10.11.11 | 9 Comments

CATEGORIES audiences, facts + figures, funding and support, rabble rousing, theatrical ecosystem

They come, with startling regularity, on Monday and Tuesday each week. “The Grosses.” The Broadway League aggregates and releases the gross sales and attendance for every Broadway show on Monday afternoons (Tuesdays when there’s been a holiday), and a wide range of outlets dutifully report on the biggest hits, the biggest losers, and prognosticate on a show’s future based on their own analyses, some informed, some less so. For a few thousand people who work in professional theatre, this is valuable information  (I touched upon this earlier this year in another blog, Scoring). For most people, however, The Grosses have become the new arbiter of quality, since a review runs but once, while The Grosses appear week in and week out.

The Grosses are followed, and sometimes preceded, by a bevy of press releases from individual shows announcing their most recent box office achievements: “Highest grossing week ever in x theatre,” “Highest grossing week for x show,” “Biggest one day box office gross at x theatre,” and so on. Because there is now an industry of websites and bloggers who regurgitate this information largely unremarked-upon, this has become the new currency of achievement on Broadway. “SRO” just doesn’t mean the same thing as “$$$.”

What no one stops to point out is that these ever-higher box office achievements are taking place with the same number of seats in each theatre, meaning only one thing: people are paying more and more for tickets, or records wouldn’t be set. Since the introduction of premium seats 10 years ago, the pace has accelerated; the ability of shows to put tickets at the TKTS booth at varying discount rates has also allowed seats to be filled more strategically, so shows with excess inventory at the last minute need not be bound to a 50% discount, but can use a sliding scale. Box office prices are not even fixed any longer; displayed on video screens in lobbies, I am told they can be adjusted a couple of times each week based on demand.

So the fact is, yes, Broadway is setting records, but it’s doing so by generating more money per seat, or in layman’s terms, raising prices. If you thought it odd when Broadway shows said they were playing to 101.6% of capacity (meaning they’re selling standing room), now we can marvel at how shows can gross hundreds of thousands of dollars more than their declared weekly potential.

Before you start shouting “Occupy Broadway” and running with your hastily but tastefully made signage to camp out in Shubert Alley, let’s take a breath.

The majority of productions on Broadway are commercial enterprises. Each show is its own corporation and it has a responsibility, like any business, to maximize its revenue. Famously, only one in five shows supposedly turns a profit; many of the limited runs on Broadway are fortunate to simply return their capitalization.  Finding investors is difficult, costs are escalating from a variety of sources (labor, advertising rates, etc.) and the entire business model is called into question by many. Can we blame producers for seeking to keep Broadway alive, and shouldn’t we accept that the hits need to be ever more remunerative in order to keep more investors interested in participating in Broadway shows and mitigating their losses elsewhere? I think these are all valid considerations and should not be ignored in favor of simple populist rhetoric.

But at what point do we reach, or have we passed, the tipping point where, to echo some of the Occupy Wall Street rhetoric, the top 1% of the country’s theatregoers can afford and secure 99% of the tickets, and every effort to popularize theatre and insure future audiences is negated by economic reality? Just as people have begun to ask about banks and brokerages, is it possibly unethical to make “too much money” with the arts, whether commercial or non-profit?

Yes, I know that many people don’t pay the “rack rate” for Broadway. There’s the aforementioned TKTS booth, the wide range of discounting practiced by all but the most successful shows, the $20 lotteries for front row seats held at 6 pm nightly in front of many theatres. Frankly, Broadway has developed a balkanized pricing system, with the hit shows charging ever higher amounts while shows with less broad-based appeal forced into a cycle of discounting from which they can rarely escape. But the rack rate keeps increasing, so even the discount seats increase in price.

I shouldn’t pick on Broadway alone, as recent news reports have indicated that premium pricing has infiltrated Off-Broadway, both commercial and non-profit. One New York non-profit that famously gives away tickets to several productions for free each year will also let you acquire reserved seats for a pre-set donation amount, perhaps the most pronounced example of price disparity that allows the “haves” to simply pay in advance for what others must seek out for free at the expense of considerable waiting time. Also, while Off-Broadway’s rack rate may be half of that on Broadway, the Broadway discounts equalize the prices – forcing Off-Broadway to then discount its own seats to a point where the production can’t meet its weekly costs, giving rise, in part, to the reduction in commercial activity Off-Broadway in recent years.

“Load management,” pioneered by the airlines, is the original term for what the arts now politely call “dynamic pricing” and it’s not just a New York phenomenon, as both presenting houses around the country and resident theatres attempt to maximize revenue, although perhaps in a less pronounced manner than what we’ve seen thus far in New York. In the case of airlines, they actually can control seating capacity by running greater or fewer flights on various routes, sometimes limiting seating to maximize the price per seat. Theatre doesn’t have this option, but even as one who years ago pondered how to adopt load management at a not-for-profit, I now look to the public’s low opinion of airlines and air travel and worry that the arts could drive themselves into a similarly unpopular consensus. To top things off, this comes at a time when a recent report has informed us that charitable giving to the arts disproportionately benefits the upper echelons of arts audiences.

There is a theatrical ecosystem and it includes professional theatres from small communities to Broadway; I am sure the same is true for symphonies, museums and all of the arts as well. There is absolutely a case of trickle-down economics, but not in any positive way: it is the negative of the upward price and expense cycle that rolls downhill to everyone’s detriment, but most especially to undermine everyone’s supposed shared goal of attracting new audiences and introducing future generations to the arts, if not out of altruism, then out of self-preservation.

