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Thursday, March 22, 2012

The Once and Future Cost of Doing Business

From the Vault Dept.: What charmingly innocent numbers herein! Proctors recently announced its 2012-13 Broadway Series, and you can bet that the expenses involved make what’s recounted below look like so much pocket change. But here’s a wistful look at what it cost that theater 25 years ago to try to entertain us.


SOMEONE WROTE A LETTER to Proctor’s (it hangs on their bulletin board) declaring the reason for the theater’s economic problems: High ticket prices.

It’s a nice theory. And executive director Dennis Madden says that if he could fill the house every night by lowering those prices, he would.

But tickets are priced as they are because productions are priced as they are. Madden’s willingness to discuss dollar amounts has led to an image of the man crying poor mouth at every opportunity, but the fact remains that, as of now, Proctor’s doesn’t break even.

Here are some reasons. “We’ll put together a hypothetical Broadway show along the expense lines of La Cage aux Folles,” says Madden. “That wasn’t our most expensive show, but it’s rather typical.

“The first problem you run into is that if you want a show while it’s hot and on its national tour, you have to book it for a week of eight performances. Or more, in blocks of eight. Often I’ve seemingly overbooked a show just to bring it in here and people wonder why I didn’t just go for, say, five performances. That’s why.”

Cost of La Cage began with $265,000 for the artists’ fee. “That’s their guarantee. They get that no matter what,” explains Madden.

Then there are the extra musicians Proctor’s hires to supplement the band that tours. “Usually 18 or 19 pieces, so that runs about $9,000 for rehearsal and run of the show.

“We have to guarantee a certain amount of advertising; typically it will cost us $40,000 for a week-long show.”

Stagehands for La Cage came to $28,000 for one week. This was a local crew that worked with travelling “department heads,” essentially team captains who coordinate the work.

Royalties are figured from gross sales; for this show it was a 13 percent fee.

“Now, when all is said and done there are always little things. But little things can add up to $3,000 or $3,500. We might have to rent forklifts to help unload the trucks. We may have to provide a meal for the stage crew doing the load-in if it extends over a certain period of time or is after hours.”

Before adding in the first royalty payment, then, the cost is now up to $345,000.

The gross potential for the hypothetical show is $475,000. That’s if the house were to sell all 2,700 seats for eight performances with an average ticket price of $22. That’s with no discounts, no press seats. In which case, the royalty fee would be $61,750.

Add that to the cost and you’re up to $406,750 in expenses. “Okay,” says Madden. “That’s not the end of it. The producer will give me a profit of ten to 15 percent. I’ll split it down the middle and say 12-and-a-half. That means I would get the next $50,000 as profit. Any money we make over that I split with the producer 30-70. But there’s only $5,000 more I could possibly get if the show were a sell-out. Still, say we do that, and say we clear about $8,000 from the bar on this sell-out.

“That means I just made $63,000 on a hit show. Is it fair for Proctor’s to make that much?” Madden laughs wryly. “If I could make that much every week this place would be in the black and we’d be in great shape.

“But let’s look at what it takes just to break even, and how delicate our profit area is.” As he speaks, he works the keys of a calculator. “Just to meet expenses, this show has to sell about 17,000 seats. That means about 80 percent of capacity.”

Per performance, that translates to 2,160 of the 2,700 seats for each of the eight shows.

“If I do 75 percent, I could lose about $20,000. If I do 70 percent, I lose about $40,000.

“So you see that it’s not that I think the profit is unfair if, in fact, everything goes well – but the chance for a loss is always present. And whether we lose money or not doesn’t prevent the  show from coming to town. It’ll come and that producer will pick up his check for $265,000 and the local newspapers and radio stations will collect theirs for $40,000 and the musicians and stage hands will get their money . . .

“And then you’ll come to the theater and you’ll see those 70 percent of the seats filled and you’ll be all smiles and say to me, ‘Oh, another success, Dennis!’ I get that all the time. And I’m kind of gloom and doom and down at the mouth because the 70 percent means we only lost $20,000. Seventy percent has that look of a full house – you figure the few empty seats you see didn’t make it that night and you don’t notice those 150 on either side of the top balcony.”

This is just for a Broadway show, which Madden says isn’t the best example when you want to look at the risks Proctor’s takes. He cited the upcoming (Feb 2) recital by soprano Jessye Norman. “If you want to reckon with Jessye Norman’s fee, she gets $30,000. That’s not the highest fee for a solo classical artist I’ve had, but it’s one of the highest. Due to the special nature of the program, we’ve spent about $5,000 advertising. You can’t spend more than that. It’s a single program. But it’s a very special one, with a prestigious artist that we definitely want an audience there for.

