| How does a show continue to run when very little is taken in at the box office? | |
| Posted by: | joe1956 11:25 am EDT 05/07/15 |
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| I admit that I do not know much about how shows are financed. How is it possible that a show continues to run week after week with very poor box office? Aren't the shows investors losing a bundle? When does a show cross the line of no return, and must be closed? | |
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| How about the classic case-study of... | |
| Posted by: | jimvar1 02:00 pm EDT 05/07/15 |
| In reply to: | How does a show continue to run when very little is taken in at the box office? - joe1956 11:25 am EDT 05/07/15 |
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| SPIDERPERSON: TURN OFF THE DARK? Did the film companies invest in that one? | |
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| Related question: shows that have turned it around without winning Tonys? | |
| Posted by: | mikem 12:58 pm EDT 05/07/15 |
| In reply to: | How does a show continue to run when very little is taken in at the box office? - joe1956 11:25 am EDT 05/07/15 |
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| I have a related question, revolving around the idea that a money-losing show might eventually catch on. Does this really work? Has any show in the past few decades turned around their box office fortunes WITHOUT help from winning Tonys? I'm thinking about a show that was still not meeting its nut a month after opening, so that its reviews or opening-related publicity had kicked in and it hadn't turned around yet. I guess Smokey Joe's Cafe would qualify -- it wasn't going to win Tonys, but the producers were justified in keeping the show running until the Tonys were televised. Are there other examples? | |
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| re: How does a show continue to run when very little is taken in at the box office? | |
| Posted by: | makemlaff 12:40 pm EDT 05/07/15 |
| In reply to: | How does a show continue to run when very little is taken in at the box office? - joe1956 11:25 am EDT 05/07/15 |
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| The short answer is they can't. As pointed out below, shows always have some sort of reserve built in to the budget which is generally intended to cover weeks of loss while a show picks up steam. If the reserve isn't sufficient but the producers, for some reason or other, feel they can still make a go of it they can take what's called a "priority loan." Once a show is capitalized and all the shares are sold more investors cannot be taken on so a loan provides the cash they need to stay afloat and/or perhaps bolster advertising efforts. This is money lent to the production and paid back from net income before anything is disturbed back to the investors. I don't know but would assume that if Tony Danza truly had money in HONEYMOON to prop it up it would have been as a priority loan. The line you ask about would be different for all sorts of shows. Clearly in the case of GENTLEMAN'S GUIDE the goal was to get to the TONYs which proved to be a smart move for them. In the case of HONEYMOON I imagine they felt that they'd ultimately "catch on." | |
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| do producers have to pay off the priority loan | |
| Posted by: | dramedy 02:16 pm EDT 05/07/15 |
| In reply to: | re: How does a show continue to run when very little is taken in at the box office? - makemlaff 12:40 pm EDT 05/07/15 |
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| If the show closes? With gentlemanG, I think rhog stated the priority loan is paid off first. But curious if the show closes like honeymoon, is this a guaranteed loan against the producers or investors that get paid back anyway. Seems like a bank or outside investment firm wouldn't invest in a priority loan for a show that has been losing money for weeks | |
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| re: do producers have to pay off the priority loan | |
| Posted by: | makemlaff 02:19 pm EDT 05/07/15 |
| In reply to: | do producers have to pay off the priority loan - dramedy 02:16 pm EDT 05/07/15 |
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| It would be paid back based on whatever the terms of the loan were. It would be very unlikely that the loan would come from an institution. Almost without exception a priority loan would come from somewhere internally e.g. the producers themselves if hey have the means, a wealthy investor, etc. | |
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| ok, thanks | |
| Posted by: | dramedy 07:15 pm EDT 05/07/15 |
| In reply to: | re: do producers have to pay off the priority loan - makemlaff 02:19 pm EDT 05/07/15 |
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| Didn't know where the money comes from. | |
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| re: How does a show continue to run when very little is taken in at the box office? | |
| Posted by: | charles1055 11:37 am EDT 05/07/15 |
| In reply to: | How does a show continue to run when very little is taken in at the box office? - joe1956 11:25 am EDT 05/07/15 |
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| I think it depends on how much the producers are OK with losing and whether or not the theatre owner wants the show out. Gentleman's Guide did poorly at first and won the Tony and seems to be doing fine. Tons of other shows do poorly and never get out of the hole. | |
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| each show is funded differently | |
| Posted by: | dramedy 12:08 pm EDT 05/07/15 |
| In reply to: | re: How does a show continue to run when very little is taken in at the box office? - charles1055 11:37 am EDT 05/07/15 |
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| But most shows have a budget for losing weeks , like a reserve of $1m for musicals. So if a show is under the weekly costs, which can vary on advertising and other expenditures, they draw from that. But many times it might be only $50k or a little more under, so that reserve can last a while. If a show is losing a few hundred thou a week like honeymoon or zhivago, then that reserve can go quickly. In gentlemans guide, they got a loan to continue going during the slow weeks and honeymoon probsbly did the same. I think the investors don't have much say in closing, it's the producers decision. And when it does, any reserves or unspent money will go back to investors. | |
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