Why investing in Broadway or Off Broadway is better than investing in the stock market.

Whenever you are selling anything . . . from tickets, to why a star should sign on to your show, to a vacuum, you have to remember that you’re never selling IN a vacuum.

There is always something that your “consumer” could buy instead.  They could always get tickets to another show (or, God forbid, a movie).  The star could always sign on to another show (or, God forbid, a movie).  And they could always get a Swiffer (or, God forbid, they could just leave their apartment a mess and go to the movies.)

You not only have to sell why your product is worth whatever price they are paying, you also have to sell why your product is better than the other products that are out there.

For example, when raising money, one of the common questions that I always have to be ready for (and one that you should be ready for when you start raising money) is, “Why should I throw money into such a high risk venture when I could throw it in the stock market instead?”

Hmmm, good question, right?  Actually it’s a great question.

There are of course a bunch of reasons why someone would invest in the theater as opposed to the market:  opening night tickets, high risk but big upside potential, house seats, billing, potential tax write off, or just because they believe in you.

But most of those are indirect comparisons.  When you’re selling stuff, you need to find direct comparisons between the competition, like . . .

Yes, investing in the market is safer, without a doubt.  And you should encourage your investors to do so, to create the most diversified portfolio possible.

But when you buy a stock, you not only have to know when to buy . . . you also have to know when to sell.  Stocks go up, but they also come down.  You could invest in a blue chip a year ago that everyone was recommending and a year later it could post almost a 10 billion dollar loss.  And no matter how much your stock went up over the last year, if you didn’t get out in time, you lose.  You may have made a smart decision a year ago, but if you’re not a expert market watcher, then you could end up with a tax-write off anyway.

Here’s the thing about shows . . . once they get over that humungo hurdle and actually recoup, they never go the other direction.  Once you’ve got a winner, you’ve got a winner, and your gains only increase.  Sure, the gains may be small, or they may slow down when the Broadway show closes and when your show is only being done in high schools, but you never have to worry about selling.  Returns diminish, but never reverse (barring some sort of extreme circumstance like litigation).

When you buy a stock, you have to be smart twice.  When you buy Broadway, the pressure is on only once.

Ok, that’s not true.  You also have to figure out what to wear to the opening night party.  (And there’s another reason why people invest in the theater instead of the market – you don’t see Citigroup throwing parties for investors when they buy 100 shares, do you?)

Would the traders at Goldman Sachs punch holes in the above theory and find direct comparisons of their own to prove why investing in the market is better than a musical?  Probably.

That’s just as much their job as it is yours.

Then again, they were also recommending Citigroup last year.

So don’t sell in a vacuum.

(Insert your own Davenport-style “sucking” reference here)

 

If you are interested in learning more about investing in Broadway shows, click here.

A Risky Business Tom Cruise would be proud of.

You’ve heard me talk about the importance of a title.

You’ve heard me talk about how today’s audience enjoys shorter entertainment.

And then along comes a play that is almost 3.5 hours long, has no stars, has a title no one can understand or pronounce . . . and will probably be the most profitable non-star driven play of the last several years and win the Pulitzer.

Look at it on paper, and producing August looks like a very risky venture.  Props to Producer Jeffrey Richards for taking the chance.  Inside sources tell me that he agreed to do it after a read and a recommendation.  He probably could have waited to see the regional production, but instead, he just jumped on board.

He read it.  He liked it.  And he also knew it had inherent marketing problems.

But, to quote one of my favorite 80s movies, Risky Business . . .

“Sometimes you just gotta say . . . “What the f***.”  “What the f***” gives you
freedom.  Freedom brings opportunity.  Opportunity makes your future.”

Does the success of August mean that my previous blogs were wrong?  No.  Would August be easier to sell under a different title?  Yes.  Would it be easier to sell if it was shorter?  Yes.

Maybe it would have made even more money.

But does recouping 200% compared to 175% really matter when you have to make that much of a compromise?

