Theatrical Producers

SIC 7922

Industry report:

This category includes companies engaged in providing live theatrical presentations, including road companies and summer theaters. This industry also includes services associated with theatrical presentations: casting agencies; booking agencies for plays, artists, and concerts; scenery, lighting, and other equipment services; and theatrical ticket agencies. Also included in this industry are producers of live and taped radio programs and commercials and producers of live television programs. Establishments primarily engaged in the production of taped television programs and commercials are classified in SIC 7812: Motion Picture and Video Tape Production. Theaters that are normally rented to theatrical producers and stock companies are classified in SIC 6512: Operators of Nonresidential Buildings. Motion picture theaters and motion picture service industries are classified in the major group for motion pictures. Establishments primarily engaged in operating dinner theaters are classified in SIC 5812: Eating Places.

Industry Snapshot

The scope of theater nationwide is so broad and varied that a snapshot of its size, as measured by revenues, does not currently exist. Broadway productions are fairly well documented, while off-Broadway and off-off-Broadway productions are significantly less documented. Regional touring companies, community theaters, summer stock (where one ensemble performs several plays each season), and their contributing entities, including agencies and scenery design and building, are so fragmented that a comprehensive overall picture is difficult to determine. According to the U.S. Bureau of Labor Statistics, 113,200 people were employed by 8,730 performing arts companies in 2011.

New York City, particularly the borough of Manhattan, has always been the undisputed center of the U.S. theater scene. After the records set in the 2000-2001 season, attendance and revenues declined sharply following the terrorist attacks of September 11, 2001 and the subsequent drop in tourism. By the mid-2000s, however, attendance was back up, and the 2006-2007 season shattered the attendance and revenue records with 12.31 million tickets sold and $939 million in gross receipts. Although revenues increased to $943 million during the 2008-2009 season, tickets sales had declined somewhat to 12.15 million. In addition, at all levels, the theater industry was also characterized by rising production costs, and not all shows were profitable. In the 2010-2011 season, attendance rose high enough to break the previous record: 12.53 million tickets were sold. Revenues were also at an all-time high of $1.08 billion.

Throughout the nineteenth and early twentieth centuries, the New York theater district along Broadway kept moving north as new theaters were built and old ones were abandoned or torn down. After World War II, as construction of new theaters became rare, "Broadway" stabilized in an area that can be roughly defined as the section of Broadway between Times Square and 53rd Street. Most of Broadway's 32 theaters are not actually on Broadway but clustered on side streets.

Background and Development

Theater in the United States dates back to the time of the Revolutionary War, which saw the formation of the first professional company in Williamsburg, Virginia, in 1752. The company was led by Lewis Hallam and was a profit-sharing venture. This financial structure called upon the actors to pay a percentage of company expenses and to receive a share of the profits. This organizational structure was adopted from Elizabethan England and also existed in the first known company in the Americas, which began in Peru in 1599. The general manager of the company was also generally a leading actor who would invest more and receive a greater share of the profits than the other performers in the company. Playwrights and musicians would also participate in this type of ensemble. Not only did the performers often make a meager living from this arrangement, but they also faced resistance from Quaker and Puritan colonists. However, theaters began to open in the late 1700s and were well established by the beginning of the nineteenth century.

The era of profit-sharing theater companies gave way to one of independent stock companies, a trend which lasted through the 1870s. The independent stock company had a fairly permanent stable of actors and a fixed supply of scenery and props. These companies staged a variety of current works and classics, and either toured or presented shows in a fixed venue. Most actors remained relatively obscure, although audiences made tours of celebrity performers from England popular during this time.

The impetus for the next major change in the structure of theater was the development of the railroad system, which led to the "combination company," which was an ensemble that toured by train from one major city to another, taking with them stagehands, scenery, and the like. Most combination productions were organized in New York, which led to centralization of the American theater in that city (Philadelphia and Boston had offered some rivalry to New York in earlier decades). The combination system required a complicated booking system to insure that large ensembles of performers and scenery would move smoothly through lengthy tours. As a result, theater ownership became centralized into a small number of circuits, which monopolized booking rights in various geographical areas. In 1896, three theater-owning circuits joined forces to create the "Theatrical Syndicate," which dominated the theater for the next two decades. Producers who wanted to use a Syndicate-owned theater in a certain city were forced to book their entire tours in Syndicate theaters. Thus, theaters owned by non-Syndicate members languished and competition was minimal. Syndicate members, most notably Charles Frohman, were also producers and reserved the best routes and best theaters for their own productions. Theatrical offerings of this era focused on star performers in vehicles suited to their talents, such as Maude Adams in Peter Pan and David Warfield in The Music Master. Road tours, which made one-night stops in small cities as well as playing for lengthier engagements in large cities, were more profitable than playing in New York, and only a handful of major successes ran on Broadway for more than two or three months. Eventually, the Theatrical Syndicate declined, and the chain of theaters owned by the Shubert brothers became the nation's most powerful theatrical landlord. The Shubert Organization continued to thrive in the twenty-first century, owning 16 of Broadway's 32 theaters, and a half interest in a seventeenth, the Music Box. Theater owners hold an important position in the commercial theater since they control what goes in their venues.

