How to Invest (Profitably) in Broadway Shows

Date: September 15, 2013      Publication: Bottom Line Personal      Source: Jed Bernstein      Print:

Love the theater? You would probably love it even more if it made you money. Unlike investors in most segments of the entertainment industry, anyone willing to invest perhaps $10,000 or more (typically $25,000 or more for a musical) can put cash into a Broadway show that is “in development” and can share in the profits if it becomes a hit. As a bonus, investors often enjoy a bit of Broadway glamour, such as invitations to opening-night parties.

Now may be a good time to consider a Broadway investment. Broadway has topped $1 billion in gross ticket sales for the past four consecutive years, a milestone it had never reached previously. The $1.14 billion that Broadway shows took in for the 2012-2013 season—which ended in late May—was 58% higher than the $720 million total a decade ago.

What you need to know if you’re thinking about giving it a try…


The odds are against you when you invest in a Broadway show—75% to 80% lose money. So why consider investing? Because if you find just one hit, it can more than make up for many misses.

Broadway shows don’t disclose their profits to the public, but even a modestly successful play featuring a big star can produce a profit of more than 50% in its first few months.

Look at an investment in a Broadway show as you would view an investment in a high-risk Internet stock—as a small and speculative part of your portfolio, not a place to put money that you will need for retirement. As the saying goes, You can’t make a living, but you can make a killing.


Investors must get their money into a show while it’s still in development—once a show nears the start of its run, it’s too late. The New York Times ­theater section, as well as and, often feature articles about shows in development. After you have invested in a show or two, finding additional opportunities becomes easy—producers will find you.

When you come across a project that interests you, ask yourself…

Who’s going to pay to see this? A show with a very dark theme or about an obscure person or topic might struggle to attract ticket buyers. Even broad appeal might not be enough if the people the show appeals to aren’t people who are likely to attend a Broadway show.

Example: Green Day is a very popular punk rock band with a sizable audience—but it would have been fair to wonder how much of that ­audience would be likely to buy theater tickets to see American Idiot, the musical based on Green Day’s music. It closed at a loss after 422 ­performances.

Is there a good fit between this play and its star? Not all Broadway plays feature famous celebrities, but those that do depend on the celebrity to attract his/her fans to the theater. Are those fans likely to want to see this star in this role?

Example: Daniel Radcliffe, star of the Harry Potter films, is an excellent actor with a huge fan base—but it’s a young fan base that was not naturally drawn to the revival of the very serious, very grown-up play Equus. The intentionally limited run ended and broke even with 156 performances.

How’s the producer’s track record? The stronger a producer’s record of past success, the greater the odds that his/her new project will succeed—particularly if that project is very comparable to those earlier successes. Search the producer’s name in the Internet Broadway Database ( Details about each of his/her prior shows will be provided, including gross ticket sales and reviews.

Warning: It usually doesn’t pay to invest in a play just because it’s written by a famous or successful playwright—playwrights generally do not drive ticket sales. Woody Allen and arguably David Mamet are exceptions to this rule.


If the project still seems promising, call the production company and say that you’re interested in investing. Most shows that still are in development are in need of investors, so they’re likely to be receptive.

Helpful: The name of this production company likely will be listed in news reports about the project. Search for the production company on the Internet to obtain a phone number. If news reports don’t mention the production company’s name, search online for the producer’s name and the phrase “production company” to find it.

Provide an estimate of roughly how much you’re looking to invest and say that you would like to receive the “offering papers.”

When you receive these, check…

The viability of the investment thesis. The investment thesis is the producer’s explanation of why the show should be a profitable ­investment. Make sure that it makes sense. If the show must sell every seat for three years to earn a profit, stay away. Generally it’s a good sign if the show is expected to break even in no more than 12 to 18 months, with ticket sales averaging no more than 50% to 60% of capacity.

Whether the investment thesis jibes with the star’s contract. When a show features a big-name star, the length of that star’s contract often is all the time that the show has to turn a profit—and many but not all Broadway contracts signed by big-name stars last only 14 to 16 weeks (sometimes less for the biggest stars). Confirm that the show would make money at 50% to 60% capacity before this contract ends.

Important: If a musical has a big-name star, confirm that the star is under contract for at least a year. ­Musicals are so expensive to produce that it generally takes at least a year to turn a profit.

Whether you can get an advanced look at—and listen to—a musical. Musicals tend to stage readings or presentations while investors are being recruited. Recorded demos of the music might be available, too. You even might be able to watch a development production—a work-in-progress staging in a small theater that might or might not be in New York City. Ask the production company for details. (These things are much less likely when the show is not a musical.)


Novice theatrical investors often imagine that investing in off-Broadway shows is a prudent way to get their feet wet before tackling Broadway. Certainly the investment floor is lower—many off-Broadway productions are happy to accept investments of $5,000, sometimes less.

Trouble is, it’s even harder to make a profit off-Broadway than on Broadway. The labor costs are nearly as high as on Broadway and the marketing costs are just as high, but the theaters are much smaller—fewer than 500 seats, compared with more than 1,000 for the typical Broadway theater—greatly reducing income potential.


Broadway shows are organized as limited liability corporations (LLCs) or limited partnerships (LPs). That means that as an investor, you put up your money but have no input or control.

The basic division of the spoils is 50% for the managing partners (that’s the producers) and 50% for investors. Investors do not necessarily own a portion of the profits from sales of cast recordings or future revivals.

High-end investors—those who put up mid-six-figures or more—sometimes can negotiate for “incentives,” a cut of the managing partners’ share of the profits.

Hire a lawyer familiar with the theater industry to review any investment contract before signing. Expect this to take around two hours if there are no major complications. The lawyer might charge as much as $1,000 or occasionally as much as $2,000. The New York State Bar Association can help you find an attorney who has extensive experience working with Broadway investors (800-342-3661, Or see who’s listed as “production counsel” in the Playbills of shows you attend. Most attorneys who represent Broadway shows also represent Broadway investors (though never on shows they represent).

Investors usually receive financial statements annually or perhaps quarterly. Each week, publishes gross sales, which give investors a general sense of how things are going. The general partners determine when profits are distributed. With a limited run, full distribution usually is made within six months of the final performance.

Source: Jed Bernstein, a longtime Broadway producer whose shows include the Tony Award–winning revival of Hair and a 2013 production of Driving Miss Daisy. He is executive director of the Commercial Theater Institute, a New York City–based program that offers training to prospective Broadway producers and investors. He will become president of Lincoln Center for the Performing Arts in January. From 1995 to 2006, he led the Broadway League, the industry's national trade association.