The Business Behind National Tours and Their Effect on Broadway

It’s the heart of Broadway Touring announcement season, where venues around the country announce what shows they are planning to present across the country over the next year. Over 50 venues have already announced their seasons for next year, and there are hundreds more still yet to come. 

A brief rundown of touring financials:

On the actors contract side, Broadway tours are split into seven levels, with Levels One and Two typicially being reserved for shows doing multi-week runs in each city (the highest tiers). Think the new tour of Phantom or long-running tours of Hamilton, The Lion King, and Wicked. This highest tier contract is the closest to the Production contract Broadway shows use, and when a National Tour does a stint on Broadway or elsewhere in NYC, they use the Level One contract. This means the recent runs of Beetlejuice and Mamma Mia! were paying actors less than the standard Broadway production contract would, but stil higher than the typical touring salary. On average about one show a year has gone out at Level One, with the upcoming Oh, Mary! tour being the most recent. The most recent musical to go out at Level One was MJ a few years ago. 

Levels Three through Seven are what used to be called SETA contracts, or Short Engagement Touring Agreements. These contracts are for shows that mostly run for only one week engagements in cities, and are what most touring shows today are covered by. The touring theatre subscription model dictates that most cities have a mostly guaranteed audience for one week of a show's run. Adding additional weeks can quickly become financially untenable. The national tour Moulin Rouge! is a great example of this, after about a year and a half on tour playing multi-week engagements in most cities, they reteched and scaled down the production so they could do single week engagements. But tours like The Outsiders and the upcoming Death Becomes Her...

These touring agreements have lower guaranteed salaries for performers, about half of what a level one tour might have, but they include a portion of the “producers share of the overage”. Broadway national tours often get a guarantee from the venues they play, typically in the neighborhood of $300k (there are different models, but this is by far the most common), plus a royalty up to a certain dollar amount. The presenter then pays their costs out of their ticket sales, and once they recoup on the engagement there’s a profit split. Out of that profit split is where cast and crew can get overages, usually 0.25% or 0.4% depending on if the national tour as a whole has recouped yet. This means depending on how well a show sells in a city, cast members can theoretically earn more than a level one or two tour, or even a Broadway production, which do not have that overage. But there are almost certainly weeks where the pay is much lower.

Costs are also across the board much lower on tour than on Broadway. A show like Operation Mincemeat almost certainly costs over $500k a week to operate on Broadway, on tour that number could be closer to $300k (right around, or maybe just less than, the venue guarantees). But in spite of that, grosses can be much higher. Although The Broadway League does not publish touring grosses externally each week like they do the Broadway grosses, you can get an idea. The average Broadway touring venue has over 2000 seats, and select cities may have much larger venues. Recently The Phantom of the Opera national tour played to over 65000 patrons across only two weeks in St. Louis. If the average ticket price for those two weeks was $100, that's $3.25 million gross per week, roughly equivalent to the highest grossing weeks Phantom played on Broadway. This means shows that struggle to recoup on Broadway have a much easier time on the road. Shows like Beetlejuice and A Beautiful Noise were able to recoup rather quickly on tour, even though neither of their Broadway counterparts were financially successful. 

There are a number of reasons costs are lower. Maybe the biggest one is that on Broadway each show is its own entity, i.e they are both the producer and the presenter of the show. That means in addition to paying cast and crew and musician salaries, they are also responsible for marketing and front of house costs. Those are six-figure weekly line items on Broadway that are comparatively negligible on tour (for the production), since it’s largely each venue that is undertaking that cost burden, instead of the show itself. And while there are certainly additional costs associated with touring (mainly trucking and housing costs), it’s comparatively less expensive. 

Do they help or hurt current Broadway shows?

This is a much more difficult question. According to the Broadway League’s annual demographic report, 42% of Broadway theatregoers are domestic tourists, i.e not from NYC, the surrounding suburbs, or other countries. It stands to reason then that there would be a negative financial impact for a touring show's respective Broadway counterpart. After all, why see a show in New York if it’s coming to your hometown? But since Broadway tours typically don’t begin for well after a year from when the show might debut on the main stem, so often when the initial hype of that show has already died down, that’s difficult to prove. The only real exception to that recently is Back to the Future, which opened on tour about 10 months after its Broadway opening. And while Back to the Future certainly struggled financially after their tour opened (grosses dropped about $250k a week on average), that just as well could have been due to a lackluster reception with awards voters, as the timelines line up almost exactly. Back to the Future notwithstanding, there has not been a show to go out on tour less than a year after opening on Broadway since 2020. Which makes sense, touring venues are currently announcing shows sometimes as far out as Fall 2027. It would be odd (for example) to see Galileo popping up on touring subscriptions when it has yet to begin performances in New York. 

National tours also pay royalty fees to the original Broadway production. So theoretically, a successful national tour could also provide enough money to a Broadway show to keep it afloat, even if the Broadway show is financially struggling. Or help it recoup faster, both The Outsiders and &Juliet, the two most recent musicals to recoup on Broadway, very likely benefitted from the success of their National Tours.

Regardless, there are some signs that the model is shifting, bringing National Tours and Broadway premieres closer together. The upcoming Beaches already announced their intention to tour following their limited run on Broadway, but dates have not yet been announced. It would be interesting to see a show try a quicker launch to a National Tour from Broadway. Maybe the shift would be good, for the industry at least, in this challenging Broadway financial landscape.