In the 1920s, the once lucrative road dissolved as many theaters were converted into movie houses, which were inherently more profitable than legitimate theaters, since operating costs were lower. Theatergoers in many medium and small cities were left with no theater to attend. According to Jack Poggi in Theater in America, the number of legitimate theaters outside major metropolitan centers dropped from 1,549 in 1910 to 400 in 1928. Motion pictures had begun to capture the imagination of the public, especially the segment that had patronized second-tier theatrical comedies and melodramas. This left the theater with a smaller but more sophisticated clientele.

The stock market crash of 1929 and subsequent Great Depression hurt the theater but, unlike other industries, a recovery was not seen as the economy improved. The level of Broadway activity in the prosperous post-World War II era, sometimes considered Broadway's heyday since so many works from that period enjoyed popularity into the twenty-first century, was actually no higher than during the depths of the Depression.

A burgeoning number of non-profit resident theaters, or repertory companies, began operating in cities outside New York in the 1970s, though a number of them, such as the Pasadena Playhouse in California and the Arena Stage in Washington, D.C., have existed for much longer. These companies, which have lower ticket prices and a wider range of offerings than the commercial theater, depend to a great extent on government grants and private sector donations. Reduced levels of support from these sources imperil many resident companies. The budget of the National Endowment for the Arts was slashed by 40 percent in fiscal 1996, and while its budget was squeezed tightly throughout the remainder of the decade, debate raged on Capitol Hill and elsewhere, often calling for the Endowment's dissolution.

Even more important in the opinion of some analysts was the dramatic drop in private philanthropy. Younger people were patronizing art organizations at a decreasing rate and consequently were not supporting such organizations with generous donations. Charitable donations to the arts declined by about half between the mid-1980s and mid-1990s and registered a further 2.5 percent drop in 1998, despite a booming U.S. economy and increased income among the largest traditional arts patronage demographic. To deal with this situation, many resident theaters restructured their finances, making longer range economic plans, and producing works that appealed to a wider audience. There was also greater acceptance of the idea that some resident theaters, especially those that cannot put themselves on a stronger financial footing, will have to be disbanded. This situation was troubling to many people since producing highly commercial material was not viewed as the purpose of non-profit theater, and companies with sound finances were not necessarily those of the greatest artistic merit.

The New York theater market surged in the late 1990s at all levels, generating about $1.6 billion in ticket sales. Although Broadway enjoyed record box office returns, the biggest gains, both in attendance and in prestige, occurred at off- and off-off-Broadway venues, most of which had theater capacities of 75 to 400 seats.

Broadway.
During the 2000-2001 season, New York Broadway attendance reached a record 11.9 million, according to the Broadway League. The next season saw a dramatic drop in foreign visitors to approximately 526,000 following the terrorist attacks of September 11, 2001. Another interruption to attendance came in early 2003, when Broadway producers were unable to reach an agreement with the American Federation of Musicians, resulting in a four-day strike. Millions of dollars in revenue were lost before musicians agreed to a new contract. The resulting agreement cut the number of musicians required in orchestra pits by 22 percent, allowing more computerized music to be used.

However, by the 2005-2006 season, the number of foreign visitors had jumped up to a record 1.32 million. During that season, 11.6 million tickets were sold for Broadway shows. For the 2004-2005 season, total attendance was 11.53 million and revenue was over $768.55 million, and in 2005-2006, attendance topped 12 million and revenue was nearly $861.65 million. In the 2006-2007 and 2007-2008 seasons, attendance dropped, respectively, to 12.27 million and 12.15 million tickets.

Although revenues increased steadily and significantly over the years (from $253 million in 1987-1888 season to $943 million in 2008-2009), production costs also increased. Thus, increased gross amounts were based primarily on rising ticket prices. In 1957, top price orchestra seats at a Broadway musical cost $8.05. By 1970, the price nearly doubled to $15, and by the early 1980s it soared to $45. In 1999, orchestra seats were going for $75, and by 2005, they were nearly $100. According to the Broadway League, the average paid admission to a Broadway production was $77.66 during the 2008-2009 season, up from $48.58 in 1998-1999 and $66.77 in 2004-2005. Ticket prices for Broadway road companies followed a similar pattern. The rising costs are attributed to a strong U.S. economy, the increasing wealth of the typical theater audience, and, especially, rising production costs. Unless production costs diminished, it seemed unlikely that ticket prices at commercial theaters would decrease. Generally speaking, although more plays are staged on Broadway, musicals are the larger and more popular form of production. During the 2008-2009 season, 14 musicals grossed almost $776 million and 24 plays brought in just $150 million. The remainder of revenue was generated by special performances.

