Podcast: The Mechanics of Closing (and Unclosing) a Broadway Show with Daniel Kuney, Kevin McCollum
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KGM Theatrical President, Daniel Kuney, sat down with Oliver Roth and Kevin McCollum to chat about the reasons a Broadway show might close, how to best prepare for closing a show, and how a closing campaign can sometimes help a show.

On this Season 2 premiere episode of BroadwayWorld's theatre business podcast, "The OHenry Report," Broadway producer and investor Oliver Henry Roth goes inside the mechanics of closing a Broadway show with veteran theatrical general manager, Daniel Kuney.

Then Oliver chats with four-time Tony-winning producer Kevin McCollum about how the decision to close a show works from his perspective, but also what goes into the decision to reverse course and push back an announced closing date, as he did with Broadway's "The Play that Goes Wrong."

You can listen to the full episode below or view the full article on BroadwayWorld here.

How much does an Off-Broadway Show Cost to Produce?
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One of the first things producers want to know is how much their project will cost to produce Off-Broadway.

The short answer is probably at least $500,000 and likely not more than $3,000,000.

Most shows are squarely in the middle.

Below are the major factors that will influence your Off-Broadway budget.

Physical Production

Scenery for an Off-Broadway show can cost anywhere from $15,000 for a few homemade backdrops and a used couch, to over $200,000 for an elaborate set manufactured at a professional scene shop.

And how much you spend on the set will likely influence how much you will spend on lighting, video and sound. If you're spending $200,000 on a set, you are probably going to be renting some fancy gear to make sure it looks (and sounds) great.

Costumes are going to run you anywhere from a few thousand dollars to purchase contemporary clothing for a small cast to over $50,000 for a large musical with period costumes and multiple costume changes.

The Size of Your Venue

Off-Broadway theaters range in size from 199 seats to 499 and, as you can imagine, the rents go up as the theater gets bigger.

Right now, we are seeing rents that range from $10,000/week to $25,000/week.

The size of your venue will also influence how much you pay your actors, musicians, director and designers since each of the unions that represent Off-Broadway employees takes venue capacity into consideration when determining the rates you will pay.

The Size of Your Cast & Band

This is fairly straightforward, but a show with 17 actors and 5 musicians is going to cost a whole lot more than a show with just 2 actors.

Also, the more people you have on stage, the more employees you'll need to hire to support them, from stage managers, to wardrobe crew, to company managers.

How Much You Want/Need to Spend on Advertising

This is one of those times in life when something may seem arbitrary, but it actually isn't.

It doesn't matter what size show you are mounting, you probably need to spend at least $125,000 in advertising prior to your opening night.

For a large musical I would go up to $225,000.

However, most shows just can't afford that, and will have to get creative. It's 2018 so there are ways to have incredibly effective Facebook, Instagram (and, yes, still Google) campaigns for a fraction of that cost.

Sometimes that will suffice but not always. It's a noisy marketplace. If you want to reach consumers, you need to spend money.

Your General Manager will help you assess how far you can stretch your budget and when you really need to make sure you are not shooting yourself in the foot. It may not make sense to pay $200,000 for an amazing set that no one will see because you're only budgeting $25,000 for pre-opening advertising.

Your Own Priorities

People often give us a quick set of facts and ask if we can estimate how much their show will cost.

Seems straightforward to think that a show with 5 actors and 2 musicians will always roughly cost the same thing.

But we always work closely with our clients to understand their unique priorities. One producer may feel strongly that a show needs to have an elaborate set or a very unique special effect, while another feels that their show will work best on a bare stage and a single spot light.

Similarly, one producer may feel strongly that a television campaign is the right way to sell their show, while another with a background in online marketing will want to have a digital only campaign on Instagram and Facebook.

These are the intangibles that can both offer cost savings and push costs up.

If you're contemplating producing an Off-Broadway show, take our 7 question assessment to see if you have everything in place to ensure a successful production.

What Does a Broadway General Manager Do?

Unless you are a theater insider you may not know that all commercially produced theatrical productions, much like major league sports franchises, have a general manager. You also may not have noticed that a general manager typically is listed directly above the director and choreographer in every Playbill, signifying the importance of this position to a production.

But if a general manager is so vital, what exactly does he or she do?

The short answer is that the general manager is responsible for overseeing and coordinating virtually every aspect of a show. But, for now, let’s focus on the three major duties of the general manager.

THE BUDGET

The first task of a general manager is to create a budget. This is not a one-page document or a quick summary of expenses. It is, instead, an extensive line-by-line itemization of every component of a show’s costs.

It includes both obvious expenses, like the cost of the set and costumes, as well as not so obvious expenses, like insurance, payroll taxes, legal filings and union benefits. Also included are the cost of personnel, from the actors to the crews responsible for unloading scenery.

