| re: Will we ever see another "new' Broadway Theater ever again? | |
| Posted by: | tmdonahue (tmdonahue@yahoo.com) 01:33 pm EDT 03/30/14 |
| In reply to: | Will we ever see another "new' Broadway Theater ever again? - Maguire75 12:43 pm EDT 03/30/14 |
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| Good question. One problem is that the average revenue from a Broadway theater is unknowable. There are 35 commercial Broadway theaters, owned almost solely by the Nederlander Organization (8 theaters), Jujamcyn Theatres (6), and the Shubert Organization (17). The remaining commercial houses are the Helen Hayes owned by the Martin Markinson and Donald Tick families, Circle in the Square which began as a nfp but is now a commercial theater, and the Foxwood owned by the British company the Ambassador Theatre Group. The New Amsterdam is owned by the City of New York but is on a long-term, low priced lease to Disney. In essence, commercial Broadway theaters are owned and operated by just three entities. Nederlander and Jujamcyn are closely-held corporations which do not publish annual reports or other measures of revenue, profitability, etc. The Shubert Organization is a real rarity. It is a for-profit organization wholly owned by a nfp corporation, the Shubert Foundation. This is extremely rare and probably could be overturned in court but who would challenge the Shubert Organization? Again, these two interlocked entities publish no publicly available records of profitability. (The Shubert Foundation's nfp report to the IRS is available publicly, but it doesn't detail the real finances of the Shubert Organization. If you want to see the most recent available IRS report for the Shubert Organization, it is here: http://990s.foundationcenter.org/990pf_pdf_archive/136/136106961/136106961_201205_990PF.pdf) The Shubert Organization doesn't need a tax write-off. It doesn't pay most taxes. Without some notion of the revenues and risk of a new Broadway theater, no investor is tempted to build one. New York's newer Broadway houses exist because the City required a developer of a hotel or other larger structure to build a theater in that building to receive zoning exceptions or to replace theaters they tore down to build on the site. (Examples include The Marquis, the Gershwin, and the Sondheim.) Also note that the Little Shubert is one seat shy of Broadway size on purpose. Add one seat and the Little Shubert is subject to Broadway contracts with higher minimum salaries and more expensive work rules. By the way, the empty lot at 46th and 8th is owned by the Shubert Foundation. I have a good friend who mourns the loss of the Broadway Inn on that site before it was cleared. Don't know what's going up there but I'm pretty sure it's not a theater. | |
| Link | Stage Money |
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| re: Will we ever see another "new' Broadway Theater ever again? | |
| Posted by: | WaymanWong 04:17 pm EDT 03/30/14 |
| In reply to: | re: Will we ever see another "new' Broadway Theater ever again? - tmdonahue 01:33 pm EDT 03/30/14 |
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| I understand the issue of the Little Shubert being one seat shy, so it's not subject to Broadway contracts, but that still doesn't answer Maguire75's query: What's the point of leaving the Little Shubert empty most of the time? And if it did add a seat so it's a regulation Broadway house, wouldn't it get more bookings? It seems too big for most Off-Broadway shows. | |
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| re: Will we ever see another "new' Broadway Theater ever again? | |
| Posted by: | ryhog 04:28 pm EDT 03/30/14 |
| In reply to: | re: Will we ever see another "new' Broadway Theater ever again? - WaymanWong 04:17 pm EDT 03/30/14 |
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| It may be too big for off and too small for on. It is really an enigma, and a black hole. Obviously, if the Shuberts thought it had promise as a Broadway house, they could act on it. I think as much as anything else the prevailing policy is that the Broadway balance is working fine, and if it ain't broke, don't fix it. Maybe some day they will divest themselves of it and someone will convert it into a viable non profit. Or maybe some day they will figure out what to do with their white elephant. | |
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| re: Will we ever see another "new' Broadway Theater ever again? | |
| Posted by: | AverageBwayNut 03:04 pm EDT 03/30/14 |
| In reply to: | re: Will we ever see another "new' Broadway Theater ever again? - tmdonahue 01:33 pm EDT 03/30/14 |
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| Small housekeeping note: Jujamcyn owns 5 (not 6): St. James, Hirschfeld, Kerr, O'Neill, August Wilson. Nederlander owns 9 (not 8): Nederlander, Minskoff, Rodgers, Lunt, Atkinson, Marquis, Palace, Gershwin, Neil Simon. | |
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| re: Will we ever see another "new' Broadway Theater ever again? | |
| Posted by: | tmdonahue (tmdonahue@yahoo.com) 01:24 pm EDT 04/01/14 |
| In reply to: | re: Will we ever see another "new' Broadway Theater ever again? - AverageBwayNut 03:04 pm EDT 03/30/14 |
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| Forgive me. Doesn't change my contention that Broadway theater buildings are an oligopoly. | |
| Link | Stage Money |
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| re: Will we ever see another "new' Broadway Theater ever again? | |
| Posted by: | ryhog 02:13 pm EDT 03/30/14 |
| In reply to: | re: Will we ever see another "new' Broadway Theater ever again? - tmdonahue 01:33 pm EDT 03/30/14 |
