My last post on production budgets took us through the beginning of a show’s development all the way through the first preview; here, we’re going to talk about how expenses are budgeted on a week-by-week basis after the show gets up and running.

In the simplest terms, the show’s producers want the gross box office receipts to exceed the weekly operating costs, thereby turning a profit every week that can be put towards the overall return of capital to their investors. The bulk of the operating costs don’t fluctuate much per week – salaries will more or less remain constant (despite variations in who’s on in what part), as will administrative and departmental fees – but weekly royalties are where it gets a bit tricky.

Anyone who makes a contribution to the creation of the show, be it the executive producer who helped secure the rights to the material or the lighting designer, gets a royalty payment every week. This goes for future productions of the show in arenas other than Broadway, too, such as regional productions or tours. As long as those creative elements are utilized in a production of a show, royalties will follow suit.

However, those royalties are unfixed when it comes to a weekly budget. If a show is doing poorly and not generating much in the way of box office sales, for example, many of the creatives will defer their minimum weekly guarantees, which means that the payment they would ordinarily receive every week for their contribution to the show gets deferred into a pool that will theoretically be returned to them when the show begins to fare better down the line, then finally repaying the royalties it owes. Of course, since the vast majority of shows on Broadway don’t recoup, those who elect to defer royalties will likely never see that money unless the show has a solid reserve or ends up exploiting the stock/regional rights. (Royalty pools and the organization thereof tend to be pretty confusing unless you have hands-on experience with them, especially if amortization is introduced, although this site gives a very tidy overview of the process.)

Every show has its own unique royalty structure and expenses, of course, but a typical budget drawn up to account for a show’s weekly operating costs will contain the following items: 

• Salaries (principals, ensemble, standby, stage managers, wardrobe, dressers, musical director, company managers, general manager, press agent, marketing office, production manager, music contractor, arrangers, casting director, rehearsals/work calls, star per diem/car service/living, catering, company payroll taxes, company union fringe benefits): $150,000
• Advertising & publicity (print, TV, radio, outdoor, artwork, website, broadcast): $100,000
• Departmental (carpenter, automation, props, electrics, sound, wardrobe, hair, makeup, company managers): $5,000
• Equipment rentals (automation, electrics, lights, sound, projectors, special effects): $40,000
• Theatre expenses (operating expenses, air conditioning, house manager, box office staff, cleaners, ushers, ticket takes, stagehands): $130,000
• General & administrative (general manager office fee, executive producer fee, legal, accounting, insurance, closing reserve, phones, postage, photocopying): $20,000
• Royalty guarantees (author, underlying rights, adaptor, director, choreographer, designers, orchestrator, producer, co-producers): $10,000

This puts our weekly expenses at $455,000, which is in the median range for a Broadway show. Plays tend to run much more cheaply since they don’t usually require large casts or any musicians, whereas musicals will often be quite expensive to run. A two-hander play with a unit set might run at $300,000 per week, for example, while a lavish Rodgers & Hammerstein revival might cost $750,000.

Although it may seem like a show that capitalizes at $6 million has a far greater chance of achieving recoupment than one whose capitalization approaches $12 million, the real key to financial success on Broadway is keeping the weekly operating expenses as low as possible – the cheaper a show runs, the more producers can send back to their investors every week.

The post Broadway Budgets 101: Breaking Down the Weekly Budget appeared first on The NewMusicalTheatre.com Green Room.