Investing in theater -- tragedies and
plays offers a high-risk, high-reward form of investing full of
cliffhangers, triumphs, tragedies and plot twists.
Last year, for example, the big winner for people
who invest in theater is the Broadway hit "The Producers,"
a musical comedy about hoodwinking people who invest in theater.
In real life, the investment syndicate The Frankel,
Baruch, Viertel, Routh Group rounded up 200 people who invested
$10,000 each in "The Producers." Their $2 million investment
was on the up-and-up and represented about 20 percent of the cost
of putting on the show.
The syndicate already has made back 35 percent of
its investment for its 200 members and expects investments to be
recouped by the end of the year. After that, it's gravy. With a
hit show, the investors could eventually receive up to 20 times
what they put in.
Steven Baruch, who handles new investors for the company, says he
is open to all inquires.
"With all modesty," says Baruch, "we
are the only company that invites in small investors."
The group is credited with making it possible for
smaller investors, those with $10,000 in risk capital, to make a
play on plays.
There's more to it than dollars, though.
"We try to make this as much fun as possible,"
Investors, for example, receive tickets, CDs, framed
posters, show jackets and lots of correspondence from Baruch. But
investors want more than a good seat. He says his plays over the
past 15 years have had an annual internal rate of return of almost
"We have a great track record," he says.
Andrew Benerofe, a Westchester, N.Y.,-based real-estate
investor and developer, is part of that group who invested in "The
Producers." His wife, Froma, attended high school with Baruch.
Over the years, the couple has invested in 30 of Baruch's stage
productions. Their first, "Penn & Teller," an off-Broadway
production, returned his $10,000 investment threefold, Benerofe
"Most of the plays made money, but some didn't,"
said Benerofe, whose investment group recovered 25 percent of their
"Producers" investment by opening night, and expect to
continue to earn an additional 10 percent a month. Benerofe estimates
that his $10,000 will yield $200,000. "This show was special,"
he said. "No one anticipated the hype."
While "The Producers" is a unique situation
and it is unusual to reap such high profit so fast, it is possible
to make money by wisely investing in a theatrical vehicle. And it
doesn't have to be a big Broadway production.
The play's the thing
"Invest in theater because you want to," advises Benerofe.
"There are lots of perks besides making money, and you're not
going to make money all the time. There have been several plays
that I thought would be hits that made nothing."
Out of the 30 shows in which Mr. Benerofe invested
his usual $10,000, he said, "almost all have made money."
But it's sometimes difficult to judge -- he recently went bust on
a seemingly no-brainer Broadway revival of "Sound of Music."
"You have to look for profitability. Low overhead.
Few actors," he says.
And then for a show such as "The Producers,"
written by Mel Brooks and based on his hit movie, those rules of
thumb get thrown out the window.
"The story was great, and people were falling
down laughing during previews and when reading the script. Those
are all good signs," he said.
There are several ways to find a good property in
which to invest. But securing a producer is key, says Patty Casterlin
of The League of American Theaters and Producers, a theatrical trade
organization. Maria DiDia, of Maria Productions, whose properties
include the hit "Blue Man Group," agrees. Producers are
the ones who raise the money, and they are always on the hunt.
Finding your seat
There are several ways to find a producer, ranging from checking
out the Yellow Pages to scouring playbills. Casterlin suggests contacting
a performing arts center in your community. Also read reviews in
your local papers, or New York publications; they include information
But the best starting point, Ms. DiDia suggests, is
Price Berkley's Theatrical Index, which many regard as the Bible
of the theater business, available on a subscription basis. The
Theatrical Index can be ordered via e-mail, TheatricalIndex@nyc.rr.com,
or by phone, (212) 586-6343.
Price Berkley, publisher of the venerable 38-year-old
publication, says, "Anyone interested in investing in Broadway,
off-Broadway or regional theater will find the necessary contact
information in the Theatrical Index for all productions, well in
advance of their debuts.
"Investing is very risky," warned Mr. Berkley,
who recently invested (and lost) $15,000 in an off-Broadway play
that recently closed. "But then you get a small show like 'Wit,'
which is about cancer, that started off very small and ended up
on Broadway and then on TV. Those investors will make lots of money
for the next 10 years." Baruch, by the way, passed on "Wit."
For most ventures, Mr. Berkley says the range can
be as little as $5,000 for individual investors, with large investments
into the millions usually covered by corporations.
Profit potential and prime
"What's unique about investing in live theater," says
Shirley Chait, of Manhattan-based Omnibus Productions, "is
that the compensation scheme is a lot more lucrative than say, investing
"Investors are now making more money because
taking the show on the road can ensure profitability, even if the
play doesn't do well on Broadway. Franchise productions that tour
the world make huge profits. Broadway doesn't count heavily on talent
and production costs like Hollywood, which makes investive economics
"Creating a portfolio of several off-Broadway,
Broadway or touring shows can reduce the risk of failure. Also,
anyone can invest in a local playwright or local play, and anyone
can invest in a show that will end up on Broadway. You don't have
to be in New York. Almost all plays evolve from outside of New York.
"No matter where you live, get all the information
you need from the Theatrical Index. It's indispensable. And thanks
to people like Frankel and Baruch, it's not all big investments
like it used to be."
In fact, The Frankel, Baruch, Viertel, Routh Group
is credited with bringing down investment costs to a reasonable
$10,000. The group had to conduct a lottery for potential "Producers"
investors, narrowing it down from 300 interested parties.
Learning your lines
There's more to finding a good vehicle than finding a producer,
though. Potential investors also need to do their homework.
"You have to read reviews of past work, know
what's out there, what plays are being launched. You have to study
and analyze the play you're considering. Read descriptions of the
play, look for commercial appeal and potential. You have to read
the business plan," says Benerofe.
Watch out for star vehicles, he warns: Big-time salaries
can eat up the profits.
"Find someone to back who's interested in making
money. Focus on the business aspect and not the art appreciation.
And most important -- don't invest more than you can afford to lose.
"It's profitable and great fun to invest in theater,"
he adds. "You're invited to opening night and you attend the
party with the cast. And it's just fun seeing it all happen, a hit
generated from scratch. All that and you can make money, too."
-- Updated: May 6, 2002