So the maths on Broadway has always been hard to make add up. Shows are expensive to open, expensive to run, and audiences are unpredictable. That stat about one in five shows recouping their investment has been around for decades, but COVID has made the business of investing in Broadway even more uncertain. Last season, which starts in the middle of the year, was the first full one since COVID, and over 12 million tickets were sold to Broadway shows. That's a lot, but it's a 17% decrease from before the pandemic. And that decrease in ticket sales has not hit all shows equally, according to Oliver Roth, who's been producing shows on Broadway for over a decade now.

The best show is doing about as good as it was, and the worst show is doing about as badly as it was. But

if you look

at the Inter-Cortale range, which is sort of a statistical measure of the middle 50% of shows, the gap has widened. So it used to be sort of this nice curve of shows that performed at the bottom and shows performed at the top. Now there is like a pretty decent gap. Things are either making money now or they're losing money, and it seems to be easier to identify those than it used to be.

In 2023, only one new show has announced that it's recouped its initial investment. And that show was Primer Facey with Jodie Comer, which is the advantage of being a one-woman show, so it's cheap to put on. And to be fair, she did also win the Tony. So Oliver sees a pattern with shows that are doing well.

Well, right now, and I like because I don't know how great this is for the industry, identifiable titles and identifiable stars are selling. And those are honestly really working right now. The problem for our industry is that there's little that doesn't fit that model that is also working. Not none, but little, right? There are other things being created. Those are the ones that are struggling the most to find audience.

It's not just starry shows. Shows based on existing IP are also doing well, whether that's back to the future of the musical or MJ about Michael Jackson. Tickets are generally easier to get now, so shows that would be hard to get into before COVID, like Hamilton. These days, you can get a ticket to that pretty easily. So people can go to their first choice rather than their second or third choice show. And that means that the second or third choice is selling less well. That's because fewer people as a whole are coming to see shows. Attendance from every group is down, whether it's people from the city and the suburbs or tourists, international and domestic. None of them are back to their pre-pandemic numbers as of yet. The

reality is, I think COVID taught us to be comfortable not doing things. We've just all become a little bit more comfortable with a meal at home. Not to also mention the fact that more people, especially families, moved out of the city and fewer people are commuting into the city to go to the office, which means that they are not four blocks away from the theater. There's tourism that's so not quite back. It's sort of not a shock that that is why the industry is not quite recovered. And it's not

just that audiences are down. Costs have gone up a lot since COVID. One producer who brought a Tony-winning show to Broadway in 2019 told me that back then, it was capitalised for about 11 million. These days, they reckon it would cost 18 million. And it's not just the initial investment. Running costs are up too.

It's no surprise to anyone that there is a total rise in labour organisation. The film and TV industry just suffered for six months because of it. We have 20 plus unions that put on our shows and we are in constant negotiations and that is honestly more and more expensive for producers.

The 40ish theatres on Broadway are closed shops, so the producers have to employ union actors, stage managers and musicians. Those unions are powerful, but it's not just labour driving up costs. Shipping

costs are up, materials are up and out of stock. There are all these other things that are making the world more expensive than it was pre-pandemic. Truly, the cost crisis is a sum of its parts. We have to capture revenue while spending. And the second we stop spending, the show is closed and there's zero revenue as

well. For those actors and musicians in the wings or in the pit, a lot of what's driving those higher running costs is very, very understandable. Kate Schindel is the president of Actors Equity, the union for live theatre performers and stage managers. And she was also Vivian in the original Broadway cast of Legally Blonde. So

we tried to push very hard to negotiate some additional provisions to make sure that there were more bodies there. There were just more people to

cover if

somebody got sick or injured, which, by the way, happened before COVID, all the time, right? Kate

also argues that it's just better financially, that it's cheaper to have two extra bodies able to sub in than to cancel a week of shows when stars get sick, which is still happening. In August, both leads of Sweeney Todd got COVID at the same time. Their covers went on and the show did go on, but box office grosses fell by $370,000 compared to the week before. And it's not just more cover that equity is pushing for after COVID.