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| just one note on this... There is nothing unkosher about the shubert structure, and it is not at all unusual. | |
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| re: Will we ever see another "new' Broadway Theater ever again? | |
| Posted by: | tmdonahue (tmdonahue@yahoo.com) 01:18 pm EDT 04/01/14 |
| In reply to: | re: Will we ever see another "new' Broadway Theater ever again? - ryhog 02:13 pm EDT 03/30/14 |
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| It is not unkosher only because the IRS wrote a letter allowing the Shubert Foundation to maintain this structure in 1969 when the tax code was amended to generally forbid such structures. The Foundation argued that to force it to sell the Organization would endanger the American theater. In 1969, that argument had more weight than it might hold now. The IRS decision is unusual. As the Times reported: 'Even today, few people seem aware of the Shubert tax ruling. After it was recently brought to his attention by a reporter, John Edie, the counsel for the Council on Foundations, the foundation trade organization, expressed surprise. "I've been here for 12 years, and this is the first exemption I've heard of," he said. "This is pretty amazing."' The New York Times article for background: http://www.nytimes.com/1994/07/11/us/irs-ruling-wrote-script-for-the-shubert-tax-break.html What is bothersome is the Shubert Organization/Shubert Foundation is overseen by no one. An NFP is theoretically run in service of its community and thus must expose much about its finances. The community can support or not support the organization, in part based on that information. Typical public data points are the earnings from the NFP of any board members, any contracts with companies owned or managed by board members, and the salaries and identity of the top five earners. The IRS report for the Shubert Foundation shows payments to only two members of its board, the president who gets $90 k for an estimated 5 hours work per week ($346 an hour, not a lot for a NYC lawyer, for example), and the Assistant Director/Executive Director who is paid about $334k for an estimated 40 hrs (only $160 per hour). However, all the members of the board of the Shubert Organization are directors of the Shubert Foundation. How much are they paid from the Organization? No one knows--but themselves. If the Organization was a publicly held corporation, some reporting would be done to benefit the shareholders' decision making. If it was a privately held corporation, the owners would surely know and approve such salaries. There is no oversight. It is not criminal but the interlocking ownership is a moral hazard. Having written that, it is undeniably true that the Shubert Foundation/Organization did much to keep Broadway theater alive in the terrible 1970s-1980s. Maybe only a nfp organization could have. After all, the Nederlanders sold the Mark Hellinger to the Times Square church in 1991. | |
| Link | Stage Money |
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| re: Will we ever see another "new' Broadway Theater ever again? | |
| Posted by: | ryhog 03:00 pm EDT 04/02/14 |
| In reply to: | re: Will we ever see another "new' Broadway Theater ever again? - tmdonahue 01:18 pm EDT 04/01/14 |
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| The unusual-ness was a surprise to me, as discussed in the other post. But your suggestion that the arrangement could be challenged in court is (as you seem now to acknowledge) simply wrong. What makes the arrangement unusual is that the foundation wholly owns the corporation. If the Shuberts owned 49% of Jujamcyn and Nederlander, it would not be an issue. The compensation of anyone paid from the foundation is fully reported publicly. But you seem to be chasing the wrong fox. The cash flow (and it is quite substantial) is from the corporation to the foundation, not the other way around. So if there is an issue that raises a concern it is that the arrangement avoids scrutiny on a private inurement theory because the principals get to decide how much to ship upstream after taking care of themselves, and that is unchecked. Were the Shuberts to recede as by far the most substantial benefactor of non-profit theatre (as well as the broader arts community), there might be real cause for concern at the IRS. But that's not the case. And since no one other than the corporation contributes to the foundation, there is no constituency for anyone else to complain. | |
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| re: Will we ever see another "new' Broadway Theater ever again? | |
| Posted by: | AverageBwayNut 03:00 pm EDT 03/30/14 |
| In reply to: | re: Will we ever see another "new' Broadway Theater ever again? - ryhog 02:13 pm EDT 03/30/14 |
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| Actually, the Shubert structure is quite rare indeed. Perhaps even unique. The most informative article I've read on the topic is at the link below. | |
| Link | NY Times July 1994 |
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| re: Will we ever see another "new' Broadway Theater ever again? | |
| Posted by: | ryhog 03:57 pm EDT 03/30/14 |
| In reply to: | re: Will we ever see another "new' Broadway Theater ever again? - AverageBwayNut 03:00 pm EDT 03/30/14 |
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| Thanks for that-I was under the impression there were multiple exemptions. The article also, of course, makes clear that the structure has the IRS's blessing. | |
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