In the late 2000s, a full-scale musical production could cost upwards of $10 million to stage. Increased costs have made turning a profit more difficult, and shows can run for well over a year without showing a profit. Investors are increasingly reluctant to back risky ventures that do not have the potential for a lengthy run. This led to a preponderance of revivals of past successes, especially musicals. Carousel, Damn Yankees, Show Boat, The King and I, and How to Succeed in Business Without Really Trying, are just a few of the older works that returned to Broadway in the 1990s. In the 2000s, Broadway saw the return of such hits as Who's Afraid of Virginia Woolf?, Fiddler on the Roof, Sweet Charity, and Hairspray. According to The New York Times, about half of the productions that opened on Broadway in the 1995-1996 season were revivals. Though revivals are a normal and necessary part of the theater, a large number of them are unprecedented and problematic. Meanwhile, one of the lynchpins of the late 1990s Broadway market, The Lion King, had already proven itself as a fantastically successful animated Disney motion picture, thus constituting another relatively safe investment. During the 2008-2009 season, 4 of the 14 musicals and 16 of the 24 plays were revivals.

In the 2000s, many Broadway productions were drawing major movie and television stars onto the stage. Nathan Lane and Matthew Broderick started the trend with their 2003 Broadway hit "The Producers." The two returned to the stage in 2005 for a revival of "The Odd Couple." Other well-known names to take the stage include Julia Roberts, Hugh Jackman, Denzel Washington, John Leguizamo, and David Hyde Pierce. However, a headlining lead actor still did not guarantee that a show would turn a profit. Critics' reviews and audience reactions traveled quickly to determine how long a show would run. Robert Hofler wrote in Variety in August 2009, "There's a crass, often broken B.O. rule for plays. To find success at the box office, producers need to fill at least two of the following three slots: stars, good reviews and a popular title." In 2009, U2 frontman Bono was mired in production costs, which were estimated to be as much as $40 million, in his attempt to stage a Broadway production of Spiderman.

Soaring production costs further sparked increased focus on marketing campaigns as a competitive field for Broadway producers. A typical Broadway production spent between $300,000 and $1 million on pre-opening marketing campaigns and maintained publicity with about $50,000 per week after the production hit the theater. Meanwhile, the League of American Theaters and Producers (now the Broadway League) entered into a number of promotional contracts with major companies, including Schweppes, which agreed to launch a Broadway sweepstakes campaign advertised on its beverage bottles. Similarly, the First USA Bank-Broadway credit card featured Broadway-related consumer incentives. Broadway shows advertised on McDonald's French fries containers, while youth-oriented productions such as Rent and Disney productions placed products such as coloring books in schools.

One area of marketing where Broadway producers have been resistant to change is ticket sales. Theaters in Chicago and California embraced discounting tickets at the box office and online in order to fill empty seats at the last minute. However, in the first decade of the 2000s, those looking for reduced-price tickets for Broadway shows were still using a 30-year old TKTS booth in Time Square, where they waited up to three hours for half-price tickets for that day's performances. With the hope of improving attendance at nonmusical shows, a "play only" window was opened at Duffy Square. However, the Broadway League now offers an Internet option to purchase tickets for many on- and off-Broadway shows through its online Broadway Concierge & Ticket Center.

An extension of Broadway shows are road companies, which bring streamlined, though still often extremely elaborate, versions of Broadway productions to major cities around the United States and Canada. In the 1985-1986 theater season, 8.7 million people attended Broadway shows outside of New York, and box office receipts totaled $236 million. Touring companies hit record highs during the 1995-1996 season, selling 18.1 million tickets and grossing $798 million. Ticket sales and revenues fell off during the early 2000s, with just 11 million tickets sold and $541 million in revenues. Broadway's touring companies rebounded somewhat during the later part of the decade. Although ticket prices drove revenues up, attendance remained below the highs of the 1995-1996 record highs. During the 2008-2009 season, shows traveled to 250 North American cities, selling more than 14 million tickets and grossing approximately $883 million.

Off-Broadway.
Re-staging of material that has already proven itself off-Broadway or in London is also a current feature of Broadway. The conservative reluctance to exhibit new and untested work has somewhat diminished Broadway's status as the center of the U.S. theater. The pressure to come up with a long-running crowd pleaser has also turned away creative personnel. Off-Broadway, a term applied to a wide variety of smaller theaters in New York located away from the major theatrical district, became more important as a place to showcase original material. Once considered a training ground for Broadway, Off-Broadway is accorded as much prestige as Broadway as a venue in which audiences can glimpse the latest, most innovative works before they appear on the Broadway scene, as was the case with the late 1990s hit Bring in 'da Noise, Bring in 'da Funk. Having a success off-Broadway has come to be seen as an end in itself. Many playwrights and theatrical composers, including those who are well established, such as Stephen Sondheim, Neil Simon, and Edward Albee, have taken some of their works off Broadway.