This is the challenge of the commercial producer:  what’s the right mixture of art and commerce?  Obviously Jeffrey believed without a doubt that his product was so good that it didn’t need the perfect canned marketing strategy.  He believed it could survive a bad title and a length that makes Les Miz look like a Family Guy episode.

He was right.  Remarkable product always proves the smartest marketers wrong.  That’s why it’s the first P.

If he didn’t believe that it was a home run, maybe he would have begged for a different title or a shorter length to prevent those overtime bills.  After all, there is a big difference between
75% recouped and 100% recouped, right?

But nope, he believed in the product and in the marketplace for that product.

So here’s the question:

If August: Osage County landed on your desk instead of Mr. Richards’, would you have produced it?

Numbers are hot.

So here’s a few to spice up your weekend:

Let’s look at Tony Award nominees and winners of the two big categories, Best Musical and Best Play, and their corresponding reviews in the New York Times over the last 11 seasons (since 1997).

BEST MUSICAL NOMINEES
                    BEST PLAY NOMINEES

Positive Reviews             40%                  Positive Reviews        68%
Mixed Reviews                30%                  Mixed Reviews          16%
Negative Reviews           30%                   Negative Reviews       16%

BEST MUSICAL WINNERS                      BEST PLAY WINNERS

Positive Reviews             64%                  Positive Reviews        82%
Mixed Reviews                18%                  Mixed Reviews          18%
Negative Reviews           18%                   Negative Reviews       0%

What does all this mean?  Does the New York Times favor plays?  Are Tony voters voting with The Times or because of The Times?  Do reviews not matter for musicals looking to be nominated for a trophy, or is it just that the lower numbers of new musicals means easier nominations?

What does it mean?

That’s for you to decide.

Any accountant, comptroller or high school kid with a pirated copy of Excel can deliver you a set a good looking numbers.

It’s a Producer’s job to figure out what they mean.  And when you do, it’s not hot. It’s beau-tastic.

(Oh, and in case you are wondering (and you should be, because data is only as good as its source), we used the Variety Pro/Con/Mixed meter to determine the status of the reviews.)

Why Announce Recouping 1 Show When You Can Announce 3!

 

Yesterday was the most Super Tuesday ever.  We announced the recoupment of all three of my shows:  Altar Boyz, The Awesome 80s Prom and My First Time.

Read the article in the New York Times here, and the Playbill article here.

Ok, truth time.  Altar Boyz and My First Time did both recoup at the end of 2007 and at the same time.  However, The Awesome 80s Prom recouped a year or so ago.

Why did I wait to announce it?

Certainly I was itching to get it out there that I had returned the investment of my first show out of the box.  But press releases can’t be about ego.  They have to be about press.  The goal of each release is to get as many media members as possible to write about it, which increases the possibility that more people will read it, which increases the possibility that more people will buy tickets, and so on and so on.

I didn’t release it last year because I knew no one would have written about it (a fact confirmed by one of the reporters who interviewed me about all three recouping).  And even if someone did, it wouldn’t have gotten a lot of attention from readers.  It just wasn’t exciting enough.

But put it back to back with two other releases announcing the recoupment of shows from the same producer, emailed to the media within seconds of each other?  All of a sudden it feels more exciting, doesn’t it?

Be objective about the news you have and don’t talk unless you know people are listening.  Eli Manning wouldn’t throw a pass that he knew didn’t have a prayer of being caught. He’d wait, scramble in the pocket (almost getting sacked), and then throw it when he knew there was at least a possibility of completion.

So wait until you have open receivers.

(I have to wonder if that is the first ever football/theater analogy in the history of the blogosphere.  My step-dad would be very proud, even though he’s from Massachusetts and probably still sitting in his Patriots jersey and sobbing.)

Oh, the other reason I announced three shows recouping at once?  I wanted to stick it to these bitterinas who last year said that “Commercial Off-Broadway is Dead”.  Hopefully this will prove that it’s not dead.  It’s just sick.  And it has been for a long time.

