How Do I Invest in Broadway?

Investing in Broadway shows can be an exciting and rewarding experience for those who love theater and want to diversify their investment portfolio. Whether you are a seasoned investor or just starting out, investing in Broadway shows offers the opportunity to support the performing arts and potentially earn a return on your investment. In this article, I will explore the basics of investing in Broadway shows and provide tips for making informed decisions.

Understand the Risks

Investing in Broadway shows is not for everyone, as it comes with its own set of risks. The biggest risk is that the show may not be successful and may not recoup its initial investments, leading to a loss for investors. On average, 1 in 5 shows recoups the original investment. Furthermore, the production may encounter unexpected expenses, such as casting changes or technical difficulties, which can impact the overall success of the show. It's important to consider these risks before investing and to only invest an amount that you are comfortable losing. In order to invest in a Broadway production, you must be an accredited investor as defined by SEC rules. Please check out my Investing FAQ to navigate to that definition.

Research the Show

Before investing in a Broadway show, it's important to research the production and the team behind it. Look at the track record of the producers, the quality of the creative team, and the popularity of the source material (if it is based on a book, movie, or existing play). Additionally, consider the market demand for the show, such as the target audience and the competition from other Broadway shows. If you are looking at me as your producer, I have multiple years of experience in the Broadway/Off-Broadway market and would love to book a meeting to go over why I am the best choice to consider for all your Broadway investments.

Understand the Investment Structure

Broadway shows are typically funded through a combination of investors and producers. Investors can participate in the production by buying a share of the show. Each week that the show makes a profit, the entire amount is paid back to investors until they have recouped their original investments. After the original investments have been recouped, net profits are typically split 50/50 between investors and the producers. On average, show units range from $25,000 to $50,000. There are multiple avenues to invest in a show and should be discussed with your producer. Beyond investing in the Broadway production, several other options can include investing in the Broadway Cast Album (if not included in initial investment), or investing in the national tour. With each unit comes different perks, most of the time, you will receive 2 tickets to Opening Night, get to walk the red carpet with celebrities, attend Opening Night parties, and have access to house seats to use year-round for the duration of the production.

Consider Ancillary Income

Investors in Broadway shows can also receive a share of ancillary income from the show, such as merchandise, licensing, albums, and other sources. An additional source is international rights, check with your producer to see if international rights have been sold under the parent company or not. If so, this can many additional revenue for every international production that recoups (not to mention how many markets the production could open in). This can provide additional returns on the investment and can help to offset any losses if the show is not successful.

Due Diligence

Investing in Broadway shows requires due diligence and research. Before making a decision, it's important to review the show's business plan, financial projections, and contracts. Consider working with an attorney or financial advisor to help you understand the details of the investment. I can also recommend some if you would like!

In conclusion, investing in Broadway shows can be a rewarding experience for those who love theater and are comfortable with the risks involved. By researching the show, understanding the investment structure, and performing due diligence, investors can make informed decisions and potentially earn a return on their investment.