Why Broadway Is Facing a Slump

Musical theater, long the bread and butter of Broadway, is struggling. None of the 18 commercial musicals that opened on Broadway last season has made a profit yet. Some still could, but several have been spectacular flame outs. The new musicals, Tammy Fay, Boop and Smash each cost at least $20 million to bring to the stage and each was gone less than four months after opening. All three lost their entire investment. Lavish revivals of much loved classics are also fizzling. On Sunday, a revival of Cabaret budgeted for up to $26 million and featuring a costly conversion of a Broadway theater into a nightclub like setting, threw in the towel at a total loss. A $19.5 million revival of Gypsy that starred Audra McDonald and earned strong reviews closed last month out recouping its investment. Even a buzzy production of Sunset Boulevard, which won this year's Tony musical revival, failed to make back 15 million cost to mount New musicals are particularly endangered. Since the coronavirus pandemic, 46 new musicals have opened on Broadway, costing about $800 million to bring to the stage, according to filings with the securities and Exchange Commission. Only three have become profitable so far. Strong reviews, word of mouth and in some cases Tony's have not been enough. And this fall's new musical offerings are sparse. There are just two, one of which has only two people in its cast. Andrew Lloyd Webber said in an interview. Broadway is not a business anymore. Statistics are terrible and I'm very worried. I look at the economics of this and I just don't see how it can be sustained. Okay, what's the real message here? Disruption is coming for Broadway, specifically Broadway musical. You can't put yourself out as a real business when virtually everybody, 100% of their time, loses all their money. At some point investors are going to say absolutely not. We are going to see the same thing that's happened to network television news comedies being replaced by TikTok videos and YouTube shorts. We are going to see new economies of scale taking over Broadway. And I hate to say it because I'm a big fan of unions. It's going to be non unionized, it's going to have electronic digitized music. There's going to be some AI involved and we're going to see sprouting up things like Broadway shows throughout Manhattan and other places, but at 1/10 the cost, sometimes 100th the cost, it's the only way musical theater can really thrive. Okay, let's look at some of these details in at a more granular level. Now I was certainly aware, and you probably were too, that investing in A Broadway musical is not usually something you do because you think, wow, I gotta have enough money to pay my kids college fund next year. What's a surefire way to make money? No one was under the illusion of that. But now it's looking like virtually any everybody who invests in Broadway musicals is losing money. At some point you're going to run out of sucker. And there's been some, some people saying, well, the price of musical tickets have not gone up with all the other costs. Well, a ticket now to the new revised Hamilton is fifteen hundred dollars. I gotta tell you, I've spent a lot of money on Broadway tickets over my lifetime, but I'm not ready to spend 1500 bucks for me, my wife, my daughter to go see Hamilton. Which we did see it. We spent considerably less than that. So it is interesting and this is a pure coincidence, the. The three Broadway musicals that have recouped their investment, they're not profitable yet. The three that have recouped their investments got government handouts in part. I don't mean that derisively, but MJ Michael Jackson show six about King Henry VIII's six wives and and Juliet, sort of alternative version of what would have happened to Juliet if she hadn't killed herself at the end of Romeo and Juliet. All great shows. My family and I have seen all of those. And maybe that's a part of the problem is they did a better job of marketing. They brought me into the show. The others have not done well at all and there's no new blood. Yes, Hamilton's still around, Wicked, still around, the Lion King around. I mean those are shows that have been around a long, long time. More than 20 years in some. This is not sustainable, folks. And look, I have friends who work on Broadway and are able to have good livings because they work in the orchestra of Broadway shows and they can make a decent income and afford to live in New York City, which is an expensive town, there's no doubt about it. But you can't expect investors to continue willingly putting their money in knowing it's 100% loss. At that point it'll all have to be nonprofit, nonprofit foundations. Have you personally seen any Broadway shows in the last year? Or if you're in London, West End shows or live theater wherever you are, whether you're in Mumbai or anyplace else. Post a comment and let me know what you think because I'd like to know. Ben says Hamilton and Lion King still printing money while everyone new tanks. No wonder Broadway feels stuck. You know, a Lot of people don't know this, but one of the very first businesses Donald Trump ever invested in was a Broadway show. He was in his early 20s, we're talking about, you know, late 1960s, and he invested in a Broadway show in it tank. Roger Ailes, the guy who founded Fox News Channel, was a Broadway producer and had some successes to his credit. He did know how to put on a show. There's no doubt about it. Now, if you've spent much time in New York City or Manhattan, as I have, yes, there's the Broadway shows, there's Off Broadway, there's Off Off Broadway. And those things have a lot of different meanings in terms of the size of the V venue, in terms of how unionized the cast is, how unionized the orchestra is. I think we are going to see a lot of these Broadway venues just shut down. There's simply no way they can do it. And what we're going to see is creative people. The next Lin Manuel Miranda is going to start from scratch, not trying to make it a Broadway show. In the very same way you see former stars like a Trevor Noah of the Daily show go from having a huge staff of 100 or more people to a lean staff of five people for his podcast, you're going to see the same thing