Cirque du Soleil Struggles Entering Quarter Century Club

Le Grand Chapiteau has begun to dip and sag under fallout from the global recession. Will Founder and CEO Guy Laliberté be able to save his company? Not if he keeps up his quantity over quality initiative that has plagued the French Canadian troupe over the past five years. At present moment, the company has 19 shows running, seven of which are sit-down productions within Las Vegas hotel casinos, far more than ever before.

Full disclosure: I’ve been a huge fan of Le Cirque for a long time. For years I couldn’t say a bad word about it, but now my thoughts have changed. Discovering the company in late 2002 with La Nouba, there was a period where I was routinely traveling across the country, seeing 6-8 productions a year at $100-150 bucks a ticket. I helped represent the company to underserved demographics and did outreach to new, young audiences. I even worked with the company’s online presence across message boards and forums. I had travelled thousands of miles and had seen almost 30 productions. Then in 2008, the pieces began falling apart, drifting, and so did I. Despite having more disposable income and better geo-flexibility for traveling shows, I’ve only seen 2 since 2009. I didn’t enjoy either; the magic was gone. For generalist understanding, I won’t dive into specifics with names of productions, staffing changes, and artists. Instead, I’ve tried to use show trailers for accessibility to chart progression. If you want to talk in-depth, email me — I love chatting with other fans, especially with those who’ve been disappointed as of late.

The massive company announced late last week it would be laying off over 400 employees (about 8% of the its workforce), shelving scheduled productions, and closing several poor received currently-running shows in an effort to rein in spiraling costs on the financially debt-laden projects. Most of the job cuts will take place at the Montreal HQ, home to 2,000 of the company’s 5,000-strong global work force. Straight out of the gate, Cirque’s press was immediate in saying these huge cuts and slashes were not due to artistic, internal problems, but instead could be attributed to external forces beyond their control, namely surging production costs and the strong Canadian dollar.

“The Cirque is going through a difficult period but not a difficult financial period,” spokeswoman Renée-Claude Ménard said Wednesday at the company’s Montreal headquarters. She noted that the company achieved record revenue of “nearly $1 billion” over the past year and sold 14.2 million tickets to more than 20 shows around the world. “Basically we’re lucky that with a very difficult economic and financial situation we’re still pulling a rabbit out of the hat,” she said. In addition to runaway expenses associated with its rapid expansion, the company is facing a shortage of outside investors in its production and ongoing difficulties caused by the strength of the Canadian dollar. The company incurs 95 percent of its expenses in Canada and 95 percent of its revenue elsewhere, Ms. Ménard said. “Each one-cent increase in the dollar has a $3-million impact on our profits,” she said. The company, founded almost 30 years ago by stilt-walker Guy Laliberté and fellow street buskers, also announced Wednesday it is closing four shows to trim expenses. “We would have been much happier to tell you those shows weren’t closing,” Ms. Ménard said. “But it’s not a revenue issue, it’s an expense issue.” – Bertrand Marotte

Yes, these external factors are at play, but it would be remiss to operate under the assume that the Cirque themselves are not at fault. The pivotal issue, I believe, is due to the reckless and furious expansion of the company since mid-2007. With a string of Dragone-directed hits in the mid 90s and Dominic Champagne’s vision guiding the company through the early 2000s, the CdS was moving steadily forward, debuting a show every 12-16 months. At this time, storytelling and spectacle walked hand in hand. The company was in a great place with it’s marketshare and name-recognition growing around the world. The company’s founder and CEO Guy Laliberté rose from a poor street performer to one of the richest men in North America.

All fairy tales however, especially in business, must come to an end. Greed sets in and original values are lost. A company’s mission statement is traded in for a stronger balance sheet and higher net worth. Twenty years after the innovative company’s formation, the tides shifted and spectacle took the forefront and artistry/storytelling was abandoned. Production budgets initially spent on new act R&D, talent travel, and innovation was spent on massive, unimaginable theatre renovations and special effects so far reaching from the company’s start in the mid 1980s. All one must do is take a look at La Magie Continue to Saltimbanco to KA, the transformation is astonishing. KA’s 2004 production costs surpassed previous records of $165M, dwarfing that of even Broadway’s Spiderman: Turn of the Dark ($65m) almost ten years later.

Saltimbanco, 1991. Humble beginnings.

Alegria, 1994. Astonishment through performance. Entering the Golden Era.

