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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

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

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

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

Didn't know where the money comes from.


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