happen with Broadway shows. You're going to see a cast go from 20 or 25 or 30, sometimes down to a cast of maybe three plus more one man, one woman shows instead. And I hate to say this, I love musicians, but you're going to see shows mounted that have the veneer of Broadway quality, and it's going to be recorded music, and you are going to see people build sets where it's the producer and maybe the star, and it's not going to be unionized staff. Am I saying that's a good thing? No. But the whole. The whole point of unionized workforce is to share the profits. You shouldn't have a system whereby the capitalists make all the money and all the workers are treated like oats and serfs, happy to just survive on a few scraps. But now we flip things. There are a lot of professionals, set designers, costumers, actors, who do make six figures a year, which is not a lot of money in New York City, let's be clear. And meanwhile, the investors who wrote checks for millions of dollars get nothing. That doesn't make sense. Now, I do think there's a possibility for some enlightened real estate executives in New York, service providers, unionized professionals who work on Broadway to look at this in a new way and say, look, let's have a profit sharing aspect of this. Let's get the upfront cost as low as possible, let's get this show up and running and then let's have revenue splits with an understanding that, okay, maybe the capitalists who put their money in don't deserve more than a 20% return on investment, but they have to get something before other people get above minimum wage. I'm just tossing this out here. I'm thinking, I'm trying to think creative. I don't have the answers. I'm not a Broadway star. I'm simply a fan. I like to go see Broadway, I like to go see off Broadway, off of Broadway comedy. I like the creative atmosphere of real people. Not here, just on a screen. Although I'm happy you're here with me on a screen. I like it when I see real people trying to create in real time in front of people and show their craft. This is just not sustainable. In the same way, you don't see people just starting new small town newspapers anymore or mid sized town. You don't see someone, you don't see an investor saying, you know what? I like Durham, North Carolina. I'm going to start a new daily newspaper in Durham, North Carolina. Never mind the fact that nobody started a daily newspaper in a mid sized town in 50 years without going bankrupt. I'm going to do it. No, you don't see that. And at some point you're going to see exactly the same thing with Broadway. People are just going to say, not going to write the checks and it's not going to get off the ground. A few more Sunsets. Sunset Boulevard revival. Great praise. Wanatoti failed. They lost their 15 million. I did see Sunset Boulevard, oh probably 25 years ago on Broadway. It was fantastic with my mother. We enjoyed it, we had a great, great time. But these costs, the labor costs, the set cost, the rent cost, the technology cost, everything is escalating. Plays are better in terms of economics. You don't have to have all the musicians. You can often have a lower cost structure. And there have been some plays that have done well recently, but they have a lot of celebrity now. I like George C.L. clooney. I think he's a great guy. His play Good Night and Good Luck ran on Broadway and it was profitable. Othello ran, it had Denzel Washington, Jake Gillenthal in it. These broke records, but that's not really sustainable. These big stars can't really take more than three months out of their life. To be on Broadway, that's not sustainable. And at some point, no matter how good a play is, and I like plays, there's something about the sheer spectacle of, of the Broadway music. It's something that I find it's easier to bring a whole family to. It's easier to bring. If you're like I am and you have family members where English isn't their first language, you can't really take them to play. You can take people to a music because the music is a universal language. The dancing is a universal language. So that's why I'm rooting for Broadway. But am I going to pull out my checkbook and write a million dollar check for what I think is a guaranteed loss of a Broadway musical? I don't think. Let's check in with you. Some of you are writing and I appreciate you do that. AJ says Murdoch's TikTok gamble could well be avoided being another MySpace disaster. Talking about what we were discussing in the earlier issue, in today's show, Unique says $20 million down the drain for a show that closes in three months. Who's financing these things? Well, really rich people are financing these things. A lot of times someone makes so much money on Wall street, you know, if you, if you're worth half a billion, a billion dollars, writing $10 million checks to fund a Broadway show can kind of feel like buying. What I did yesterday, I bought lemonade from local kids in the neighborhood. Do I want the lemonade? No. I'm trying to actively avoid intake of sugar. But I also wanted to support my neighbors. My neighbors, kids. Youthful entrepreneurialism. So of course I bought a glass of lemonade when four or five boys came by and rang my doorbell. At some level, that is what's happening today with Broadway. You've got people who are so wealthy that losing 10, $15 million is the equivalent of me spending $3 on a lemonade. But even really rich people had their limits. And there's still a lot of ways you could help. I mean, you could endow so many university professorships in singing and drama with that kind of money, you could give scholarships to so many kids. So at some point, Broadway is going to have to look at their economics. People are going to have to somehow come up with a profit sharing version of things such that capitalists don't always lose. And let me tell you, capitalists do very well, especially in America, but they're also pretty good at sniffing out. Is it time to leave this industry? Is it time to exit this sector? And I think that is exactly what is happening with Broadway. It hasn't been great for a long time, but very few people I know, no matter how wealthy they are, say, I will invest money in a guaranteed loser. And increasingly, that's what Broadway musicals sound like.