Setting the Stage

The term “Broadway” technically refers to the 41 professional independently owned theaters with over 500 seats located in the Theater District in Midtown, Manhattan in New York City, aside from one theater at Lincoln Center, at 66th Street on the Upper West Side. (“Off-Broadway” generally refers to theaters outside of the Midtown area, though technically this designation solely means the theater has fewer than 500 seats; as such, there are “Off-Broadway” theaters next door to “Broadway” ones). The largest of the theaters, most of which have eight shows a week, seats 1,933 patrons.  The Theater District is nestled next to Times Square, which serves as an epicenter for Broadway advertising and ticket sales.  The inextricable partnership between theater and Times Square is decades-old and rooted in a greedy corporate past.  

Decades ago, before there was Disney’s Lion King and Aladdin, the theaters that pervaded the Times Square area held peep shows and adult strip teases.  The now-Broadway theaters were first opened in Midtown’s Theater District at the turn of the 20th century thanks to wealthy New York elites and a burgeoning urban transportation system.  Hampered by the Great Depression in the 1930s, many Times Square theaters struggled to survive and began running burlesque shows and renovating theaters with silver screens to show sexually explicit movies.   In 1981, Rolling Stone magazine declared lower 42nd Street the sleaziest block in America. 

Nevertheless, at the same time many other theaters continued to show world-class Broadway productions: Phantom of the Opera, Cats, and other lauded shows opened and ran during this time. The difference between the Broadway of the mid-20th century and the same part of town in the early 1900s and today was the world outside the theaters, where prude tourists were dissuaded from lingering after a show, especially after dark. Despite Times Square’s reputation as a “flesh-peddling, open-air meat rack,” it was quite profitable, bringing in $106,000 weekly in 1978 from peep shows alone (nearly half a million in today’s dollars).  

Corporations and pro-corporate politicians saw the potential dollar signs on 42nd Street by the mid-1980s: these same blocks of midtown could be transformed into a commercial metropolis where out-of-town tourists could be encouraged to rotate between chain restaurants, corporate brick-and-mortars selling everything from candy to stuffed animals, and family-friendly theaters –– at a markup.  

During Ed Koch’s tenure as New York City’s Mayor in the early 1980’s, he worked with state officials to use eminent domain to take city control of “decrepit” buildings.  As a result, apartments and small businesses were regularly seized and brought under the control of the New York government, thereby greatly reducing the number of residential buildings in the area.  Additionally, Mayors Koch and his successor David Dinkins supported and sponsored bills that increased police presence in the area, and created political mechanisms for rezoning previously residential plots as commercial zones.  Moreover, the new zoning laws banned any business that “promoted damaging behavior” from operating within 500 feet of homes, or houses of worship. Given that people live everywhere in New York City, a 500-foot boundary was effectively a death sentence for such businesses.

Given that people live everywhere in New York City, a 500-foot boundary was effectively a death sentence for such businesses.

Large tax-cuts were provided to any corporation willing to relocate and develop office buildings in the area (no wonder nearly all of the BigLaw offices in New York City are in Times Square).  The city gave Disney a $25 million low interest loan in 1994, a $40 million tax break to Morgan Stanley in 1992, and a $20 million tax break to Earnst & Young in 1999 for developing office space in the Times Square area.  

Photo taken by Fritz Hoste found at www.pexels.com

Finally, when Rudy Giuliani was elected mayor in 1993, with the NYC “war on crime” already raging, the final gentrification and corporatization of Times Square and Broadway set in.  With an increased police presence in the area, the widespread adoption of stop-and-frisk policies, and new advertising strategies, tourists were lured to the area, which now boasted a “safe and family friendly” appeal. Simply put, between Koch, Dinkins, and Giuliani, the red carpet was rolled out for corporations in the name of theater and culture.  The government pushed New Yorkers out of their homes and small businesses, and provided millions in tax incentives for corporations to replace them.

Thanks to this expensive and corporate so-called “clean-up,” investors rushed to Broadway theaters in the early 2000s, creating the glitzy atmosphere that Broadway is known for today.  With millions of dollars in tax breaks acting as incentives, three main entities were able to expand their existing hold on the Theater District and essentially monopolize Broadway: the Nederlander Organization, the Shubert Organization, and Jujamcyn Theaters. This monopolization reinforced Broadway’s capitalist system as opposed to the non-profit model that nearly every other theater company around the country uses.  In addition, the for profit theater model has left many Broadway theater owners with small fortunes which they use to protect their corporate interests and promote conservative ideology.  

The Nederlanders

The Nederlander Organization is nearly synonymous with Broadway and live theater in New York, and owns nine of the 41 Broadway theaters.  On their website, they describe themselves as  “support[ing] and champion[ing] the advancement of BIPOC artists, creative teams, audiences, and our employees.  We are committed to a safe and inclusive space that reflects our community’s vibrant diversity and where everyone is welcomed.”  