 O, 1998. Design and technology’s emerge, but they walk beautifully hand in hand.

Varekai, 2003. The final show in the 10 year Golden Era.

KA, 2004. Amazement through technology and design. The decline begins.

Viva Elvis, 2010. What happened to my beloved company?

Prior to this slip up, Cirque’s development had a near perfect record. Shows rarely stopped touring and were often sent out on third and forth trips North America, European, Asian, and Australian tours; not a single permanent show in residence had closed. The company faltered. Adaptation replaced innovation. The root of the “wow” shifted from the performers they celebrated at their core, to stage automation and moving elements. Partnerships with unlikely sources (The Beatles, Criss Angel, Broadway and Elvis Presley) changed the company’s artistic landscape. And most importantly, having several shows playing on every continent (and the complete over-saturation in Las Vegas) was more important than what was playing on each stage every night.

Laliberté, now more concerned with being the first clown in space than running his billion dollar empire.

Cirque du Soleil was founded in 1984 by Laliberté – now, of course, the world’s first billionaire stilt walker – and in the first 25 years of its life it opened an average of one new show a year, sending out a new touring show or further colonizing the Las Vegas strip. In 2001, Daniel Lamarre, who had previously run the private television network TVA, came on board as CEO. Lamarre told Bloomberg around that time that he wanted to expand the half-a-billion dollar company at a rate of 25 percent a year. Some observers might locate the beginning of Cirque’s fall at that moment, but for me it came around 2008, when the company decided to triple its output to three new shows a year. It aimed to create permanent shows in new markets: New York and Los Angeles, and, further abroad, in Tokyo and Macau. And it tried to create new kinds of shows – magic, variety, musical. “If we succeed in creating new categories of show, content diversification, then there is no limit,” Lamarre told me at the time.” – J. Kelly Nestruck

The company needs to stop now and reevaluate itself, rediscover its roots. High level management and artistic staffing changes and turnover have led the company astray. Original act and artistry designers have since left the company and begun their own practices (Creations du Dragone) or returned to their respective corners of the globe. The first to go must be Lamarre; he simply does not understand the logistic challenges of running such an operation. Production at HQ must cease and projects currently under development must go through a full “Lion’s Den” ceremony circa 1998-2002 standards of quality. Resident show (especially Las Vegas) must be reexamined with a fine-tooth comb and their sit-down aspirations questioned, as these are the ones to suffer the brunt of failure as of late. In 2010, its Banana Shpeel vaudeville-type venture flopped in Chicago, New York and Toronto before it was finally cancelled. Zed shut down in Tokyo just over a year ago, earlier than expected, while Zaia closed in Macau. Viva Elvis folded in Las Vegas this summer, while Iris, a cinema-themed show playing in Hollywood, is closing this month after poor ticket sales.The by-products of these stints have bled into the company as a whole. Cultural reporter Marc Cassivi wrote in La Presse this week that Cirque’s prestige has eroded in recent years, partly because it is so closely associated with the “kitsch” of Las Vegas. He also said the company has become so structured that it does not allow individual performers to reach their full potential.

Disrupt The Youth Demo Again: Bring Them Back From Digital

Empty houses? Get used to it.

Are you a college student or a young professional?

If so, when was the last time you attended a classical music concert, an opera, a ballet, or a symphony? Not recently I bet.

How about a museum, gallery, or theatre production? Maybe a different answer here.

Did you attend on your own accord? Or instead, were you influenced or forced (either by necessity or social pressure) by a parent, professor, or co-worker?

At some point in time while you were dressing in your Sunday church attire, did a smug grin come across your face when either you or someone else uttered “Oooh, how cultured!?” in a cringeworthy highfalutin tone?

That smirk, while fun and lighthearted to you, is a problem of nightmarish proportions for arts administrators across the country. To them it means that certainly now, and likely in the future, it is not a typical activity or purchase decision from your wallet. The fact of the matter is, all arts organizations — fine, traditional, mainstreamed, and avant-garde — not only want, but fiscally need the youth demographic. Whether through special outreach programs, additional programming, or subsidized ticket pricing, organizations see less naturally colored hair everyday. They’re slowly drowning in a sea of gray and blue hair. While many may be getting by at the present moment, all are concerned about their futures, fearing no one will replace your grandparents; few young people in attendance today do so on their own volition. Instead, they’ve looked to alternative outlets more accessible, trading in the mezzanine for a Macbook.

