The Broadway Index Fund – Profitable or Not?


Broadway is a risky investment.

Duh.

But Broadway can also be ‘wicked’ profitable.

Double-duh.

But here’s the question that I’d like to see answered . . . because if the answer is what I think it is, I believe it could:

1) legitimize the business model of the industry

2) bring a whole new crop of investors to our biz

The question is:  is Broadway, as an overall asset class, profitable over the long term?

In other words, if you could buy shares of a Broadway index fund, like you can with the Dow or the S&P, and own a piece of every show, would you end up in the black or the red?

This data could be oh so valuable.  That’s why I believe Broadway should hire an independent analyst to do the following:

Examine the profitability (or lack thereof) of every single Broadway show from a set period in time . . . Let’s say, 1980.  Take the 3% return on one show and add it to the 140% return on another with the 50% return on the next and so on and so forth . . . right through to the current day.  Average it out and bingo . . . we’d see what the overall profitability of the entire industry is over this 30 year period.

My bet?  It would be a positive number, because the number of mega hits (Wicked, Phantom, Les Miz, Rent, etc.) and their massive ROIs would more than make up for the losers, resulting in a profitable industry for investors.

And for an investor, that’s more exciting than a Sports Illustrated Swimsuit Edition at a Boy Scout retreat.

Because then the pitch becomes . . . if the industry makes money, then smart investors that chose wisely, and invested with the right Producers and the right projects, could beat the ‘market’ (just like stock market investors try and beat the indexes) . . . as long as they invested for the long term and diversified over many shows.  But they are starting from a positive place.  The “market” makes money. Now it’s up to you to make it or lose it, just like any other financial market.

Proving to people that your industry and your company is profitable is the best way to attract more capital, which allows you to produce more product . . . including riskier product that pushes the boundaries of what audiences might not expect they want to see (like non-star driven vehicles, new plays, etc.).

What’s the problem with the above?  Well, I’d guess that the biggest obstacle would be getting the Producers (especially of those mega-hits) to share the data on how much they’ve made.  But that’s why an independent analyst would be key.  The data would only be submitted to a third party, non-industry, Price-Waterhouse style team that would only release aggregate results.

It only works if everyone is involved . . . but, frankly, everyone should be.  This kind of data could not only get us a seat at the big kids table . . . but it might even get us double dessert.

What do you think? Think we’d be profitable over the last 30 years?  Last 50 years?  Last 10?

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