BROADWAY MYTH DEBUNKED #1:  Why The “1 Out Of 5 Shows Recoup” Stat Is Wrong.

You’ve heard it for years.  

1 out of 5 Broadway shows recoup their investment.

20%.  That’s our commercial success rate. 

And hey – that’s not bad, when you consider that the success rate of startups in this country is 10%.  

By the way, those other four?  Ok, they didn’t recoup.  But that doesn’t mean they lost their entire investment.  Most return something.  And plenty return something significant.  50%.  65%.  My production of Alan Cumming’s Macbeth, returned over 90% on only six performances a week.

This “1 out of 5” rate has been consistent for decades.  I put it to the test years ago and got the same result.

So yes, I’ve been one of the Producers preaching this statistic.

And I’m here to say that I was wrong.  

The success rate is NOT 1 out of 5 . . . or 20%.

It’s better than that.

See, recoupment is only announced when a show reaches that milestone of Broadway.

But for some shows, a significant amount of revenue can come to the original production AFTER the show closes on Broadway.

I’m talking about regional productions, high school productions, movies and more.  All this falls into the bucket known as Subsidiary Rights.

See, the Authors get paid for all those productions (yep, even the high school productions.  The “Mother Company” (Original Production) gets a percent of that income.  Why?  Because without the original production, the subsidiary income wouldn’t exist.

So, any money coming into the mother company trickles down to the original investors.  This income helps recoup the original investment. 

PRODUCING AND INVESTING TIP:  If commercial success is your goal, choosing shows to Broadway shows to invest in or produce with strong potential subsidiary life is essential, and risk mitigating.

Since shows can earn this income for years (and in some cases, decades), they can recoup their investment long after they’ve closed on Broadway.

How many?

We don’t know.  Because most Producers don’t put out press releases announcing this kind of recoupment.  

I think we should. (If Macbeth had subsidiary income, you can bet your bloody spot I would have announced its recoupment when I found the remaining 9%).

We may never know how many Broadway shows recoup their investment after they close on Broadway.  Or how many shows go from 25% recouped to 50% recouped.  Or how many go from ZERO % returned to their investors to 25%.

But one thing is for sure . . . some do.

Which is why the myth that only one out of five shows recoup their investment is wrong.

Our commercial success rate is better than that.  

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Next week, I’m debunking another Broadway myth – why our industry’s reported seasonal gross (this year, 1.58 billion) is wrong too.

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Ken created one of the first Broadway podcasts, recording over 250 episodes over 7 years. It features interviews with A-listers in the theater about how they “made it”, including 2 Pulitzer Prize Winners, 7 Academy Award Winners and 76 Tony Award winners. Notable guests include Pasek & Paul, Kenny Leon, Lynn Ahrens and more.