On the surface, this statement aligns the Nederlanders with the typical Broadway theatergoer, the majority of whom are liberals with college degrees.  Additionally the statement aligns with the Broadway image, which is constantly framed as a beacon of diversity  (even though the vast majority of artists and directors are white).  Even so, sitting in a Broadway show, in the liberal New York City, watching unionized artists perform live, in theaters that require proof of vaccination feels like a liberal experience.  

What most audiences do not know is that the Nederlander family has close ties with Donald Trump, and contributes to anti-gay, union busting, conservative political candidates.  While the Organization has donated to both Democrats and Republicans, in recent years, the vast majority of the dollars donated have gone to Republican candidates, with the most eye-popping contributions happening during the 2016 election cycle.  

In late June of 2016, president of the Nederlander Organization James L. Nederlander, made two donations of $2,700 to Trump’s campaign committee, Donald Trump for President Inc., $30,000 to the Trump Victory PAC, and $24,600 to the Republican National Committee.  Less than a week later the former Chairman of the Nederlander Organization, James M. Nederlander donated $100,000 to Donald Trump and the RNC: $50,000 went to the Trump Victory PAC, two payments of $44,600 each to the RNC, and two payments of $2,700 to Donald Trump for President Inc.  Less than a week later, James M. passed away. While some pointed out that the death of James M. and Broadway’s renewed movement towards diversity and inclusion potentially signaled a change for the Nederlanders, the family did not cease their conservative contributions.  Instead, the Nederlanders became increasingly duplicitous and covert in their contributions.  

In June 2020, in the wake of the murder of George Floyd and the Black Lives Matter movement, James L. Nederlander and his Republican contributions were once again brought to light.  Many artists, producers, and journalists asked the Nederlanders for statements regarding their political contributions to racist, conservative candidates while simultaneously profiting from BIPOC artists, their stories, and the audiences they attract.  Additionally, actors such as Tony winner Karen Olivo and Wicked star Eden Espinosa vowed to no longer accept work from theaters who made such contributions. 

Instead, the Nederlanders became increasingly duplicitous and covert in their contributions.  

 In response, on June 6th, 2020, James L. pledged to donate $50,000 to Black Lives Matter as part of his “process towards understanding, reflection and change.”  Nevertheless, two days later on June 8th, Nederlander also donated $1,000 to  Republican Senator John Cornyn, an outspoken anti-gay Republican.  In December, 2020, Nederlander donated to Marco Rubio, Florida’s Republican Senator and fervent “Don’t Say Gay” Bill supporter.  And as recently as November 2021, Nederlander donated $10,000 to Republican Nikki Haley’s Stand for America PAC.  James L. Nederlander is not alone in his duplicity; other top executives at the Shubert Organization (which owns 18 of the 41 Broadway theaters) have also donated to Republican candidates including Missouri Senator Roy Blunt.  

How Does Broadway Operate Currently?

So how have these conservative theater owners amassed their fortunes in an industry that generally operates at a loss? The answer is that financially, live theater is a unique art form –– and Broadway is even more so.  Unlike the music, TV and film industries, live theater (especially the geographically bound Broadway) is not universally accessible in modern times.  In part, the scarcity of live theater is part of its draw: each performance is unique, with actors, musicians, and crews who work tirelessly to bring the show to life night after night.  Compared to your favorite song on Spotify or movie on Netflix, there is no “preserving” live theater in the same way (but oh, has Disney+ tried).  Live theater is beautiful, all-encompassing, and most of all, fleeting.  The owners of Broadway theaters understand the temporary nature of live theater, and have harnessed it, abused it, and capitalized on it to turn a profit.  

The scarcity and live nature of theater also makes it a uniquely expensive art form, even when compared to the budget-busting film industry today.  Theater is expensive at all steps in the process, from initial set design, to renting a theater, to advertising, to selling tickets, to its nightly operating costs.  This is true at all levels of theater –– from the local regional theater to the Broadway stages.  

The scarcity and live nature of theater also makes it a uniquely expensive art form, even when compared to the budget-busting film industry today.

On Broadway, in order to turn a profit, theater owners essentially operate as a real estate corporation — think of them as your oppressive, “art-loving” landlord (INT 4:05).  It turns out it’s not only residential rents that are criminally expensive in New York City, but theater rents too.  The average Broadway show costs $450,000 a week to operate; the majority of that cost is the rent that the productions must pay to the theater owners. The Gershwin Theater, the largest on Broadway, charges Wicked well over $100,000 a week.  In this way, theater owners protect their bottom line: even if ticket sales falter and producers and investors lose money, the rent checks still get cashed –– or the show closes (INT 6:30). 