From the worker perspective, the idea that we're just going to have unlimited five-show weekends and constantly shifting schedules that really don't give people time for rest and recovery. Those things are things that are more in focus and sort of front burner now. There's no way around the fact that we tend to work during most people's leisure time, but trying to work within the parameters of our industry to make it more humane and more of a place where people can

make a living,

have a family if they want to afford to live near where they work. Those things are pretty important.

But how to make Broadway more sustainable for workers at the time when it appears unsustainable financially is going to be a challenge.

Financially speaking, it's really deep in recovery. I don't think there's a way to sugarcoat this. This season to date, it's 28% down, gross-wise from 2019. Just this week, it was on 35% from the same week in 2019. Lee

Seymour is a theatre producer. He helped bring the Tony winning, the inheritance to Broadway. But he's also written about the structure of the industry for Forbes and the Wall Street Journal, among others. I spoke to him about how unusual this moment is and what could be done about it.

It is not back. It is not in crisis. It is deep in recovery. And when I say it's not back, I mean that it's not back to 2019 where it was still risky to

produce shows. It's

a high-risk, high-reward industry. But plenty of shows had a fighting chance, especially shows like New Work, original musicals, original plays that weren't based on anything. They had a fighting chance. Now, almost none. And I say this is one of the producers of the inheritance, which was an insane risk.

The inheritance came to Broadway in 2019, and it told the stories of generations of gay men in New York City. But

it was a risk that was worth contemplating then. I would pass instantly. If somebody pitched me at the inheritance today, I'd say good luck in Godspeed. There was no way that that show would have even a hope of working on Broadway now. Just to

kind of put this in perspective, Broadway has never been an industry that you got into, whether there is an artist or on the back end as a producer, to make money. Is this moment different, or is it just a continuation of a uncertain, insecure investment industry?

It will be back. The trouble is for it to get back, or in this almost paradox moment, because we need to move through this moment where many people are simply burning money to keep the lights on. We're just burning money to keep shows and theaters. Certain shows don't have audiences that are coming to them, which, again, has always been the case. There are always flops. There are always hits. But there's a lot of churn. And the goal, I mean, this is such a bleak way of putting it, but I think it's accurate, is to keep, on one level, the illusion of a recovered Broadway alive until it's no longer an illusion. Because if we don't, we lose theaters, we lose audience, we lose engagement, and that can't happen.

So the economics of Broadway have always been hard, and the margins have been thin and success hard to predict. But it's worse now. So that leaves the question of what can be done about it.

You really don't have too many levers to pull. If the question is like, what can we do about this? On Broadway, you've got seats, you've got weekly operating costs, and you've got ticket prices. And like, those are the three things that you're trying to right-size around each other. And until you can charge the same amount for like a VR experience at home versus being in the theater, you're really stuck working with those margins around costs, around number of seats, around ticket prices. And so that, for me,

is where ideas

like streaming, like co-productions, like resource sharing, that's where those come into play. And we're seeing that. We're especially seeing that in the nonprofits sphere so far of different companies sharing production workshops, sharing costs, sharing costume archives, doing all of the resource sharing to help each other out, to share audiences, to expand their reach in that way. Streaming, I think, is going to be huge, and I think that that will help. Because

one of

the challenges of Broadway, which also adds to its cool cache, is the reason to come to New York, is that you can't get it anywhere else. But eventually, if we're talking about making this a sustainable business that isn't going to collapse under its own weight, you are going to have to find ways to rebuild and broaden your audience, because a lot of them haven't come back. So

it's really making use of ideas of scale, both behind the scenes with sharing resources, tapping into economies of scale in that sense, but also scaling up the possible market. That's kind of what the internal market can do to kind of help itself. Is there anything external forces should be doing? We've seen a great success in tax credits for film and TV. Does something similar exist for Broadway?

Should it be expanded? It does. It's

a developmental tax credit, and it's a New York state program, where if you develop your show in a certain way and bring it to New York, you are eligible for tax credit, which can be sizable. I mean, multi-million dollar credits. That can go such a long way, more federal relief. I mean, America, we don't have a Department of Culture, we don't have a Minister of Arts, like they do in other countries. Historically, we've been extremely small-sea conservative when it comes to supporting arts and culture on the federal or even the state level, even though we know, and there's rings of data to support this, that arts centers, whether they're theaters, whether they're concert venues, whether they're arts education programs, are major economic drivers. They are catalysts for communities that's restaurants nearby, that's hotels, that's after school programs, that's whole pieces of local economic networks, and I really don't want us to lose sight of that kind of value.

