Understanding A Show’s “breakeven” Point
This blog was originally published on my LinkedIn.
In the intricate world of Broadway investment, understanding a show's weekly operating costs, or the "breakeven" point week-to-week, is absolutely essential. It's what ultimately drives a show's success (or failure), but is often downplayed by producers when approaching potential investors.
Especially since Broadway's reopening in 2021, we've witnessed a trend in our economic landscape. Shows are becoming more expensive to produce, and the stark reality is that, in most cases, the weekly breakeven point doesn't always seem attainable relative to the average weekly earnings. Simply put: Broadway is spending more than it is making. Furthermore, a lack of transparency and data-driven decision-making could hurt future investor sentiment within the commercial theater realm.
While most producers don't publicly disclose their weekly operating costs, I've aggregated shows that have had these numbers disclosed publicly, so we can better understand the trend between earnings vs. expenses.
The following scatter plot offers insights into the financial dynamics of several Broadway musicals. The black reference line represents the point at which weekly operating costs equal average weekly grosses. Consequently, any data point positioned above the line signifies that a particular show has generated an average weekly gross exceeding its estimated operating cost, while those below the line denote instances where average weekly gross fell short of the operating cost. Paired with budgets from productions yet-to-open (that wouldn't included in the plot), a notable observation is that, since the reopening of Broadway in 2021, production costs seem to be rising while corresponding success still remains quite variable.
In order for investors to make informed decisions, historical context towards a production's odds of success (like this) is not just helpful, but necessary.
Broadway is a world of dreams and magic, but it's also a world of investment and business. To thrive in this ever-changing environment, we need a new generation of producers who appreciate the power of data analysis. We need those who can unveil the science behind the art, and in doing so, create a path to sustainable success in the world of theater.
If you're an investor searching for a partner who can provide transparency, insights, and a pragmatic outlook on Broadway investment, please don't hesitate to reach out. Together, we can continue to bring the magic of Broadway to life while navigating the shifting tides of our industry.