Prominent former New York Times business and culture columnist Judith Dobrzynski disagrees in a recent article from ArtsJournal. “Many people,” she believes, “don’t have the time for art or the inclination for it until they reach a certain age, which — anecdotally — seems to be somewhere in the 40s, give or take, after most people’s children have developed some independence.” Dobrzynski goes on to cite a recent Euro RSCG study which suggests that 63% of consumers around the world believe society’s obsession with youth has gotten out of hand. An article from MarketingCharts appears to support her conclusion, indicating 6/10 Millennials themselves believe too much marketing value is placed on them and their purchasing habits.

A bet you there are a good few marketers, like myself, who disagree with this thinking, citing brand and product loyalty studies. Many will cite exposure and experience with a product while young to be vital in purchasing decisions as people grow into their consumerism. In the age of today’s Millenials with more productions than ever before and technological alerts of offerings outside of a once-restricted sphere-of-knowing, tapping consumers while young is even more important. Building an affinity early is key, especially given this apparent advantage. Unfortunately, arts have consistently struggled capturing youth in the new long-tail landscape. The landscape has changed.

The Chicago Symphony is an arts org leading the pack — through outreach and development they foster student engagement and in turn have massive youth attendance.

With the shift of arts and entertainment from experiential to digital, this becomes an even more pivotal and time-sensitive concern. With less and less young people provided with primary exposure of live arts every year, the target has already begun to shrink. Today, the emphasis is instead on a digital equivalent, largely due to cost, convenience to attain, and ease of continued, repeated use. While the digital arts and entertainment revolution has changed the experience from stage to screen, it has also largely impacted the economics behind it. In today’s economy, businesses based on technology continue to become more affordable every year with increased innovation, while those associated with labor only become more expensive (due to inflation and inability to increase efficient production), known as Baumol Cost Disease.

In fact, there is reason to think the situation could soon get worse. As the cost of admission climbs ever higher, the advent of supply-and-demand-based “dynamic pricing’’ ensures that tickets to hot shows [insert: the only shows these “casual viewers” are interested in seeing] are as expensive as the market will bear. On Broadway, there’s the additional scourge of “premium seats,’’ which for “Death of a Salesman’’ and “The Book of Mormon’’ have commanded nearly $500 apiece. Theater, an inherently expensive art form to make at the professional level, is in danger of becoming a boutique business. – Don Aucoin, Boston Globe

With a generation of Millenials suffering from student loans and postgraduate expenses, those without exposure or a cultivated interest in arts will not be motivated to spend the little leftover from each paycheck on expensive arts. When those tickets can be afforded ten to fifteen years in the future, a lack of interest and motivation will steer many away to spend elsewhere, likely on the more economical digital entertainment. To those who say there is too much focus spent on shifting demographics, I say look to fine and traditional arts over the next decade. Those sad negative outlooks you see year after year will spread across across the industry unless a major pivot is made.

The Unpaid Arts Internship

Interning in the arts can be simultaneously the best and worst thing for you. While no one (in any industry) doubts the value of “real world” internship experience alongside academic coursework, the question of financial compensation for that work is often more uncertain. In almost all pre-professional college tracks, graduating without a few semesters or summers of related, professional work experience can be detrimental to one’s competitiveness for post-grad employment. In many industries even getting a first call from HR for an entry-level job requires a resume long enough to require leaving experiences off. Many companies will tell you working for them provides top-notch networking opportunities, a wealth of great minds, and a peak firsthand into how the industry works. I get that. What trips me up, however, is the next statement — “the experience will be your payment.”

I’m inclined to suggest they [prospective interns] refuse on principle — the practice is certainly unethical and may even be illegal – but if the only other option is to take an unrelated minimum wage position and the internship in question does, in fact, offer useful experience or the possibility of turning into a paying job, then perhaps it makes sense to accept it. There are internships for credit, but in some cases those are worse. Not only does a student work for free, she has to pay tuition for the privilege of doing so. The real solution is for any company offering internships to pay and then figure out how to recover the costs. - Edward Boches, CIO Mullen

