Who can invest in a Broadway show...

[macbeth]

Posted: 2/1/20 at 8:40am

I found this Forbes article interesting, as it answered something I've always wondered about how much money producers and investors have to have to take the risk on Broadway. 

Each so-called “accredited investor” should still have earned at least $200,000 for two years (or $300,000 with his or her spouse) and expect to earn the same amount in the current year or have a net worth at least $1 million without counting his or her house.

[SugarButterFlour]

Posted: 2/1/20 at 9:19am

OH! I know about this!! I was asking about becoming involved in The Prince of Egypt in London, and corresponded with a producer who told me how much money it would cost to invest. I don't remember how much it was, though. It's somewhere in the depths of my email, unfortunately. So I think anyone can, providing they have the money! 

 

 

[Wick3]

Posted: 2/1/20 at 11:05am

I recall reading an article a few years ago how Rudin required Hello Dolly investors to also invest in other plays he was producing as a bundle. It's a risk of course but somehow I think a number of Broadway investors are simply reinvesting the money they're making from other shows. For example, I'd hope Hamilton investors are reinvesting some of their profits to produce other musicals/plays on Broadway. Even if those shows don't recoup I doubt they'd feel the hit given how Hamilton is still making roughly $3 million weekly grosses.

[msmp]

Posted: 2/1/20 at 1:51pm

macbeth said: "I found this Forbes article interesting, as it answered something I've always wondered about how much money producers and investors have to have to take the risk on Broadway.

Each so-called “accredited investor” should still have earned at least $200,000 for two years (or $300,000 with his or her spouse) and expect to earn the same amount in the current year or have a net worth at least $1 million without counting his or her house."

Yeah, New York law is pretty strict on investing in theatrical productions. I think there is an exception whereby producers can recruit a handful of investors (5, I think?) who do not meet the income and asset requirements, but the bulk of the financing needs to come from wealthier people. The justification is that the risk for a Broadway show is far higher than most other types of investment, and the state wanted to deter producers from pulling a Max Biyalistock and bilking people who can't afford it out of their money for shows that never quite happen.

[zainmax]

Posted: 2/1/20 at 6:29pm

Wick3 said: "I recall reading an article a few years ago how Rudin required Hello Dolly investors to also invest in other plays he was producing as a bundle. It's a risk of course but somehow I think anumber of Broadway investors are simply reinvesting the money they're making from other shows. For example, I'd hope Hamilton investors are reinvesting some of their profits to produce other musicals/plays on Broadway. Even if those shows don't recoup I doubt they'd feel the hit given how Hamilton is still making roughly $3 million weekly grosses."

The bundle stuff is interesting... but, I think you're right about Hamilton

[zainmax]

Posted: 2/1/20 at 6:30pm

msmp said: "macbeth said: "I found this Forbes article interesting, as it answered something I've always wondered about how much money producers and investors have to have to take the risk on Broadway.

Each so-called “accredited investor” should still have earned at least $200,000 for two years (or $300,000 with his or her spouse) and expect to earn the same amount in the current year or have a net worth at least $1 million without counting his or her house."

Yeah, New York law is pretty strict on investing in theatrical productions. I think there is an exception whereby producers can recruit a handful of investors (5, I think?) who do not meet the income and asset requirements, but the bulk of the financing needs to come from wealthier people. The justification is that the risk for a Broadway show is far higher than most other types of investment, and the state wanted to deter producers from pulling a Max Biyalistock and bilking people who can't afford it out of their money for shows that never quite happen."

Isn't it 35 per the article?? Not sure about state law vs. federal law, though...

I sort of agree that the risk is higher, and not everyone should be allowed to invest.

[Wick3]

Posted: 2/3/20 at 8:26am

zainmax said: "The bundle stuff is interesting... but, I think you're right about Hamilton"

Found the article about the bundling for most Hello Dolly investors: https://www.forbes.com/sites/leeseymour/2018/08/27/hello-dolly-closes-with-broken-records-trickling-roi/#7518e44f2dd0

From the article: "In order to get a piece of Dolly's pie, most investors were required to put money into riskier projects on the producer's slate, too. According to them, even a 15% profit on Dolly wouldn't cover half the losses taken on A Doll's House, Part 2 or The Glass Menagerie, which closed last year."

Also, apparently some investors questioned Rudin's choice of $150k weekly ads given how the show was already practically sold out. Nonetheless, the revival recouped and investors made at least 5% profit.

Updated On: 2/3/20 at 08:26 AM

[yankeefan7]

Posted: 2/4/20 at 9:56am

Damn, I can't invest in Broadway show with those requirements - ha ha 

[HogansHero]

Posted: 2/4/20 at 10:48am

It is well to remember that generalizations produce bad info. 

Shows are not one-size-fits-all and neither are capitalizations. In a perfect world, unaccredited investors are inefficient; producers do not want any unaccredited investors. The best way to capitalize a show is with a few (35 would be the upper range)  high-6 or 7 figure investors. All of these people are inherently accredited and by a long shot. But there are of course other shows that are unable to make this happen, and seek to find cash wherever they can. Few seasoned producers find this worthwhile but of course there are exceptions. I think this subject is much ado about nothing althugh I have never really understood the logic of the rule. 

[zainmax]

Posted: 2/4/20 at 10:58am

HogansHero said: "It is well to remember that generalizations produce bad info.

Shows are not one-size-fits-all and neither are capitalizations. In a perfect world, unaccredited investors are inefficient;producers do not want any unaccredited investors. The best way to capitalize a show is with a few (35 would be the upper range) high-6 or 7 figure investors. All of these people are inherently accredited and by a long shot. But there are of course other shows that are unable to make this happen, and seek to find cash wherever they can. Few seasoned producers find this worthwhile but of course there are exceptions. I think this subject is much ado about nothing althugh I have never really understood the logic of the rule."

Are any shows produced with a handful of investors anymore? Maybe Hamilton & Cher Show...

Updated On: 2/4/20 at 10:58 AM

[HogansHero]

Posted: 2/4/20 at 12:17pm

Handful, very few, but less than 35, yes. The bigger point, however, is that few if any of whatever the number ends up being are unaccredited. Producers don't want people who are going to freak out, or even who are inexperienced for that matter.

[joevitus]

Posted: 2/4/20 at 12:23pm

Please remember the advice of Sitting Bull: Keep bow tight. Keep arrow sharp. No put money into show business!