Did you know that, in New York City, the crew that unloads scenery from trucks outside theaters is different from the crew that loads scenery into theaters? It’s okay if you didn’t know this. But this is precisely why you hire a general manager. A GM knows this somewhat arcane point and many, many others.

Now how about one of the most complicated elements of a theatrical budget? Salaries. There are thirteen unions that represent the men and women who fill every position on a Broadway show, from the actors to the greeters who scan your ticket as you walk into a theater. And each union has its own constantly changing rates, work rules and benefits plans, all of which must be factored into a budget.

In addition to the minimum salaries prescribed by each union, there are also the intangibles that factor into every salary line. For example, United Scenic Artists, the union that represents designers, may set the minimum fee for a lighting designer at $40,000, but an in-demand designer who has just won a Tony Award will command a much higher fee. Which means that a general manager must have a robust working knowledge of the actual salaries paid in the marketplace, from the salary of the person sewing costumes backstage to the salary commanded by above-the-title talent.

How a general manager budgets a production will greatly affect not only the financial return for the show’s investors but also the execution of the show’s creative vision. Both overspending and underspending can be detrimental. But a seasoned general manager appreciates these sometimes competing demands and works to find the right balance on every budget line.

Consider these specific line items, for example. Does a show need five weeks to rehearse, or can it be staged in four? Does it require a seasoned director who works at 200% above scale, or is there a young director working downtown who is ready for a big break?

The important point here is that there is nothing cookie cutter about this process and little that can be cut and pasted from one budget to another. A theatrical budget must take into account the unique demands of each show, the most up-to-date union rates and all marketplace realities.

Unless you are a working general manager, you don’t need to learn all of the nuances of theatrical budgeting. But knowing the intricacies of the budgeting process is one of the main reasons why a general manager is so essential to the financial and creative success of a production.   

CONTRACT NEGOTIATIONS

The playwright, director, actors and designers all have agents who negotiate contracts on their behalf. But who negotiates on behalf of the producer? The general manager.   

Let’s begin where most productions begin – the agreement with the authors. Arguably, this contract is the most essential to the long-term financial success of a production, but it also is the most complex. So this is where an experienced general manager, working in tandem with the show’s lawyers, can make a real difference.

Issues relating to theatrical author rights are legion. In theater, unlike film and television, authors maintain the rights to their work in perpetuity. In exchange, producers are entitled to a a percentage of the author’s ongoing subsidiary income. Even a show that doesn’t fully recoup on Broadway can still make its money back through subsidiary income, which can come from touring productions, stock and amateur rights and the incredibly lucrative sale of the movie rights.

This means that the terms the general manager and legal team negotiate with the authors prior to the first production can be the difference between turning a profit and not fully recouping the producer’s investment.

The process of negotiating the contract of a star actor, in-demand director or designer also is complex and time-consuming, sometimes taking weeks, if not months. Take the star actor, for example. Details that must be negotiated, in addition to compensation structure, include the size of the actor’s billing, where and when the actor is billed, choice of dressing room, whether the actor has photo approval, opening night tickets and, often most crucially, whether or not the actor will have the right of first refusal to repeat his or her role in different companies of the same production.

As the producer’s voice in all of these negotiations, it is important that the general manager is someone who the producer trusts – someone who not only can achieve the desired results but who also can represent the producer’s vision for the show. In other words, once again, choosing the right general manager makes a real difference.

CHIEF OPERATING OFFICER AND MISSION CONTROL CENTER

If the producer is the CEO of a theatrical enterprise, responsible for securing the initial capital and holding title to the rights, the general manager is the COO, responsible for guiding the producer towards a production that is successful financially as well as artistically.

This work is far from over once a show has opened. Even on a show with great reviews and initially strong ticket sales, there is ongoing strategy, skill and smarts that must be employed to keep a show running.

It can be overwhelming for a producer to sit in an ad meeting and be asked to choose among the seemingly infinite number of ways to spend money on an advertising campaign. A seasoned general manager, however, knows all about current and historical sales trends and can be a huge resource to the producer in this process. 

The general manager also works closely with the advertising agency to manage ticket inventory, assess demand and drive up the average ticket price.

Meanwhile, the general manager’s office oversees the weekly profit and loss statements that are prepared by the show’s accountant and uses these reports to assess where adjustments need to be made. If there are areas that routinely are costing more than they should, the general manager will work with the department head to troubleshoot and find efficiencies.

This isn’t always about cost-cutting, though. An experienced general manager understands when the artistic quality of a show requires sufficient, and possibly additional, spending to maintain the vision of the creative team.

In addition to being the COO of a production, the general manager’s office acts as the central administrative hub for a production. This is where contracts and business records are maintained, tax documents are mailed and payroll is processed.

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Launching a new show is a significant, and at times daunting, undertaking. That’s why a smart producer will hire an experienced general manager, who can assume responsibility for every aspect of the production and, by doing so, ensure the show’s long term success. 

Be sure to take our 7 point assessment to see if you have everything you need to produce a successful production.