Luckily, many top companies agree with Boches’ argument, a study by the National Association of Colleges and Employers concluded that an ”unpaid internship offers no advantage to the job-seeking student.” A bold claim, I know, but interpret it this way: a company that pays values its interns for their minds, not just their bodies. While there are exceptions (startups, certain unfunded rights organizations, etc) this rule often holds true. If an intern will be in the thick of things with regular employees, they will be treated as one and compensated/stipend accordingly. If interns are off in silos doing “projects” or manning telephones, they (and their labor) can be forgotten. If a company can’t generate enough revenue to cover an intern’s minimum wage salary, the department should reassess their organization, structure, and hiring practices. Lately, unpaid internships have turned into a way for large, successful companies to get around reduced departmental budgets by establishing an “education” program for the next workforce. With students fighting one another to remain competitive, the wheel, unfortunately, continues to spin. Students lucky enough to secure paid internships, secure better internships and fare much better in the long run. If this were a question for the business sector, the answer would be cut and dry — unpaid internships are unfair and unethical.With the arts, however, it becomes a much more interesting discussion: often times, the money simply isn’t there.

Full disclosure: From my sophomore spring to the end of my senior year of college, I held four internships in the arts. Working for commercial theatre, non-profit theatre, and museum companies I held a position in every facet of the arts industry. Over the course of those four semesters, I clocked in over a thousand hours on the job, paid almost a thousand dollars in internship costs (unreimbursed errands, city travel expenses, etc), and was not paid a cent for my work. While a first unpaid position or two can be attributed to working your way up the ladder and gaining experience, it becomes more difficult with each subsequent semester when an intern has directly-related marketable skills.

Interning in the arts is a hustle. As friends interning (paid) at financial brokerages or with large production companies try to Gchat you to grab lunch at the local gourmet food truck, you pull your pockets inside out to find only the 3cents change from replacing the swinging lightbulb above your work station. You’re often not even seated at your computer. Often because you don’t have a computer. Or a desk. Often times arts orgs don’t even have enough physical locations for their army of interns to work. Bring your own laptop. Connect to wifi of the coffee shop downstairs. And whenever somebody’s about to open the door, get off the floor and step away or else your liable to get hit.

Simply being able to afford interning in the arts is another matter entirely.

Unpaid work has become the accepted route into the creative professions. Theaters and arts companies have become over-reliant on free student labor and couldn’t run without it — these companies bank of young people’s passion to put in several months…or even years (there’s always one 26 year old intern) of tireless work without financial compensation or even promise of one in the future. Effectively it has become institutionalized. Arts internships are infamous for long hours and taking over the responsibilities of once salaried positions; without secretarial or support staffs, newest interns to the team often must start here to prove themselves before moving on. There is no graduation from unpaid internship to paid internship, simply because no paid positions exist. Arts interns often move between major companies doing the same work, hoping for that big break.

The unpaid internship can provide precious opportunities to learn and gain practical knowledge, or it can exploit the enthusiasm and inexperience of interns hoping to break into a highly competitive field. The model may need some refurbishing, but there is still value in an internship that mentors and educates interns. It is for the art world to think about how to nurture the new generation of arts professionals, so that (in the words of Arts and Labor), “pursuing one’s passion and affiliating oneself with a culturally prestigious entity [does not become] a socially sanctioned rationalization for highly precarious working conditions.” - Ariel Greenberg of the Center for Art Law

The point of it, is that without an “experience as payment” quotient, the core concept of an internship becomes null and void. Arts interns are often doing the work of a temp agency employee with a company that just happens to make/curate art — there is little direct involvement. While many of these companies are located in the major cities across the country, summer arts internships (the most prestigious) are only attainable to those who have familial support, eliminating a major population from even qualifying. In my research, few arts interns feel they get enough out of their experience, wishing for more hands-on work related to the craft. Instead, they are the support. Over and over again. It raises the question as to where the cut-off truly lies for the benefit of arts internships. A young, motivated arts administrator learns through their own experiences — maybe it’s time they embraced the entrepreneurial spirit and set out on their own models and projects.

The Art’s Shift to a Startup Mentality

I’m back! A quick one today, composed on-the-go. Not researched or vetted, but something I’ve been thinking about this morning.

When you hear “startup,” many, from industry laymen to digital CEOs, assume the forward-thinking technology sector. Cloud computing and social enterprises dominate the landscape;  entrepreneurs and investors alike are drawn to these high-growth, high-risk, and high-return industries because they are doing something never before seen. Startup organizations pride themselves on creating revolutionary products and services that, before hearing few could conceive, but after learning of, never live without. These businesses attract the most talented, young individuals, adapt to the ever-changing needs landscape, and make it a point to not just tell, but convince people, what they are creating is so groundbreaking, their survival is a necessity. How is that different than what we do?