So, Tom, Alice, Mike, I think that point from Lee there about finding more or new revenue streams is probably the most important for keeping Broadway going. Because the thing that all these shows have in common, as you were saying, Mike, is a brand, and that's super valuable taking it on national tours or international tours, licensing to regional productions, maybe eventually making soundtracks. That's where more shows than that 20% can recoup some money. But what's really interesting is that this is a local industry, and one of the problems facing Broadway is that it's just really expensive to do business in New York, staging the same production of Hamilton or six or whatever, is three to five times more expensive in New York than in London, and a big reason is just the cost of doing business. And so, I think that are ways that they could probably cut costs if they were willing to. Actually,

that touches on an interesting point that came up from Lee there around how governments think about supporting this and what the economic case is for that. I think traditionally support for the arts is maybe viewed as this kind of necessary, but not especially productive investment for governments, to give the riff for half a bit of culture. But actually, I think you can make an argument that it is a helpful place building strategy, and it also creates lots of positive externalities around spending in restaurants and bars and hotels and so on. And so, thinking more broadly about the potential spillovers from this, I think maybe changes a

little bit how you think about the value of these investments. Yeah, I thought the point that Oliver made at the top of that about the distribution of returns for shows having shifted was really interesting. I guess

if rather than this sort of bell curve that he described, you now have this sort of barbell where you either lose a ton of money or make a ton of money, or invest that sort of risk in this business has gone

up, and then we'll need to be some adaptation of the way people invest or how they do business and sort of help offset that in a way. We did an episode earlier this year about how AI and technology was going to change fame and potentially supercharge existing stars. So people like Taylor Swift can take advantage of avatars and automation of herself to flog herself to even more people and become even more famous. And I think it's interesting that it seems to have come up in this episode as well. People that are already famous being leaned on more as the draw for Broadway shows sort of guarantee, hopefully, that will be in that sort of top 20% or that sort of high performing slice of shows rather than the ones that they completely blow up. I understand why people in the industry feel some kind of disquiet about that though, because if you look at the

sort of biggest historical stars of Broadway, people like Barbara Streisand. She eventually got her big break on

Broadway after she'd been sort of working in nightclubs as a singer, and she got booked in one show that was a complete disaster, almost closed on opening night, and then she eventually sort of managed to get booked in another, and she brought down the house. And if you're not going to put unknown people in those sort of leading lady positions anymore and that path is closed, then you'll have to sort of find those extraordinarily talented people some other way. And then you'll have to come up with your TV or movies or being a musician first. But the iconic story of Broadway, the sort of struggling star who gets cast in some sort of breakout show, maybe that doesn't really exist anymore, which is kind of

sad. Yeah, I'm sort of wondering whether that makes Broadway increasingly a sort of ancillary piece of media that's attached to the existing intellectual property that we were talking about, rather than something that starts off as like a Broadway only or primarily Broadway piece of intellectual property that things have then developed off of. When it comes to the government subsidy argument, I am going to play the Philistine again. The positive externalities argument. It's an interesting one, and I'd love to see it develop how much spending you might get in restaurants and other things, but it is what everyone that wants a government subsidy says. Right? It's always what they say. This is fully triggering my sort of gadsden flag. Don't tread on me. I refuse to pay for this. I mean, I'm not an American taxpayer anyway, but it seems that people who like the medium always think that there's a massive positive extenality. I'm reminded a little bit as well of the time that the French government gave, I think, all 18 year olds or all young people of a certain age, a sort of arts only voucher, and they spent it at very large portion of it on comic books, which I don't think was the intention. But I do wonder, in terms of the economics of it, that maybe given that we're talking about valuable intellectual property and the way these things flow back and forward into each other, there's an argument that some other parts of the media ecosystem for a given piece of intellectual property need to cross subsidize the Broadway side. If we think that Broadway is really, really beneficial for that IP and keeping people interested in it and keeping it in the news and all of that, there might be an argument there that these things need to be sort of better balanced out.