Written by: Jeremy Terry
Investors are often not credited in your Playbill or recognized in any way publically, but they are a very important part of the show. What does it mean to be an investor? Who are they? Is that the same as producing? These are questions I hear sometimes, so I wanted to talk about what it means to invest here so that people can find that information. Maybe you'll be interested in investing too, but if nothing else you will hopefully learn a little more about these people who are such an integral part of the theatre.
To mount a show, the producers must raise a certain amount to cover the expenses related to starting the production and the expenses of the production before and through rehearsals, leading up to the first paying performance. They raise this money from investors. In simple terms, in commercial theatre investors are people who put money into a theater production, and in return, they receive a percentage of the profits from the show. If you think of a theater production like a business, the lead producer would be the CEO, the co-producers would be the board, and the investors would be the shareholders. Investors purchase "units" which are almost like a share in a company. The price of a unit can vary based on the production but can range from a few thousand dollars up to fifty thousand. I've read that an average for Broadway productions is thirty thousand – I don't have much experience on larger productions like that but from what I've seen that's accurate.
Investing in theatre is very risky, but also very rewarding. Hopefully, if the show is a hit and recoups, you'll make your money back and then some. However, it's rare for many shows to reach recoupment, so if you're investing, then it should be for reasons beyond money. Most investors get involved because they love supporting theatre and they believe in this particular production. You also can get some fun perks like opening night performances and parties, backstage tours, meetings with the cast and creative teams, and more, but I think you have to believe in the art that is performed on stage and have a strong desire to support that.
So what does it look like to invest? When you’re considering investing in a show, a Producer will send you a packet of information. It will often include information about the production such as casting, production history, sample tracks if it is a musical, and sometimes a full soundtrack or video recording if one was made of a previous production. Also included in the packet is the financial information. This will include how much money is being raised in total, how much each unit is (the minimum investment in the production), and the Operating Budget. This shows what the weekly expenses for the show are expected to be, what the potential Gross Weekly Box Office Receipts are, and what some potential recoupment schedules could look like. I mentioned above that most shows don’t recoup, but that doesn’t mean you shouldn’t do your financial homework! The Operating Budget will estimate how long it will take to recoup a show based on how much of the potential gross you are making. If it says recoupment would take 30 weeks at 70% gross, and your show is only scheduled to run ten weeks, you might want to ask some questions about the feasibility of operating this production.
So who are investors? Well, it can be anyone. They're often not even people that work in theatre – they can be doctors, dentists, lawyers, teachers (just kidding – teachers are so ridiculously underpaid it's not even funny). It can also be other theatre people (including other producers sometimes!) that want to be a part of making a show happen, but aren't able to commit to a full-time role. One thing to keep in mind – if you’re interested in investing in a larger production such as a Broadway show, certain regulations say that all investors be accredited. There are several ways to be accredited, and you can read more about them here Some producers ask you to provide proof that you’re accredited, though most of the time this not something anyone checks and no real consequences if you’re not accredited but invest. Those rules are put in place to protect you from being taken advantage of by someone who would take more money from you than you are able to give up.
I hope this was informative! If you're interested in investing or want to learn more, reach out to a producer! They would be happy to share more information with you. Although there are laws that restrict them from advertising investment opportunities, if you reach out to someone they would be happy to chat with you. And if you have a generic question about investing, feel free to leave a comment below!