The Reopening of Broadway – What is at Stake?

At the beginning of 2020, Broadway was a mature, multi-billion dollar industry. On March 12th it came to a complete stop. Even with a vaccine, quick testing, and contact tracing, it could be another year before 500+ people are allowed to sit shoulder to shoulder for two hours in what the COVID era classifies as “high-density spaces”.

The Broadway League is the trade association for theater owners and operators, producers, presenters, and general managers in North American cities, as well as suppliers of goods and services to the commercial theater industry. The Broadway League has worked to ensure that “Broadway” is an American luxury brand recognized around the world as the pinnacle of live entertainment. According to The Broadway League’s statistics, the 2018-2019 season attendance to Broadway shows topped those of the ten professional New York and New Jersey sports teams combined, bringing in $1.83 billion in ticket sales and adding another $14.7 billion to the economy of New York City. US Broadway show touring productions and international tours of Broadway shows added additional billions to the United States economy.

In a report from The Bureau of Economic Analysis (BEA) and the National Endowment for the Arts (NEA) data collected states that the arts and cultural sector contributed $877 billion to the American economy in 2017 (Click here for link to report) The arts generated 4.5% of the overall U.S. GDP, with roughly 5.1 million Americans working in the sector in 2017.

The Broadway industry employed 96,000 workers in New York City alone in 2019. Eighty-five percent of these workers are now unemployed and the billions from the arts sector to the economy have disappeared.

Broadway is entirely unionized. There are 13 unions in COBUG (Coalition of Broadway Unions and Guilds.) New COVID safety standards may have to be put into place with new safety marshals added to the budget. Under the best of conditions six out of 10 Broadway shows do not recoup their investment. The current economics of pricing, cost of operations and risk would indicate that social distancing will not work in commercial theater. Heavily discounted tickets for the entire theater or for extended periods of time also did not work in commercial Broadway in good times. Radio City Music Hall does more than eight shows a week. The Rockettes in the Christmas Spectacular show are scheduled with four 90 minute shows per day but this model will also not work with Broadway shows under current union agreements.

The theater owners have had to pay taxes, maintenance of the building (heat, electricity, etc.) and staff to supervise the buildings. It is unclear how the rent owed from stage show producers to the theater owners will be paid; full rent, discounted rent, or government relief. Some producers are also theater owners or operators like the non-profits Lincoln Center, Roundabout Theatre Company, and Manhattan Theatre Club so they don’t need to pay themselves rent per se but they still have to pay mortgages, maintenance and staff.

Maybe the SOS Act will be the answer.

On July 22, 2020 Senator Amy Klobuchar and Senator John Cornyn introduced a bill to the Senate called the “Save Our Stages Act” or the “SOS Act”. The Save Our Stages Act is a request for $9 billion dollars in relief for the live entertainment industry. If passed, the money would go through the Small Business Association and be awarded in grants. It is unclear if the bill will pass, if the $9 billion is the amount that would be awarded, or how the money would be distributed (i.e.: how much money and how money would be split between the venue/theater/landlord or the promoter/producer?) The Save Our Stages Act includes language asking for supplemental grant money to cover expenses through June 2021. This could imply that if the grant money is received the theaters might stay closed until June 2021. Click here to see Summary of Save Our Stages Act

The shows have been closed for almost seven months. All of these shows would need to be re-rehearsed before performing for an audience. The cost might be less than the original budget because the actors already know the script, blocking, etc. But there is no guarantee that all the same actors, stage managers, etc. will be coming back to the show, so it might cost more to rehearse with a new cast and crew. Either way, it’s hundreds of thousands of dollars.

Another dilemma is whether or not the shows should invest in the upcoming press and marketing opportunities: The Macy’s Thanksgiving Parade and the new online Tony Awards. These events are considered mega commercials for the shows but the cost of rehearsing, paying cast, crew, transportation traditionally falls on the producer of the stage show. These presentations need to be rehearsed because they are not in the theater and quite often are a complication of songs and choreography, in other words, these 5 minute TV segments have not been performed in this way before. In order to do these presentations live, the actors would need to isolate and bubble before rehearsing. If NBC allows the Macy’s Parade to use pre-existing video from b-roll for marketing there will need to be union concessions made to permit this video for a different usage than was originally agreed. The Tony Awards could also use existing commercial and b-roll footage but would also need to make special union agreements. The usage of pre-existing video might set a precedent for other press and marketing events in the future unless it’s just a COVID exception. If the video is allowed, the cost of these press videos will be reduced from hundreds of thousands of dollars to the union fees negotiated for the cast and creatives to let’s say ten of thousands.

Here is another one of the producer’s dilemmas. These press events help to market the show, in other words, their purpose is to sell tickets. The Thanksgiving Parade is in November and the American Theatre Wing announced in August that the new online Tony Awards would take place this fall. We know that Thanksgiving is November 26th, but there’s still no date confirmed for the Tony Awards. The benefit of these TV appearances is to sell tickets but shows are not open and if the SOS Act passes maybe there will be no shows until June of 2021. Producers need to decide if they should spend hundreds of thousands of dollars in November for a show that is not opening until next year or save the money for the rehearsals and marketing closer to when the show is scheduled to open. Another question is how much money should be spent on the Tony and Thanksgiving press events?