But make no mistake: theater owners also take large cuts of shows’ ticket sales, to the tune of approximately five to seven percent of the box office gross.  Because the theater owners –– not the productions –– both set ticket prices and collect large portions of the sale, they have an incentive to use dynamic pricing and price-gouging techniques to ensure the biggest profit per ticket sold.  Average gross revenue for a cash cow like The Lion King is $1.7 million a week, resulting in about $100,000 profit for the theater on top of their rent payments.  The for-profit, real-estate-centric structure of Broadway has created a set of perverse incentives and mechanisms for theater owners to turn a profit with almost no oversight or accountability.  

Not only do theater owners have complete control over rent prices, but they also control what gets shown in their theaters.  With a limited number of theaters and somewhat unpredictable turnover, producers are often faced with an uphill battle to get in the door. Recently, a theater owner stated, “All we do is open the door in the morning, and there’s a line of suckers — well, I should say producers — begging to get in. This business has never been better.” While this quote is generally illustrative of the power dynamic between theater owners and everyone else, it’s important to note that certain ultra-powerful producers like Jeffrey Seller, Kevin McCollum and the lecherous Scott Rudin enjoy close, mutually-beneficial relationships with theater owners.

The role of theater owners as landlords creates incentives for theater owners and producers to be highly risk-averse

The role of theater owners as landlords creates incentives for theater owners and producers to be highly risk-averse (INT 8:00).  Like many landlords, theater owners are interested in bringing in long term tenants who pay their rent regularly and on time.  Shows like Wicked, The Lion King, and Chicago are star tenants; each can almost guarantee a weekly rent check and high ticket sales, with no indication from audiences that their popularity will dwindle in any significant way. 

The risk-averse landlord mindset manifested recently with Phantom of the Opera.  After nearly 35 years on Broadway, the show announced its closing due to declining ticket sales in September, 2022.  Audiences rushed to see the show before its scheduled February, 2023 closing, and once again restored ticket sales.  On November 29, 2022, the show announced it would push its closing date to April, 2023.  The impending death and short revitalization of Phantom elucidates the mindset behind Broadway: as long as the show makes money, the show must go on. 

The for-profit model of Broadway also lends itself to price-gouging and decreases accessibility to live theater (INT 4:01 – 4:35) .  Because only three corporations own the majority of the Broadway theaters, there is little oversight or accountability when it comes to ticket pricing.  Broadway tickets are priced well above the cost of production, and are often arbitrarily expensive as they are priced exclusively according to demand and the desire of theater owners to line their own pockets. Whereas a nonprofit theater’s ticket prices are often fixed at a rate that covers their costs, Broadway theaters and producers will dynamically inflate the cost of a ticket as high as consumers are willing to go. 

Essentially, between the lack of cost-setting and the theaters’ unilateral control over prices, the Broadway theater owners are in complete control of their profit margins, and individual shows’ producers are happy to oblige as they seek to recoup their investors’ funds.

This results in eye-popping numbers: when the legendary performer Bette Midler played the title role in Hello, Dolly! in 2017, per-ticket costs pushed $1,000.  Essentially, between the lack of cost-setting and the theaters’ unilateral control over prices, the Broadway theater owners are in complete control of their profit margins, and individual shows’ producers are happy to oblige as they seek to recoup their investors’ funds.

Broadway theater owners point to demand as the reason for these price increases, which of course is only true because they operate as a capitalist system.  Between 1984 and 2019, even when accounting for inflation the average Broadway ticket price climbed from $74 to $124 (a 60% increase). If demand really was the reason for increased prices, then the percentage increase of attendance would be the same as ticket price increases, i.e. 60%.  This is not the case.  Audience demand between 1984 and 2019 grew 44%. Thus, theater owners are price-gouging by about 20% through what is essentially surge pricing far above the cost of the production (INT 6:23).

The KPOP Case Study

The recent closing of KPOP, a new musical about young K-Pop stars competing to make it to the big-time, is the latest off-stage drama from Broadway and a potent example of what Broadway’s focus on profit means for productions that seek to push the envelope.

KPOP, which arrived on Broadway this fall and performed just 17 regular performances after 44 previews, originally premiered in a vastly different form off-Broadway in 2017. That incarnation told a similar story, with fewer songs, in an innovative processional style in which audience members walked through multiple discrete spaces and saw assorted scenes and songs in different sequences. It was produced by Ars Nova, a non-profit in Hell’s Kitchen that develops new musicals and supports young creators; it was performed at A.R.T/NY, a flexible theater space uptown from Times Square. 