Every arts administrator from successful commercial producer to the art-for-arts-sake free spirit lives and abides by this concept. It’s an internal truth for all of us. Drilled into our heads (maybe even too much) by BFA academia is that art needs to change, motivate, and inspire. Even the producers of something like the forthcoming Bring It On musical see something inherently necessary about their production. Since it certainly won’t be the financial hit of the season, it’s existence must push, trigger, or inspire something bigger — we just don’t know about it yet. An extreme example to say the least, this desire, draw, and craving is the reason we are drawn into this industry (see, you cringed. we even feel uncomfortable calling it an “industry” because it implies more pocketbook than passion), amid the financial risk and inherent uncertainty.

“It’s not often you hear the words startup and art in the same breath. It’s funny because the low cost, stretched budget and creative use of favours is something common to both worlds. Also, the severe cuts to (public) arts funding and talk of a focus on corporate and private individuals for donations suggests there are more links than one might expect.” - Anne-Marie Imafidon, The Guardian

Next step: IPO?

Despite this inner conflict, we need to recognize things have changed in the last five years. Up until several months ago, we saw an evident dry spell in original, avant-garde, and daring pieces brought to the commercial stage. Non-profits and regionals known for their innovation still went strong, but others simply fizzled with dated, safe revivals and even more paltry film adaptations. With the economic downturn, the producers, backers, and angels couldn’t justify the investment on something “new” — the risk was simply too great. Today, we are beginning to shift out of that; we have finally realized the changes necessary so not only survive, but thrive in this climate.

The talent pool is better than ever — graduates from prestigious programs come out with more diversified, adaptable training. More pieces are being written and produced for older and underserved [population] actors, strengthening the base of faces we recognize onstage; often times, these names we recognize from years past are the ones who prompt our ticket purchases. Technicians and administrators who have volunteered, assisted, and interned under some of the smartest minds across the country (and world) are entering the field with more diverse and thorough knowledge than ever before. Once on-their-own playwrights and composers now have more resources and development programs to hone their voices and workshop ideas. Due to the convergence of the industry, alliances, contracts, and relationships have been developed between universities and arts orgs, commercial enterprises and arts orgs, arts orgs and arts orgs, pooling resources, knowledge, and funds for mutual benefit. Like startups and their investors, arts patrons and organizations have begun investing in one another. Creating a microcosm of what we see in the tech industry, we are finally beginning to realize that while joint success may appear as competition at first, it is vital to the success (financially and for arts innovation/freshness) of all further down the line. This shifted model is more scalable than the status quo ante, in the sense that it can grow rapidly with limited investment of capital, labor or resources. With New York’s first crowd-sourced production successfully funded this year, the shift has already begun. With arts organizations becoming venture capitalists in their own industry, direction and control are maintained, whether it be accumulated personally or shared within the industry (joint productions, etc). The key to success (in every facet of the industry) relies on development by all and adapting the best solution. The only thing that’s certain is that art isn’t — banding together will insure few fail and all will have moderate success. All winners, no losers — a good strategy during these times.

Transitioning College Graduates to Full Price Tickets

For students, a handful of cheap tickets are a thing of the past. Or are they?

It’s been a busy past few days for me here in Boston. With a production of Spring Awakening opening tonight, several large projects, and my “final finals,” the last three weeks of my time at Boston University are quickly coming to a close.  That’s not even counting the ever important job-hunt — which, by the way, I’m still accepting applications for, so send along an offer for the perfect position.

A shorter and slightly different post from me today, inspired by a conversation I had last night. Forgoing my typical structure, I want you to stop and think about a problem that have been feeding ourselves over the past fifteen years. While heavily discounted ticket prices make the arts affordable and accessible to the student and college-aged demographic, how do we transition this public into a traditional ticket-buying model and why haven’t we done it yet?

With my collegiate life coming to a close, it’s dawned on me that rather soon, my process, means, and methods for purchasing tickets will dramatically change. About a month ago, I wrote a post talking about the importance of full price tickets to a production’s bottom line. While moderate discounts on certain performances may help to fill a house, the additional income accrued from these seats does little to impact the bottom line — failing productions often often in the red by more than $10-15k a week.  By and large, full price ticket sales are the lifeblood to sustain the industry as we know it.  At present moment, the discounted ticket opportunities for college students are deep and widespread.  Catering to student audiences began in 1996 when Jonathan Larson’s RENT opened at the Nederlander Theatre.  Quick to becoming the hottest ticket in New York, irony set in; those who the story was about, the city-dwelling bohemians, could not get tickets or afford to see the show.  The show’s producers, along with angel funding from the New York Theatre Workshop (NYTW), instituted a policy that twenty (20) front row tickets would be sold for $20, day-of-show.

