Recent tax reforms have also provided additional benefit to account for any losses in the investment where investors may be able to take a deduction for their loss. Of course, speak with your accountant or tax adviser for any tax advice.
Opening Night Tickets
There is a great entertainment value in Broadway investing. One perk is often getting opening night show tickets. These are usually the hottest tickets for the show, with celebrities, paparazzi, a red carpet, and an amazing overall energy. Opening night tickets are rarely available to the general public.
Investors looking to invest in a Broadway show often know the unique, fun aspect of Broadway investing. One of the fun things about Broadway investing are the perks that come along with it. Think about the various investments where people could put their money. Whether it is a CD, Bond, Stock or small business investment, there are little rewards or perks.
Broadway investing is unique in that it is combines entertainment with investment. Many people reportedly paid well over $1,000 per ticket to see the hit Broadway musical Hamilton. Even Bruce Springsteen on Broadway tickets can cost over $5,000 per ticket on the resale market.
You Can’t Lose More Than You Put In
Whatever amount you invest in a Broadway show is typically the most you can lose. This is different than some business venture investments or real estate investments where there could be significant costs to maintain the asset. Broadway investing is more like a loan, that has a chance of being paid back with interest. That interest could be multiples of the initial investment, as was seen in shows like Wicked, Hamilton, Jersey Boys, and Kinky Boots.
Opening Night Gifts
If you are lucky enough to get opening night tickets, you will likely also get opening night gifts. Opening night gifts are usually exclusive gifts for the show’s opening night guests and are not available to the public. Opening night gifts from some shows have a great resale value. Even a coffee mug from the opening night of Carrie was listed on ebay for $250.00.
Opening Night Playbill
Like opening night gifts, the opening night Playbill is often highly sought after by collectors. It may be a good idea to try and get some extras at opening night if you are able to, as there could be some resale value in them. Even better is if you can get them autographed by some of the cast!
Opening Night Party
Many times, Broadway investors are also invited to the opening night party of the show. Some of these parties are quite extravagant, and nothing like any other party you’ve been to. The opening night parties may feature private performances by famous bands and musicians, appearances by many celebrities, open bar, high end food, and schmoozing with lots of other business people and industry folks. It is a great networking opportunity for future business.
Investors Get Paid Back First
The financial structure of most Broadway shows pay back the investors first before any distribution to the Producers. This is known as “recoupment.” You may read about a show recouping its investment. This happens when the weekly gross revenues generate income above the weekly running costs. When the additional revenue reaches a point where it equals the initial capitalization, the show is typically said to have recouped. The investors should be paid back their initial investment, though some shows may keep reserves to help cover any slower weeks, or to increase advertisement to help keep the show open longer and to increase profits.
Investing In Other Related Productions
Many shows open on Broadway with the hope of being performed elsewhere. The show may also have valuable licensing rights which can be used to license cast recordings, merchandise, national and international tours, regional productions, and more.
Investors in the Broadway show may see additional revenue from these licensing fees.
Even better, investors in the initial Broadway production may get first right to invest in some of these additional productions. For a successful show, these could be very low risk-high profit investments. Hamilton, for example, has additional productions in Chicago, London, cast recordings, and tours going on, all while the show continues its success on Broadway. An investor will likely not think twice about investing in these additional ventures, as they could continue to make money from the Broadway venture, and increase their revenue stream upon the profitability of these additional productions.
These opportunities may be limited to select investors or those early investors who may have invested in the shows well before it ever hit Broadway. There are some amazing shows being work shopped and developed with opportunities to invest in them at an early phase. Imagine if you invested some money when Cats was trying to get off the ground!
Access to House Seats
One of the great perks of being an investor in a Broadway show is having access to house seats. These are generally reserved seats that are not available to the public and are usually the best seats in the house. This can be very valuable for sold out shows.
Investors may also have access to backstage tours of the theater. This is a really fun experience where you can go to the stage door after a performance and meet with a member of the cast and crew for an exclusive backstage tour of the theater. You may get to take pictures on the actual Broadway stage, see how the props work, and even meet with various cast members for photo ops and autographs.
Many shows during development have showcases, developmental labs, and industry readings. Investors are often invited to these and given free tickets to attend. It is a really fun, exclusive experience to watch a show develop on its way to Broadway. It is also a good networking opportunity with other industry professionals and investors.
Investors may also have opportunity to bring friends and family into the Broadway show. If they bring in enough people, they could even get credit as a producer! One way to do this is through fundraising showcases. This is where a few cast members and company representatives will fly to you to put on a small sample performance of the show’s music, or to discuss the investment terms or the show’s potential. These can be a lot of fun. Imagine having a Broadway performer or producer in your living room to talk about the show, or to have a Broadway performer singing in your house with your friends and family sitting around the couches.
Shows have different paths to Broadway, and different ways they raise the capital to produce the show. Many of these events are additional free benefits of being involved in the show.
Dress Rehearsal Tickets
Investors often get free tickets to a dress rehearsal to see the show before the public ever does. It is a way to see your investment in action, and also to enjoy the entertainment value of your investment. The dress rehearsal is usually a full staged performance, but with an audience of industry professionals.
You Could Win A TONY Award
This is one of the more significant benefits for a theater lover. Investors who invest or raise certain amounts of money may get credited as a producer, and could be eligible to win a TONY award as a co-producer if the show wins a TONY award.
Broadway Investing Is Fun And Risky
One successful producer said to write your check as if you will never see it again. That is good advice, and not unlike many other investments. Investment in Broadway has the potential to earn significant returns on your investment, and the potential to lose the investment. The value as I see it is also in the entertainment value. People pay thousands of dollars to go on vacation, or to see shows, or in memorabilia. Broadway investing has potential to give you entertainment value far beyond your investment, and can also provide you with merchandise to help off-set some of the investment costs.
ABOUT THE AUTHOR
Jason Turchin is an attorney, entrepreneur, producer and owner of InvestingBroadway.com.