INVESTING IN BROADWAY - BASICS
Over the past century, hundreds of Broadway musicals and plays have been produced. Behind the glitz and glamour of many Broadway shows are teams of producers who work with investors to help fund the productions.
Why does Broadway need investors?
Most Broadway shows cost between $2,500,000 to $20,000,000 or so to produce. In order to raise the funds to produce the play or musical, one or more lead producers may open the opportunity for other investors or co-producers to join the venture.
How does investing in Broadway typically work?
When a show is being produced, a lead producer may reach out to his or her network of co-producers or investors and will offer them a share or part of the production. The minimum buy-in is usually around $10,000 for a play and $25,000 for a musical. Some producers will allow investors to buy half-shares, making it a little easier for some people to invest. Some investors or producers may also have their own investor club or group that may invest in a production.
What are the risks of investing in Broadway?
The main risk is that the show does not do well and you may not recoup your money back, or you may not get all of it back. There were recent changes in the law which may also allow you to take a deduction for your losses, but do not take this as tax advice. Check with your accountant or a tax professional if you have any questions on this.
What are the potential benefits of Broadway investing?
If a show does well, you could see a large return on your investment. Shows like Wicked and Hamilton could see several multiples of their investments returned. If a show does not do well, you may also have tax benefits (we are NOT accountants and cannot give tax advice, so speak with your accountant about those - see above!).
You may also get many other fun benefits, like getting free tickets to the show's opening night performance, and free tickets to a private and exclusive after party with the cast and celebrities after the opening night performance. Some shows may give you access to VIP house tickets (those Hamilton investors must have been happy!). You may get free tickets to see a preview performance of the show, or even a developmental lab performance before it ever hits the stage. You may get exclusive opening night gifts, autographed posters and playbills, show merchandise.
Investors and producers may also get first right to invest in secondary ventures of the show. This could help to further multiply or increase the benefits of a successful show's investment. These may include an option to invest in a touring production of the show (think of not just the United States, but also Canada, Europe, Asia and more), and cast recordings. Some cast recordings have done amazingly well.
If you ever wondered what it is like to invest in a Broadway show, feel free to reach out for more information on what Broadway investing is all about!