Think the losers are headed to the B.O. to buy tickets? Nope, they're headed to the next lotto across the street.

Paving the way for the future, this policy has exploded to be the rule rather than the exception.  Up until three or four years ago, the market penetrated with three types: general rush, student rush, and lottery. Geared toward students, some of which even require an ID, students pine over the twenty or twenty five tickets reserved for each show. As to be expected, these tickets are competitive; for popular shows like Wicked and Book of Mormon, hundreds may show up to put their names in.  When many lose, it’s not off to the box office to buy regularly priced seats or even a walk to the Times Square TKTS booth. Instead, they dash down 9th Ave off to the next drawing fifteen minutes later, continuing on until twenty dollar front row seats are in hand.  There are even dozens of websites and blogs dedicated to information, strategies, and tips to score these seats on Playbill.com, BroadwayWorld, and dedicated sites like BroadwayForBrokePeople.com  This audience has grown up a) always being able to get day-of-show tickets to the hottest shows, and b) never having to pay full price.  Slowly, producers have begun to realize this, but rather than addressing the issue head on, many are scrambling, trying to buy time and figure out a solution. The problem is, the longer they wait, the harder this obstacle will be to overcome.

Fake licenses used to be worth their weight in gold -- now there may be another ID even more valuable.

When moving to college, bright-eyed and bushy-tailed the first thought for many students is finding a fake ID or driver’s license.  Now, for those arts-inclined, maybe the fake college ID business could prove even more lucrative. What other card do you know of that gives a 80-85% discount?  With more accelerated programs and less students completing their studies in the traditional four years, many universities have forgone including expiration or graduation dates on IDs. Certainly box office managers recognize students hold on to IDs after graduation, continuing to press their luck walking up to the glass.  Aged a bit since freshman year?  The cost to get a new ID printed with an updated photo often only runs $20-25 — a deal that pays for itself fivefold with the first use. Many students consider this tactic as an easy way to get three, maybe even four additional years of these student prices reserved for high school and college students.

Arts administrators fear losing this demographic have found additional means to cater to them. But is this a good thing? This coddling only perpetuates the problem, allowing these recent graduates (now with income) to become even more accustomed to paying below face and sustainable value. Two years ago we saw these “student” programs transition to “young adults,” increasing the upper age bracket range to 25. While I would have like to see a push toward the more traditional, appropriate discount opportunities (specific codes, redirection to half-price TKTS booth, etc), I’m not incredible concerned by this change.  Few recent graduates, especially those with an arts focus can afford to shell out $121.25 for a single seat. What does make me sweat is the recent, more alarming jump.  Over the past few years programs like Roundabout Theatre Company’s HIPTIX and Huntington Theatre Company’s 35 Below, have increased the upper age another ten years, providing these heavily discounted tickets to those pushing forty. Wow.

Is a period of tough love the only away to flip this entitled audience base with unrealistic expectations? Should there be a hard, finite stopping point on these student discounts or should a more graduated approach be used, easing people into a more realistic middle ground? It’s a tricky situation — a passionate and engaged audience who cannot (and will not) pay retail price. What is a Broadway producer or regional theatre company to do?

Should All Shows Have The Same Ticket Price?

In new York, even minimalism comes with a hefty price tag.

It’s no secret New York theatre is expensive.  Often in this blog you’ll see my write “$121.25′s” as a way to denote a single audience member.  Right now this is the standard base price for almost all Equity theatre running in a Broadway house.  The price for an orchestra or front mezzanine seat can only go up from there: add ten dollars if you’re looking for an aisle, fifteen if you’re coming on a weekend and so on. Let’s not even talk about so called “premium seats.”

