Broadway costs add up for producers. But on stage, the show must go on

By Leigh Waldman, Joel Williams, CNN

(CNN) — For over a century, Broadway has been at the heart of New York City culture, with glittering marquees welcoming millions of tourists and locals every year.

But Broadway musicals are now struggling to make a profit, as affordability concerns impact all aspects of American life. Musical producers can place the blame on rising costs from theater rent, fees, labor and even lumber, which has roughly doubled in price since December 2016. Meanwhile, ticket prices haven’t risen quickly enough to offset these costs.

It’s a blow to New York City, where Broadway’s health is vital to its economy.

“As New York City goes, so goes Broadway in many respects and vice versa,” Jason Laks, president of the Broadway League, the trade association for the theater industry, told CNN.

“We employ 100,000 people per year, and we contribute $15 billion to the New York City economy alone each year,” he added.

Laks said the rising cost of musical productions is leaving the Great White Way in the red. He added that it’s only gotten harder since the pandemic, when Broadway went dark for over a year due to Covid-19 restrictions.

High production costs, flat ticket prices

Data from the Broadway League show the industry had its highest-grossing season in a decade this year, with over 14 million people attending shows.

However, none of the 18 musicals that opened last season, made a profit as of late September, according to the New York Times. Laks said the prevailing wisdom for the industry is that only one in 10 shows will make their money back.

For example, producing “Boop” — the colorful show centered around Betty Boop in modern New York City — cost around $26 million. The musical ran for about four months this year and, according to the Times, failed to recoup its investment.

“It’s just so difficult for (producers) to get their money back. These shows are now upwards of $25 million. Ten years ago, you could have a musical on Broadway that was probably in the $13 million range,” said Jim Kierstead, a Broadway producer whose over two dozen credits include “Kinky Boots” and “Waitress.”

While producers have seen their budgets grow, ticket prices haven’t kept pace, according to Laks. The average ticket price is currently $126, while the average ticket price for the 2015-2016 Broadway season was about $103, or about $140, when adjusted for inflation.

But the solution isn’t as simple as raising ticket prices.

“There’s only so high you can raise them because you’re really pricing people out of the market,” said Kierstead. “It’s just a bad conundrum across the board.”

One investor takes issue with Broadway’s financial woes

James L. Walker Jr. invested $50,000 in the recent revival of “Cabaret at the Kit Kat Club” on Broadway. The star-studded performance closed early in what producers called a financial loss after being open for about 14 months and 592 regular performances.

“When you look at a play that’s grossing an upwards of nearly $100 million, it’s hard to explain how we didn’t make our money back,” Walker said.

In August, the Atlanta-based investor filed a lawsuit against the show’s producers, alleging breach of contract and what the suit calls a “deliberate scheme” to strip him and other investors of their money.

“Obviously, we want our money back, but yes, a major consideration is how do we change the overall infrastructure?” Walker questioned.

ATG Entertainment, the defendant in the lawsuit, would not comment on active litigation but has denied any wrongdoing and filed a motion this month to dismiss the suit.

Off-Broadway shows are trying something new

While shows on Broadway struggle to find a solution to their financial woes, one off-Broadway show has taken a unique approach to draw crowds.

“Masquerade” — a reimagining of Andrew Lloyd Webber’s classic “The Phantom of the Opera” — has audiences donning masks and sipping Champagne upon entering a transformed six-story art shop in midtown Manhattan. Webber also helped produce the $25 million show.

Adding to the experience is a secret password to enter and artwork from some famous names like music legend Bob Dylan.

“We’re doing everything Broadway does, except we’re even doing it ‘more,’” said Randy Weiner, one of the show’s producers.

Tickets for “Masquerade” range from roughly $200 to $400 on a given night, but Weiner said the show still hasn’t made a profit. For now, it’s set to run through March, though Weiner hopes it will run for many years like “Phantom.”

Weiner said there are no plans to bring “Masquerade” to Broadway, and he’s not sure if an interactive concept is the solution to Broadway’s troubles. But as a lifelong New Yorker, Weiner is confident the industry will rebound.

“I’m not worried that Broadway won’t figure out its model because it’s an incredible New York experience,” he said. “That’s something that’s not going anywhere.”

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CNN’s Robert Ilich contributed to this report