FIN 101, Lecture 1: The economics of theatre

Jude Law in Hamlet. Source: BBC

Drinks with a producer friend last week turned into an opportunity to rehash the not wholly unexpected drama that has become “Spider-man: Turn off the Dark”, and more broadly the economics of theatre.

A brief recap of the musical’s history to date (more here): most expensive musical ever with capitalisation of $65M, music by Bono and The Edge, first preview on Broadway Spidey left suspended upside down at end of first act, subsequent previews have led to very serious injuries of leading lady and Spidey stunt double, opening date has been moved back five times.

What I find most shocking (beyond the safety issues of course) is the obvious devil may care approach to budgeting that appears to have happened. The New York Time’s Economix blog covered the economics in detail here and further here, but suffice to say it will be at least 4 years before Spider-Man could hope to be in profit. Compare that to Les Miserables which recouped its initial investment in 12 weeks and has been in profit for 25 years.

Most of my friends are surprised when I lay out the basic economics behind theatre.  Spare sharing a P&L, here are a few interesting facts for your next dinner party:

  • The average musical costs about £3-4 million to produce. Before Spider-Man, Shrek was the most expensive musical with a cost of $25m to produce.
  • Only 7 shows in history have grossed more than £1 billion.  These shows are: Cats, Phantom of the Opera, Les Mis, Mamma Mia, Lion King, Wicked and Miss Saigon.  To be in profit, Spider-Man must move into this £1 billion + territory.
  • 4 of the above 7 (Cats, Les Mis, Phantom and Miss Saigon) came from Cameron Mackintosh in a highly prolific (and profitable) 7 years
  • In theatre, there is no correlation between money spent and the revenue delivered, with Les Mis being the most obvious example.  My friend argues that there is a point at which money actually stops success and highlighted the Menier Chocolate Factory‘s David Babani as a good example of a producer delivering quality on small budgets
  • Equity minimum is £450 per week for actors in a West End show (£350 for non-West End shows).  Leads may receive more than this, but it is not unheard of for a major star to do a show at the same rate or slightly more than the rest of the company, e.g., Jude Law’s Hamlet. (NB: ticket sales for another Law stunner with Michael Grandage go on sale on 6th June to the public)
  • Depending on who you speak to and what kind of shows you are talking about, only 10-25% of shows make money.  Intelligent Life has a great article on this phenomenon on Broadway here, where only 4 out of 19 autumn openings are still running (some planned closings, others early notices).

In light of the challenging economics and recent cuts to the arts (see one notable example here), it is no wonder that many producers are looking to produce more surefire “bankable” productions. I predict that the next few years will bring more well known works, alongside more ‘star casting’….Only time will tell though.

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2 Responses to FIN 101, Lecture 1: The economics of theatre

  1. Liz says:

    It seems this may be the “Waterworld” of theatre!

    • Aliceson Robinson says:

      Very funny. I had forgotten about Waterworld but it is such an appropriate connection! Yet another vanity project that went bust. Perhaps there is a message in me forgetting about it!!

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