I get it. Theatre isn’t a cheap endeavor.  Producing and managing even at the amateur level has shown this to be true. Those numbers increase one-hundred-fold when moving to the regional or Equity realm as I’ve seen when working with LORT companies in Boston and in the West End last fall. Every week, there is an endless list of expenses producers must shell out before even thinking about paying back the initial investment to angels, not to mention even think about profitability: rights and royalties, actor salaries, crew and musician salaries, theatre rent, electricity, prop costs, union fees, benefits, etc.  Based on size and scope of production, these weekly running costs can range anywhere from $250,000 up to a cool million. This number, or “nut,” of a production is the cost to keep the show afloat every week — the dollar and cents amount is to keep the actors onstage and the lights aglow. My question, is should base ticket prices for these Equity productions be proportional to the amount spent by producers? Should cost of ticket be dependent on the cost actually needed to keep a production open?

title of show had nothing.

The scaling of ticket prices has been an age old debate, coming up every few years, often times when a small show is placed right beside a larger one with both tickets showing the same face value. Flash back to 2008 with the Broadway transfer of [title of show]. Infamously taglined with its own lyric “who says four chairs and a keyboard can’t make a Broadway musical,” the show was as barebones as could be. The cast were the writers and creators and none of the four had a past credit under his or her belt. The set was four IKEA swivel chairs, an almost empty stage, and a white wall. The pit orchestra was non-existant — the music came from a keyboard onstage played solely by the music director. The weekly nut of the show, rumored to be the lowest in Broadway history (with inflation accounted for) was $150,000.

Wicked had everything.

A few doors down, we saw the smash hit Wicked playing at the Gershwin with a nut, cautiously estimated, at four to five times higher. Both shows were advertising a ticket structure based around the then-standard $101.25. Even with heavy discounting, [title of show] failed abysmally. It was the little off-Broadway show that couldn’t. Aside from the show’s subject matter being a deterrent, the second most common remark was that people “couldn’t see where their money was going.”  The cast was small with no names commanding a high salary, the set was non-existant, and a lush orchestra pit was nowhere to be found. The intial investment was never published, but it was certainly basement level. With heavy discounting, the show’s attendance improved, but it ultimately closed several weeks later losing its full investment. People were simply not willing to spend over a hundred dollars a ticket for a bunch of no-names sitting in an empty room.

Whether it’s right or not, the casual theatergoer wants to see his or her money onstage. They want a B-list tv star, a huge ensemble cast, a lavish set, and a huge symphony orchestra sunk beneath the stage. And to be honest, at that base price, why shouldn’t they? If a producer is spending less to raise a production, what is the rationale in charging the high ticket price? Regardless of price, producers often only take in $50-70 a seat, save for the megahits — just look at average ticket prices in the weekly grosses. Why not instead lower ticket prices to an acceptable, more suitable level based on the production and people are willing to pay for it. Theatre follows the rules of supply and demand. For many shows (a third of them at any given time), there is little to no demand for a $100+ ticket — those seats are only purchased when discounts become readily available.

Maybe it’s because there are only a few producers controlling a large majority of productions, but why should they band together to monopolize the price of “theatre.” Why, instead, can it not be based on a singular production? I’d love to see a producer mix it up a little: take a smaller show and open it at  a lower affordable price. This will get people in the door — fuller houses during previews – and ratchet up word-of-mouth surrounding it. If the show’s any good, this will increase demand, which would then warrant the increase in prices.

But really, why are deep discounts the only method to fill houses -- where's the aggressive pricing structure? I think producers are often too proud.

How would the public react to such an approach? Would people inherently think a cheaper show to be “not as good”? Should set ticket prices be a thing of the past and should the art realm move forward like the airline industry with a more fluid structure based on what is needed for each show and what you’re looking to see? Not only would this limit the effects of gouge scalping but also deliver the most cost efficient tickets to audiences depending on what they are looking to see and when. In my book, someone should never pay the same for Peter and the Starcatcher as they do for Spiderman – what you see presented in front of you is not financially equal, so why should the ticket prices be?

Box Office Reports and Leaving an Unprofitable Show Open

What would you do if there was only one person in Manhattan?

For most ingrained in the New York theatre scene, weekly box office grosses are something to look forward to every Monday afternoon.  A composition of the previous week’s ticket sales, attendance, average ticket prices, percentage sold to full house, and profit potential, these gross reports give a good indication as to how every show running is doing.  Generally, producers are forward with these numbers and almost all have no problem reporting them every week.  With a quick scan down the table and comparison to the week previous, it’s a fast way to see the overall health of a show and its trends, both with its own history and compared to other productions running.

