12 FAQS OF BROADWAY INVESTING
Over the years, we’ve learned many of the inner workings of Broadway investing. Here are some tips to keep in mind:
1) Can Anyone Invest In Broadway?
No. There are some restrictions on who can invest. Generally, an investor has to be “accredited”, which means they meet certain criteria. An “accredited investor” is generally one who has either:
Annual income of $200,000 a year for the past two years (or a household annual income of $300,000) with the expectation that it will continue, or
Net worth of $1 million or more, excluding the investor’s primary residence
Recent changes in the law may allow certain others to invest if they meet other criteria. One proposed change allows a “non-accredited investor” to still invest, for example, as follows:
If a non-accredited investor has an annual income or net worth of less than $100,000, then the investor can invest the greater of $2,000 or 5 percent of the lesser of his or her annual income or net worth.
If the investor has more than $100,000, then the investor can invest 10 percent of the lesser of his or her annual income or net worth.
2) How Much Do You Need To Invest In Broadway?
The average investment unit for a musical is $25,000, but some shows may offer units as low as $5,000 or minimums of $50,000 or more. Investors may have their own smaller investor groups where they share a unit.
There are many shows where the entrance investment is only $5,000 or $10,000. There was a recent news report of a Jersey Boys investor who only invested $12,500, and was able to see nearly 20 times a return on the investment.
3) You May Get A Nice Return On Your Investment
Broadway investing offers an opportunity to get a large return on an investment. If the show is profitable, an investor can possibly earn multiples of their original investment over several years after the initial investment is made.
4) You May Make Great Connections
Many investors love the opportunity to meet other like-minded people. Theater is a wonderful common bond for people all over the world to come together. Investors may make great friends and connections through Broadway investing.
There are many opportunities to connect, including possibly at the Opening Night afterparty.
5) You May Get To Invest In Other Productions
Many shows start on Broadway with the goal of launching productions into London, Asia, Australia, and national and international tours. The main company may share in those revenues, and investors may also have an additional option of investing in those other productions. This could lead to additional revenue streams.
6) You May Get To Share In The Profits
Once a show recoups is investment, and pays back all of its investors, any additional profit is typically shared between the investors and the producers. Any profits that remain each week typically go into an investor pool and the producer pool. Distributions may be made to the shareholders of each pool on those profits.
7) You Can Help Support The Arts
Investment into a Broadway show is an investment into the arts. Supporting the arts allows actors to continue to pursue their dreams with Broadway debuts and performing on national and international stages. Helping Broadway shows to be put on also encourages younger generations to be part of the arts and to support it.
8) You Can Include Broadway Investing In An Estate Plan
If you love the arts, you can consider setting up a fund or trust to invest in Broadway. This could help keep Broadway shows running or help put them on. You can talk to your probate attorney who whoever is helping with your estate plan about setting up a trust to invest. This could be a great gift for your children and grandchildren for them to be part of the Broadway community.
9) You Can Be Part Of A Broadway Show
When you invest in a Broadway show, you are essentially buying shares in a company that happens to be using its capital investment to put on a Broadway show. When you purchase a unit, or share, you are part of the company that owns the rights to the show.
With an investment into a Broadway show often comes many perks, whether or not the show ever makes money back.
10) You Can Enjoy Many Perks
Unlike most other types of investments, Broadway often comes with great perks. You may get opening night tickets, invitation to the opening night party, exclusive merchandise, backstage tours, access to house seat tickets, invitations to cast parties, and more.
11) You Can’t Lose More Than You Put In
Unlike some businesses, when you invest in Broadway, you generally don’t lose more than you put in. This helps minimize risk. In a Broadway show, you typically put in your investment in the beginning, then never have to put any more in. Of course, there may be other opportunities in which you might want to, like touring productions or cast recordings.
12) You May Get Opening Night Tickets
Many shows give investors opening night tickets and tickets to the opening night cast party. The number of tickets may depend on the investment, but most shows give 1 or 2 tickets to each investor.