Some questions about the Nederlander Organization (and Broadway in general)

[bwayphreak234]

Posted: 11/19/13 at 3:44pm

Hi everyone!

I am working on a case study for my arts management class, and I chose to do the Nederlander Organization. I was wondering if anyone could answer a few basic questions. I know that the Nederlanders own and operate nine Broadway theatres. What does this mean for them from a business standpoint, and how do they profit and/or lose money from shows? Do they receive rent from the shows playing their houses? Also, are the Nederlanders the one to implement the stop clauses with shows playing in their theatre? Finally, what is their primary source of revenue and profit?

Sorry for so many questions, I just could not find the info anywhere else, and I know a lot of you on here are very knowledgable about this kind of stuff.

Thanks

Posted: 11/19/13 at 4:25pm

What does this mean for them from a business standpoint, and how do they profit and/or lose money from shows? Concession sales primarily and also they charge performers 50 cents to use the bathrooms.

Do they receive rent from the shows playing their houses? No. They are allowed to keep any money they find when they sweep up, however.

Also, are the Nederlanders the one to implement the stop clauses with shows playing in their theater? They could, but why would they want to? Theater is like a family, why kick out your cousin just because they overstayed their welcome.





Updated On: 11/19/13 at 04:25 PM

Posted: 11/19/13 at 4:31pm

Meanwhile there are tons of books about Broadway Producers. The Season by William Goldman is old, but very very good- and there is at lest one whole chapter on how a theater owner agonizes over whether to exercise the stop clause and how they pick which show to host.

There is also a lot on how a producer maximizes his profit which also talks about how a theater owner helps & hurts.

[Gothampc]

Posted: 11/19/13 at 4:50pm

"also they charge performers 50 cents to use the bathrooms."

That's only for the chorus and walk ons. Big stars like Patti LuPone are charged a percentage of their salary.

And anyone in the audience who takes pictures has to pay a royalty to the theater. That's why Patti LuPone is always yelling "Stop taking pictures." She knows that every click of the shutter is putting more money into their pockets.

[musicalfool]

Posted: 11/19/13 at 5:05pm

Why don't you call the Nederlander office and see if someone would spend an hour with you? Not sure I would rely on info from a message board.

[bwayphreak234]

Posted: 11/19/13 at 9:05pm

Updated On: 11/19/13 at 09:05 PM

[FutureGM]

Posted: 11/19/13 at 10:43pm

Hello! I earned my Master's in Arts and Cultural Management, so good luck to you; I've been there! Let me see if I can help a little bit:

"I know that the Nederlanders own and operate nine Broadway theatres." You are correct; they own the Brooks Atkinson, the Gershwin, the Lunt-Fontanne, the Marquis, the Minskoff, the Nederlander, the Palace, the Richard Rodgers, and the Neil Simon. They also have a special agreement with Disney Theatrical (the own the New Amsterdam), to allow for DTG to have more than one show going.

"What does this mean for them from a business standpoint, and how do they profit and/or lose money from shows? Do they receive rent from the shows playing their houses?"

From the business standpoint, honestly, it depends on whether they are renting out the theatre, or if they are also a producer on the show. As a producer there is a bit more flexibility in the budgeting of the show. If they truly believe in work that they are putting on, but the reviews end up not being great, they can still give the show a try and maybe withhold the rent for a little. As just the owner, they reserve the right (the stop clause, if you will), that if the show is not doing as well as thought in the contract, they are allowed to pull the plug. This is why, if you are renting a theatre, you want to make sure that the theatre owner is always on your side. The latter of these scenarios doesn't happen as often on Broadway, but I wanted to mention it, because it is not like it never happens.

"Also, are the Nederlanders the one to implement the stop clauses with shows playing in their theatre?" See Above. An entity as large as the Nederlanders will, for sure, ensure this because, they will of course, want to make a profit. In either case (as Producer or just theatre owner), they are the owner of the theatre and are supposed to be making money off the production. If the show stops making money, they close the show to make way for one that will.

"Finally, what is their primary source of revenue and profit?" Rent will be a big part of it, but they also will likely have negotiated a royalty based upon the net box office, concessions sold, and merch sold. Also, if the production they are producing (or renting out to) is a hit, they will likely have negotiated a royalty base for future productions as well (this would be much, much smaller than the NBO royalty).

A great source? Purchase "Guide to Producing Musicals and Plays" released by the Commercial Theatre Institute. It is an amazing resource, and is basically my bible. Go to the Drama Book Shop on 40th; I am sure they have it (pretty sure that's where I got mine). Also, it couldn't hurt to try and see if someone from the Nederlanders would speak with you. In the event you would like to learn more about Broadway, check out broadwayleague.com and spotlightonbroadyway.com; very good information.

I hopes this helps a bit. Good luck on your case study!