In some cases, the box office reports can tell the full picture. The Book of Mormon has 102.6% attendance, indicating it’s sold every place of standing room in addition to every seat in the house — it’s weekly intake is almost $1.5M a week.  While the numbers for Broadway’s superstars are fun to look at, it becomes exponentially more interesting to investigate shows right on the cusp of profitability.  Like when the average ticket price starts to dip because of discounts, leading to attendance percentage going up, but having gross sales go down. Even after synthesizing all of this, it’s still difficult to tell whether shows are truly making money.

The one number producers hide from the public is a show’s weekly operating cost, or “nut.”  This number is the complete dollars and cents amount it costs to run the show every week: theatre rent, salaries (actors, musicians, ushers, and crew), performance royalties, union fees, electricity, insurance, consumable props, and so on.  This number can range from $200,000 on a small show like Godspell to upwards of $1,000,000 on larger shows like Spiderman: Turn Off The Dark (which I always forget is still running…). Those who’ve been in the industry can often peg these numbers within $75k, but finding the exact is impossible (cast salary negotiations is one of the largest mystery, unpublished components). With the exception of a few mega-hits on Broadway today, most shows rarely post weekly grosses much higher than this nut — a majority of productions only make $40-70k a week over it, slowly works toward recoupment over a year or two, if it even happens.

Alright, so that makes sense. When a show starts to plateau right at the break even point, you close, right? If you’re lucky you’ve already made back your investment and pull out when the well starts running dry with a little extra cash in your pocket. If you haven’t recouped, you swear under your breath and post the closing notice even faster to minimize money lost. Well, sometimes there’s a bit more to the decision.

For Shows on The Cusp…

1) The Season: What months do you hate the most? January, February, and March. The holidays just ended, you’re feelingfat, you’ve spent too much money, the weather is vile, and nothing really significant happens. Producers feel the same way. Productions often see a huge surge the last two weeks in December and then hit a wall come January 1st — that’s why one of the most popular closing dates annually is the first Sunday of the year. Coming off a summer of tourism and a pleasant fall, it’s not at all uncommon to see percentages drop a full 20-30% into the 50s and 60s; attendance percentages coincide with temperature quite well.  Sometimes when everyone around the table thinks a show has some more life left in it, producers will choose to stick it out through the rough winter months with heavy advertising campaigns and ticket promotions to minimize loses and shoot for break-even knowing that prosperity lies ahead with college spring breaks and St. Patrick’s Day weekend.

2) A Tour/2nd Production in the Works: Having a show running on Broadway can be a great tool for investors to build equity in a show name or certain production.  From getting additional angels to underwrite the production to allowing actors to see it, it prevents the show from being forgotten. By keeping a show on the Great White Way, it keeps name recognition and desire to see the show high (people don’t see the half-empty houses in New York), creating demand for a tour stop or even a  sit-down production.  With this, producers can then negotiate better prices for national tours when booking venues.

3) Award Season: A critically-acclaimed show (read: financially-stifled) that may not be performing well may buckle down and try to survive for a few weeks until award season hits full force. Tony nominations and awards are big business — unfortunately, they’re often distributed unevenly to several shows with large sweeps by one or two plays or musicals. The two most popular closing dates after January’s first Sunday are the days following the Tony nomination announcement and Awards ceremony itself — getting snubbed leaves no doubt that a show on the cusp will continue to fall.

4) Movie or Other External Event: A film adaption in the near future can be a huge boost to box office receipts, so producers may be willing to take a few months of poor business if it means a large rush later on.

5) There’s Nothing Better: Due to Broadway’s economic climate during the winter months, few new productions are opening during those months.  If the producer (a Nederlander, for instance), owns or manages the theatre a show is running in, running the show at a loss can often be more profitable than closing it completely due to rent and restoration fee costs — it’s better to have some money come in than leave a theatre empty. If this is the case, royalties to creative team will take a cut and the production will run its downhill course until something is ready to take its place in the spring. Think Priscilla Queen of the Desert keeping The Palace warm for the Annie revival.

6) Fear of/Not Wanting to Give Up

“No one wants to let go. And there’s always the hope that summer will be booming business. But there are so many new shows coming, things probably won’t get better for these three musicals.” – Emanuel Azenberg, a Tony-winning veteran producer

Even the smartest and most seasoned producers have a hard time posting that closing notice. The production has probably had years of development and endless passionate work to bring it to the point it’s at. Pulling the plug is hard sometimes, a hundred close friends in the industry will be out of a job, shifting back to unemployment. Sometimes a show will just trickle for six weeks with no signs of upturn as the producers come to terms with having to post a closing notice.