So here’s the question:  if someone you loved was very ill and possibly dying, would you just keep giving them the same boring ‘ol medicine year after year?  No, you’d try everything:  experimental drugs, holistic medicine, and even The Secret.

Off-Broadway isn’t dead.  It just needs new medicine.

And as a Producer, you are the pharmaceutical company.

How Do I Find Investors For My Broadway Or Off-Broadway Show?

Unless you’re a bazillionaire, you are all probably wondering just how in the hoo-ha you’re going to find investors for your shows.

I’m going up to Columbia Univ. today to speak to a producing class on this same subject and, well, I can’t tell them before I tell you . . . so here are a few of my strategies on getting people to show you the moola.

Strategy 1:  Field of Dreams

Call me a can of Easy-Cheese if you want, but that creepy voice in the corn field was right: “If you build it, they will come.”

Spend your time worrying about your product, not about how you’re going to pay for it.  There are plenty of people in the world that enjoy investing in shows (even in bad ones).  Think like a high-tech company (another high-risk business).  Put your time and whatever money you do have in R&D.

If you create something remarkable and Purple-Cow like, you’ll find people throwing money at you. At the same time you’ll be more passionate about your product, which makes it that much easier to sell to investors.  Passion is contagious.

Strategy 2:  Cub Scouts

When I was a kid, I sold chocolate bars to raise money for my cub scout troupe.  I also sold Cutco, stationery products, and I even set up a candy shop at my father’s office after he taught me the wonders of wholesale (I called it Kenneth’s Kandy Shop.  I thought the “K” for Candy was the Koolest.).

No matter what I was selling, I always started the same way . . . with my family.  Then my friends, my neighbors, my father’s secretary, etc.

Getting investors is no different than hawking scissors that cut a penny in half.  Start with the people you know.  And then, ask them if they know people who would be interested in your product.

The people that are closest to you are going to be most inclined to give you money, because they are going to invest in YOU, regardless of what you’re selling.  Do you think my Mom really needed the scissors that cut a penny in half?

When I was pitching a show (hard) to my very first and biggest investor he cut me off and said, “Ken, I’m giving you the money, but not because I believe the show is going to make a fortune or even return its investment.  I don’t invest in projects.  I invest in people.”

True that.

Strategy 3:  Where The Wild Things aka Rich People Are

There is a big difference between bazillionaires and people with disposable income.  There are more people with disposable income out there than you think.  Lots of folks do well enough to spend money on nice vacations, a second home, a nice car, and even theater tickets!  GASP!

Your job?  Find them.  Go to charity benefits.  Go to Wall Street bars.  Go to art openings.  As my dad tells me all the time, “You have to show face.”  You’ll find people will be interested in what you are doing.  And getting a few thousand out of these folks is not as hard as you think.  Most people in the middle class to upper middle class have some extra investment money that they’d rather not invest in a boring blue-chip.  I often tell these people that investing in the entertainment industry is just an extension of the diversification of their portfolio.

These are my three principle strategies of raising money, but there are thousands more.  Just like anything else, you have to find out what works for you.

However you get them, this next part is crucial . . .

Take care of them.  I’m not saying you have to produce record breaking hit after recording breaking hit (although that helps).  You do have to communicate with them.  Send them t-shirts., introduce them to the actors, send them something unique at Christmas (but, please, anything but a card), etc.  Why?  Because people, like cigarettes, travel in packs.  People that invest in the theater, know people that invest in the theatre, who know people that will invest in whatever you are doing.

One of my biggest investors was introduced to me by one of my smallest investors two years after we met.  How did I meet him?  He walked up to me at one of my shows and said, “This is cool. How can I get involved?”

The lesson?  Produce stuff that people think is cool, and then . . . well, you remember how I said your first investors will most likely be your family?   Your last investors have to be treated like family, so they’ll stay with you . . . through thick and thin.

Need more tips on how to raise money for your project?  Click here to read all my best practices.

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