“Getting Jessye here was a three-year project. I wanted her ever since Musical America yearbook named her Artist of the Year. She doesn’t do a lot of recitals.”

And sells out wherever she goes, especially in New York, where recent Metropolitan Opera performances have been SRO affairs.

“We’ll probably spend about $500 on stage for getting the stage hands here and the piano tuned and a few hospitalities for Miss Norman. Probably not many; it’s really only the rock stars who demand a lot.” (See sidebar below.)

That brings the Norman fee up to $35,500. As of Friday, Proctor’s had sold fewer than 400 tickets. “I’m crushed.”

Grant money is available for such a show, “but it would be stretching it to say that I’ll get even $5,000 for this one because NYSCA (The New York State Council for the Arts) would rather I support a fully-staged opera where 50 artists are getting some work than to spend $35,000 on a Jessye Norman. They figure if an artist can demand that fee, than the tickets should cover it.

“But with Jessye it doesn’t seem to work. Only Itzhak Perlman and James Galway have been able to do that. The ticket prices are $25, $22, and $15. I know that’s limiting in terms of the audience size. The price means that to break even – ” The calculator zips into service – “I need 1,670 people to come. With no discounts.”

Madden quickly points out that he’s reckoning break-even on expenses alone, not staff and maintenance costs for Proctor’s. “Or the playbill. You’d think that would be self-supporting with all the adds, but it’s not. It costs us $80,000 a year, but we always lose five or six thousand.”

Of course, the big news of the season is the practically-sold-out run of Cats, and Madden cheers up as he savors the sales figures. “We stand to make about $60,000 off of that one,” he says.

“And we’ll lose that much on Jessye Norman, the Detroit Symphony and the Moiseyev Dance Ensemble.”
Metroland Magazine, January 29, 1987

Sidebar: Of Rock Stars, Hospitality, and Jay Leno

What do the rock stars want in hospitalities? “Everything,” says Madden. “Catered meals on site for them and their stage hands. Very often with china and silverware – not McDonald’s takeout. And they can be very specific in terms of, say, Perrier or Saratoga Water. They’ll always buy brand names.

“It gets rather ridiculous. And I’m not just talking rock stars. It gets like this in the whole pop field.”

And it’s the presenter, of course, that pays for it all. “I’ll give you an example of how the pop prices work. I got a call recently from Jay Leno’s manager, who wanted to bring Jay here in March.

“‘Okay,’ I said. ‘What do you want?’

“‘Well, Jay gets $25,000 a night.’

“‘Oh. Well, what makes Jay worth 25 when Cosby was asking for 20 and Billy Crystal was asking for 20?’

“‘Jay’s on the Tonight Show, he’s going to host it about six times between now and March.’

“‘Is that all Jay gets?’

“‘Oh, yeah, that’s all.’

“‘Isn’t there an opening act?’

“‘Oh, yeah, Jay brings a comic with him. That’s a thousand.’

“‘Is that all?’

“‘Oh, well, there’s the typical hospitality. Everybody gives hospitality.’ That might mean a couple of hundred dollars for a caterer to bring some food in, it might mean a limo to get him in and out.

“‘Is that all?’

“‘Well, no – he gets round-trip air from LA.’ Now, Jay might be in Atlantic City, but he still gets round-trip air from LA – along with his manager and probably the opening act.

“Plus he gets a suite at the local hotel. Now, some damn guy making $25,000 can afford to pay for his own room and his own opening act so that he’s selling us a show and not sixty minutes of his busy life.

“I’m up to $34,000 in expenses now, and if I charge $15 for every seat in the house – fifteen bucks, no scale, which I think is a pretty good amount of money to come for ninety minutes and see a couple of comics that you can see on HBO or Showtime or the Tonight Show – the gross potential is $40,500. So you have a break-even of 84 percent, or 2,267 people. Then I get to keep a little bit of the money and split the rest with Jay.

“So Jay knows he’s going to leave Proctor’s with $25,000 in his pocket. He doesn’t have to subtract a thing from that.

“But if I only get 1500 people here, or there’s bad weather – I can lose $10,000, $12,000 – and probably will.”

Metroland Magazine, January 29, 1987

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