To put it mildly, the Broadway version of KPOP was very different. Though it was staged at Circle in the Square Theater, the most offbeat Broadway space with its three-quarter “thrust” stage as opposed to the typical proscenium arch, the Broadway version was vastly more conventional than the original. It shed the processional structure in favor of more songs, a familiar narrative structure, and a higher, glossier production value on the level of a true K-pop concert.

Though it was more conventional than its original incarnation, KPOP was radical for Broadway. It featured a cast in which all but one member was Asian, it had a sizable amount of song lyrics in Korean with no English translations, it had no American celebrities in the cast (though there were real-life K-pop stars) and more broadly, was truly original –– it wasn’t a spinoff of another property, a sequel, or a compilation of existing songs from a real-life band. 

If audiences were waiting to see how the critics felt, that didn’t help ticket sales: the show opened to lackluster reviews with many critics opining about how much had been lost in the transition to Broadway (and a few, unfortunately, pointing to the amount of Korean lyrics as a flaw). If Broadway audiences –– or nontraditional Broadway audiences, such as young K-pop fans –– were waiting on innovative marketing directed at them, it never came. With just four days’ notice, citing poor ticket sales (the average ticket was around $32 compared to the Broadway average of over $128), the show’s producers announced KPOP would be closing.

Since the show closed on December 11th, there has been incessant finger-pointing among the Broadway chattering class, but little explanation offered publicly by KPOP’s producers or creative team. It’s possible that the idea of a Broadway production was flawed from the start –– perhaps it was the brainchild of a producer who saw the skyrocketing popularity of the K-pop genre and wanted to capitalize on it by retrofitting a trendy Off-Broadway property (INT 28:15 – 30:00). Or, alternatively, perhaps a move to Broadway was always on the minds of the show’s young creators, and they were merely trying to marry their innovative show with the conventions of commercial theater. 

Whatever the Broadway KPOP’s origins were, in the end, regular Broadway attendees did not buy tickets, and neither producers nor the show’s marketing firm (the show used SpotCo, effectively the only marketing agency on Broadway) knew how to replace them with nontraditional audiences. And when red flags went up about the show’s financial stability –– it was among the lowest-grossing shows on Broadway, though not the lowest –– producers pulled the rip-cord in historically swift fashion. Rather than reach profitability by reevaluating the marketing strategy, or bringing in other audiences, or creating a media stir about the show outside of reviews, producers elected to walk away.

KPOP’s Broadway bomb is a sad statement about the state of affairs on Broadway today –– and its potential ripple effects are even sadder. What lessons will Broadway producers and theater owners take from KPOP’s example? Will they seek out similarly innovative shows and support them with a stronger outside strategy? Or will they avoid such shows in favor of a property with a built-in audience, mass appeal, and opportunities to cast film stars? 

We already know the answer to that question.

Is there another way?

The vast majority of theaters in America do not operate the way Broadway does.  Instead of the corporate, for profit model, most regional theaters and their respective companies operate as nonprofits (INT 4:01 – 4:50). 

The benefits of a theater that centers the art rather than the bottom line increases regional theaters’ connection to their local communities. 

Despite difficult decisions that nonprofit theaters make in a money-scarce art form, one of the interests that they do not have to balance is worrying about lining the pockets of theater executives and producers.  Many nonprofit theater companies produce shows at their own theater houses, thereby eliminating any “rental” costs. Additionally, nonprofit theater companies have multiple revenue streams––including donors, corporate sponsorships, public grants, workshops, classes, one-off events, and the all-important annual subscription model that offers an array of slight per-show savings packages to regular attendees paying for a full season at once. The benefits of a theater that centers the art rather than the bottom line increases regional theaters’ connection to their local communities.  Many offer theater classes for young people, improvisation classes for adults, and offer significant discounts for locals to ensure access.

Taken together, consumers see the benefit of a more diverse revenue stream and the absence of add-on rental costs; even in New York City, a typical off-Broadway ticket is around $30 cheaper than Broadway, and immune from the dynamic pricing models that inflate ticket costs even further in for-profit Broadway houses seeing pent-up demand. To be sure, many mid- or large-size, high-budget non-profit theater companies like those listed above could do vastly more to increase accessibility, but they are nonetheless miles ahead of Broadway due to the lower financial barrier alone.

At the core of this divide are the different priorities between regional theaters and corporate Broadway.  Whereas non-profit theaters can and do focus on bringing interesting, innovative shows, meaningfully contributing to their communities, and ensuring accessibility to the theater, corporate Broadway theater owners have decided they have no such interests if it impacts their bottom line.  

From The [F]law:

• Diana Cao, Video Underground: How Corporations Capture Culture

From The Systemic Justice Journal:

• Jack Lubin, Stream a Little Dream: How Netflix Turned Our Culture into Content