According to the Off Broadway Alliance, commercial and nonprofit theaters in Manhattan seating between 100 and 499 people sold 5.47 million tickets and grossed $173 million during the 2007-2008 season. The average ticket price was $31.63--well less than half of the price of the average cost of a Broadway ticket. The commercial possibilities off Broadway increased along with its prestige. Although the vast sums brought in by "megahit" Broadway shows are not possible in the small to moderate size Off-Broadway theaters with their lower profile atmosphere, handsome profits are still being made. Some long-running Off-Broadway successes, such as Tony and Tina's Wedding, have franchised lucrative duplicate productions in other cities.

Off-Broadway's appeal increased so much that by the mid-1990s there was a clamor for space in its handful of larger theaters. Some analysts viewed the increased status and popularity of Off-Broadway productions with some caution. However, the trend spurred theater construction at a pace of nearly one-and-a-half new theaters per month in 1999, sparking fears of a possible glut in coming years, especially if the newfound success of off-Broadway proved to be a fad. The building boom was interrupted by the events of September 11, 2001, which proved more damaging to off-Broadway venues than to Broadway, which benefited from special promotions and subsidies. Nevertheless, off-Broadway continued to grow with the Little Shubert opening in 2002 and Dodger Theatricals' five-theater complex, and 37 Arts' three-theater facility opening in 2005. For most off-Broadway productions, to hope to remain open, production costs are cut whenever possible, and, considering the often limited seating, long runs are needed to reach a broad audience.

Demographics.
The Broadway League reported that during the 2007-2008 season, the average theater attendee belonged to a household with $148,000 in annual income. Not only are theatergoers from upper income families, but they also tend to be well educated. Of all theater attendees over the age of 25, 75 percent hold a college degree, and 36 percent hold a graduate degree. Seventy-five percent are white, although that number has been declining as the theater has become more diverse. Nearly two-thirds of theatergoers attend at least two shows every year, and an average theatergoer attends just under 4.5 shows within a 12-month period. In addition, a handful of hardcore fans account for less than 6 percent of theatergoers but make up about one-third of ticket sales. In the late 2000s, two-thirds of tickets were sold to individuals traveling from outside New York City and its suburbs. In addition, two-thirds of theatergoers were women.

For many years, the theater industry was most troubled by the strikingly low attendance rates among younger audiences, suggesting that the theater's future lifeline was exceedingly thin as younger people showed little interest in theatrical shows as an entertainment form. In 2005, the average age of Broadway audience members dropped to 42, with more than a third of theatergoers aged 50 or older. Contributing to this drop in average age were 1.3 million attendees under the age of 18, while 35.6 percent of the Broadway audience was under the age of 34. Although the average age of theatergoers remained steady at 42 years, the 2007-2008 season saw the number of children in attendance increase to a 30-year high of over 12 percent.

Current Conditions

After surviving the economic recession of the late 2000s, the theater industry began to recover--and then some. Approximately 12.53 million people attended theater productions in the 2010-2011 season, a record high, and revenues topped out at $1.08 billion, another record high. Forty-two new productions were put out on Broadway that season. Early in the 2012 season, the top shows on Broadway were The Lion King, Wicked, The Book of Mormon, Evita, and Spider-Man: Turn Off the Dark. Together these five productions grossed more than $8 million for the week ending 22 April 2012, according to BroadwayWorld.com. The average ticket price for a Broadway show in 2011 was $90.29, up from $64.69 a decade earlier.

In the early 2010s, the demographics of the theater-going audience remained similar to previous years. Sixty-five percent of audience members were female, and 83 percent were Caucasian. The average age of those attending the theater was 44, somewhat higher than in recent years, and, of those over the age of 25, 78 percent had a college degree. The audiences of the second decade of the twenty-first century were also technologically equipped to make the most of their theater experience. For example, in 2011, 44 percent of attendees purchased their tickets online. Furthermore, in 2011 The Broadway League launched its new ILoveNYTheater app for the iPhone, iPad, and iPod Touch. The free app enables users to buy tickets in real time and provides information on starting times, running times, locations, and other relevant data such as nearby hotel and dining options and links to social media. According to Charlotte St. Martin of The Broadway League, "It's becoming easier and easier for theatergoers to get the best seats at the best prices from official sources." There were plans for an Android and a mobile version of the app as well.

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