done have to be huge. That concerns me because once the holidays are over and the new shows come in and it slumps back down to the 600k/700k range will it be able to survive?
Matilda Totals

[averagebwaynut]

Posted: 12/8/14 at 12:24pm

All the puns and jokes about "nuts" aside, I did just want to point out that the term isn't really being used properly in this thread -- and that's highlighted by this most recent post about "Matilda".

When the NYT reported that at opening, the nut for Matilda was meant to be $600K, I believe that WAS in fact correct -- because the "nut" refers to the MINIMUM weekly operating expenses of the show, a.k.a. "breakeven". The "nut", such as it is, doesn't really vary much from week to week. The minimum NAGBOR (Net Adjusted Gross Box Office Receipts) that a show needs to do in order to not operate at a loss remains relatively the same over time (absent subsequent adjustments to individual budget lines like the weekly advertising accrual).

What's really being discussed here is NOT the "nut", but the average ACTUAL weekly operating expenses. For reasons others have already mentioned -- most notably, any compensation that is based on a percentage of NAGBOR, including star percentages, theatre rent, creative team royalties -- that figure fluctuates greatly in successful weeks vs middling weeks vs poor weeks.

That's one of the reasons why it can be notoriously hard to reconcile these numbers based on averages, and the greater the sample size, the more the numbers can be skewed. Shows have a fixed floor when it comes to expenses (absent waivers or other concessions) but they don't have a fixed ceiling. If a show is paying royalties on gross, it's not hard to imagine how terrific sales numbers could bump weekly operating expenses by several hundred thousand dollars. And if a show is paying based on net operating profits, the low end is a bit more protected but you can actually end up paying more in royalties in extreme success.

Either way, I think this is an impressive undertaking by qolbinau and even if there is a significant margin of error, it's still quite instructive. Most of my point above about the "nut" is sementic...er, semantic.

[neonlightsxo]

Posted: 12/8/14 at 1:08pm

Up In One, I think you're right. If we remember, Billy Elliot didn't actually run very long.

averagebwaynut, that's interesting. I guess I didn't know that things like rent fluctuated.

[binau]

Posted: 12/14/15 at 5:12am

9. Fun Home has recouped in about 37 weeks. To be able to gross 5.25 million in profit during this time, its nut must be approximately 455k per week, which is somewhere around the 60% gross potential mark (rough). One of the cheaper shows on Broadway, but not pocket change. 

[Liza's Headband]

Posted: 12/14/15 at 8:11am

^ You're not taking royalties, box office percentage shares (if any), and landlord BO percentage shares (if any), into account so that number is most likely not accurate. 

[Hamilton22]

Posted: 12/14/15 at 8:14am

^ That's hysterical coming from the account that is never accurate cause it has to keep switching between sh*tband and JM226.

[Auggie27]

Posted: 12/14/15 at 8:23am

Interestingly enough, I was just looking at "Chorus Line: FAQs" (fascinating book) and learned its original weekly nut was $160,000.  I took out of towners who'd never seen it, and recall the Shubert was often half full ore less.  It was possible to keep going because it was so inexpensive.  Worth noting, too: the show without a full house is a bizarre piece of theater, an indifferent audience can turn thrilling material into something that seems oddly self-indulgent.  I remember the vibe in the semi-empty Shubert on a particular winter night: the stories being told seemed to disappear into the ether, without laughs or collective sense of identification.  David Hare says every play takes place between the actors and the audience.  For ACL, when that space wasn't occupied, the material just refused to come to life, at least until the finale.  A sidebar perhaps, but related to shows lasting past their ability to sell well.

[Liza's Headband]

Posted: 12/14/15 at 8:38am

^ That's hysterical coming from the account that is never accurate cause it has to keep switching between sh*tband and JM226.

 

Can I help you with something, Broadway Guy? 

[neonlightsxo]

Posted: 12/14/15 at 9:23am

Liza, are you saying Fun Home's actual nut is higher or lower than 455?