Do we need a movement? Perhaps not yet. But do we need pronounced change we can believe in when it comes to access and pricing for the arts? Absolutely. Otherwise, things will just get grosser.

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Howard Sherman

Howard Sherman has nearly three decades of both executive and staff experience at such companies as American Theatre Wing, O'Neill Theatre Center, Geva Theatre, Goodspeed Musicals, Hartford Stage, Manhattan Theatre Club and Westport Country Playhouse. He tweets as @hesherman.

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  • As someone who almost exclusively uses discounts for Broadway shows, I wonder the statistical impact of people like me who decide a show is worth a non-discounted ticket or tickets. For example, I would typically get a rush ticket or use a Broadway Box discount for any given show, but however many times I end up seeing the current production of Follies, I will buy a full price (non-premium) ticket because, for this production, being only a few rows from the stage is more than worth it for me.

    Clearly this would be a nearly impossible statistic to track, but it makes me wonder all the same.

  • As someone who almost exclusively uses discounts for Broadway shows, I wonder the statistical impact of people like me who decide a show is worth a non-discounted ticket or tickets. For example, I would typically get a rush ticket or use a Broadway Box discount for any given show, but however many times I end up seeing the current production of Follies, I will buy a full price (non-premium) ticket because, for this production, being only a few rows from the stage is more than worth it for me.

    Clearly this would be a nearly impossible statistic to track, but it makes me wonder all the same.

  • Interesting points Howard. My friend and I were discussing last night that it’s depressing  that we cannot see a certain show multiple times any more because we frankly cannot afford to go.  Seeing a Broadway show is becoming a special one night only event for so many of us.  This is upsetting because, as frequent theatre goers know, not a single night at a show is the same as the ones before or the ones after.  For an especially devoted fan, it’s frustrating not to fill that need to experience the live performance of a favorite actor in a show.  It’s great that commercial theaters make money and pay their stars for a job well done, but should it be for a profit that seems to morp into greed?   And is it expected that only the wealthy should see a show?   I’m grateful that many theatre producers offer discounts or rush programs, but it seems that even these are dwindling.  

  • I’ve heard this argument that “we don’t want to be like the airlines” before, from the wickedly insightful Adam Thurman (@missionparadox:twitter).

    You and Adam are both really smart, and this argument that we’re pulling a strategy from one of the most hated industries in the world–right after coal mining and the oil companies, I think–often temporarily shuts up dynamic pricing advocates.

    So it should be pointed out that dynamic pricing, also called load management or revenue management, is not why people hate airlines. People hate airlines for cramming them too tightly into uncomfortable aluminum tubes and hurtling them through the sky without enough access to movement and bathroom facilities. People hate airlines being super cheap with peanuts and beverages, and charging for baggage (all an inevitable result, I might add, of price wars that dramatically lowered fares in the early 90’s and left no profit margin or cushion to absorb higher fuel prices and higher security costs and higher labor costs and failing pension plans). People hate airlines because airline employees have become so hardened to complaints that it seems they don’t give a shit when they lose your bag. People hate airlines, unfairly, for the indignities that the TSA puts them through. People hate airlines because people hate flying in the early part of the 21st century.

    In other words, this comparison doesn’t really hold.

  • Ed

    In my opinion, Broadway shows in NYC are primarily a tourist attraction. I would never spend $40 to ride an elevator to the top of the Empire State Building, and I’m not going to spend double that (or more) on a Broadway show. That’s for the tourists and their once-in-a-long-while trip to the big city. There are plenty of great shows off Broadway – I mean way, way off Broadway. Broadway may find itself in the same boat as Opera. The spiral of bigger and more expensive Broadway shows may end with just one survivor. Broadway will cease to be an entertainment for the general public. It is hard to imagine the spiral unwinding. When has that ever happened?

    • Keith Beck

      Your flat wrong. Broadway shows have a drive unlike anything, The ticket price for perfection on both the business and the artistic level is Broadway if it draws and is theater magic you get Wicked, Phantom, Jersey boys, Le Mis, etc.  on the planet. If its a miss you end up with Carrie, Lennon, Frankenstein, Glory Days & Moose Murders. Broadway is for tourists! LOL tell that to the Tony’s, see how far it gets you.

  • Adam

    Thanks for the love Aaron.  My issue is that dynamic pricing creates the same “game” mentality that I have with an airline.  Essentially the airline and I are opponents.  I have a need – to get from Point A to Point B quickly – that they can serve.  But my job is to get the lowest price from them as possible.   It’s strictly business.

    I don’t think theatres (Broadway or otherwise) can afford to create a “strictly business” mentality with their audience.  It’s a long term losing proposition.

    • Of course. And that’s why Chicago Symphony Orchestra, almost always referenced as one of the first organizations to use dynamic pricing for ticket sales in the arts, always keeps patron loyalty up front. The basic concept of dynamic pricing is always modified by this primary focus on patron loyalty. I don’t think an arts organization needs to be a slave to the tools we use. We can modify them. We can moderate them, and we can still benefit from them.

  • One thing I’d really like to do, and maybe I’ll get the chance someday, is to do an analysis of price elasticity that incorporates patron donations along with their ticket buying patterns (doesn’t apply to Broadway, I know). I think we assume that if somebody both buys tickets and donates, they represent an inelastic share of demand. I’m curious to find out if that’s true.