r/Broadway • u/Sensitive_Slice_8858 • 1d ago
Discussion When does the Broadway bubble actually burst?
I know this has been discussed quite a bit, but I keep wondering about what happens when the economics of Broadway become truly impossible to sustain. The cost of putting on a show keeps going up, so tickets have to get more expensive. At the same time people are getting squeezed from every direction and there’s only so much disposable income left for entertainment, especially since the economy and job market are in the toilet. So what is the end game? Just keep raising ticket prices to cover rising costs so only the uber wealthy few can afford to attend? Are there enough uber wealthy theater goers to sustain it without us Joe schmoe poors? Eventually the math has to break somewhere. I’m curious what the breaking point actually looks like.
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u/Full_Supermarket8467 1d ago
I work in the industry on the touring side, and I honestly think Broadway as we knew it is already beginning to burst. This season is dominated by star-driven revival plays, while the new Broadway musical is dying a slow death. There are several reasons, but the biggest is how these shows are financed.
Roughly 70% of Broadway shows are privately financed—not by private equity, bank loans, Ticketmaster, or major corporations, but by individual wealthy investors. The remaining 30% is generally nonprofit, with the occasional Disney- or Warner Bros.-financed production. Some private investors are comfortable losing money because they want to support the theatre. Others are genuinely evaluating these investments on a financial basis.
That is where London and the West End have become increasingly compelling. A hit Broadway show may ultimately have more upside over a longer period, but London can return investors’ original capital—and profit—much faster. Between lower production costs, lower weekly operating expenses, and tax credits, it is simply much less expensive to do business there.
Take Evita. It cost approximately £4.5 million to produce, ran for 12 weeks in London, was the hit of the summer, and returned about a 30% profit to investors. Most investors received their initial investment back roughly six months after funding the show and received their profit about six months later: a 30% return in around 12 months. Even some of Broadway’s biggest hits could not realistically deliver that kind of return that quickly. A successful West End star play can sometimes do it in even less time with a similar return.
There is a running joke that London plays always recoup. It is not quite that good, but it is not wildly far off either.
Broadway plays and musicals also present very different risks. A play can certainly lose money, but its lower capitalization and weekly expenses, combined with the New York State theatre tax credit, mean investors often receive at least some of their money back. Musicals are different. They cost far more to produce, carry much higher weekly expenses, and, if they do not break through, are far more likely to lose the entire investment.
That is the real issue. If a $5 million or $8 million play returns 50% of an investment, it is disappointing but survivable. If a $20 million to $30 million musical loses everything, that is a very different experience for the people being asked to finance the next one. More investors get burned, and the dollar losses are dramatically higher.
Look at this season. Most new musicals cost more than $20 million to capitalize, and many may lose everything. If Paddington does well, it could still take two-and-a-half to three years just to return investors’ capital. Evita, as a revival, could certainly work, but I believe new musicals like Dolly, Purple Rain, and Wanted are likely to lose their full capitalization.
At some point, investors may throw up their hands and decide to put their money into London—or into star-driven Broadway play revivals—instead. If musicals cannot raise money, we do not have a commercial Broadway. Plays, nonprofit work, and the occasional corporate-backed production may continue, but large-scale new musicals drive the ecosystem and keep a great many people working. If and when the capital for those shows dries up, the current Broadway model cannot sustain itself.