You can save money and show the world a live Zoom square performance or spend more money on a presentation and hope that ticket buyers remember your show enthusiastically when the box office opens in the future.

Brand awareness is a reason for a producer of a show to decide to use marketing dollars on opportunities like the Thanksgiving Parade or commit to a larger spend on the online Tony Awards. Brand awareness is a marketing term for consumers to recognize your product from competition, it’s money spent not so much to encourage a consumer to spend money at that moment but to keep the product in mind. It’s why the Broadway shows like Lion King, Wicked and Hamilton still have ads on buses. They have sold the tickets to that night’s performance but producers want you to think about coming back, or recommending the show to your friends. While shows are still shut down due to coronavirus, the marketing spend for the Thanksgiving parade may be a good use of marketing dollars for longer running shows. The marketing campaign for new shows is a more difficult decision because you have to get consumers to be aware of you in the first place and that can cost more in marketing dollars. The Macy’s Thanksgiving Parade usually likes to showcase the new shows on Broadway so it will be interesting to see which shows decide to spend the money on this type of marketing.

Broadway musicals’ presentations usually look better on the Tony Awards than the plays. It’s easier to enjoy the music or a melody of songs than to understand a short scene taken out of context when the plays are showcased on tv. The award season was cut short due to the pandemic so only four musicals are eligible. This means that the Tony Awards will be more play scenes than musical numbers. There were no big movie stars or celebrities in the shows that qualified for the abbreviated Tony Awards, hopefully they will show up as presenters in the online awards to attract viewers.

Producers have gone seven months without ticket sales. They still owe rent to theaters, salaries to staff, their own office rent, insurance, marketing dollars that were committed for social media ads, print or digital ads in news outlets and magazine ads, that may or may not have happened. The list of expenses goes on and is unclear whether government aid will be granted, when or how much.

It might make economic sense to not reopen the show at all. The Broadway theaters shut down on March 12th. Sing Street and Hangman had not officially opened but they made the decision to minimize losses and close the shows which were in previews. Disney announced that Frozen would not reopen. Several shows were limited runs or already closed, these shows will, obviously, not return.

The risk is different for the new shows than the long running shows. The long running shows usually depend on tourists for more than half of the ticket sales. New Yorkers and the tristate area are traditionally the first to buy tickets to new shows followed by the out of towners. If New Yorkers buy tickets first to the new shows, that bodes well for the new shows but is not necessarily a good thing for the long running shows. Producers of longer running shows will have to wait until the tourists come back unless they can convince the audience that it’s time to see the show again. Phantom of the Opera has been working on that exact campaign for several years. People who went to see The Lion King and Wicked as their first Broadway show are bringing their children. NYC & Company, the tourist bureau for New York City, is encouraging New Yorkers to act and spend like tourists to stimulate the city’s economy hoping that will bring theater goers back into Times Square. Broadway attendance is a big component of this campaign.

Digital assets are known to increase the likelihood of a life after the Broadway run of a show. Shows with digital assets: digital captures and cast albums are more likely to be licensed for stock and amateur rights and touring. Securing a Hollywood movie version of a Broadway show will also create an awareness and marketing boost for shows and additional productions. Some shows already have movie deals in place, Wicked, Dear Evan Hansen, Come From Away to name a few. Some shows already have digital captures in place. For example, Hamilton, American Utopia, and Diana. Other shows are trying to estimate budgets to put the shows back together for the purpose of shooting a digital capture with their March 2020 cast to use as a marketing asset for a possible reopening.

The non-profit theater companies have different challenges but can look to patrons to support their staff, digital outreach and efforts to remain in a pause until they have resources and confidence to reopen. The commercial producers have no patrons or tax breaks as a safety net. There are fourteen shows currently selling tickets online for January 2021, if these shows plan to open, they need to start marketing campaigns at least four months in advance and they need to start rehearsals at least four weeks in advance. Hundreds of thousands of dollars will need to be invested to hit these deadlines. There is no guarantee that the government will allow the theaters to reopen, advertising dollars could be spent and casts could be rehearsed only to be shut down again.

Commercial producers can’t make a misstep and risk hundreds of thousands of investor’s dollars on a hopeful reopening of Broadway theaters. There’s no room in the budgets to launch and relaunch, especially after seven months in hibernation.

Broadway is going to be the last of the performance spaces to open. The regional theaters, off-Broadway, concert, cabaret venues and non-profit organizations will need to carefully calculate the protocols and procedures while Broadway waits for vaccines, pharmaceuticals and treatments and, hopefully, government aid. This article focused on the billions of dollars from an industry at stake and the millions of each individual show but let’s not forget the lives at stake for both audience and theater workers. In the meantime, stay safe.

Also by Bonnie Comley:

Making Broadway Accessible to Audiences with Digital Capture

How Many Producers Does it Take to Make a Broadway Musical?