General Question

crisedwards's avatar

Why are there so few for-profit live theatres in the US?

Asked by crisedwards (329points) June 3rd, 2009

Nearly all live theatre companies are non-profits. What is broken in the system?

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14 Answers

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crisedwards's avatar

Bob. Your answer may be correct. It’s hilariously simple. But, really?

aprilsimnel's avatar

If you mean the United States, television is a major part of the issue. People don’t even watch variety shows on TV anymore, never mind watching plays or musicals. Further, people have an idea of the theatre as something for the rich to do or something that only happens during a big once-in-a-lifetime trip to NYC.

People have to be taught to go to the theatre and that it’s for everyone in every place in the country. Arts funding in public schools since the 80s has dropped off markedly. We do not have a government that supports the performing arts the way other countries do. There is no National Theatre of any kind here, which is sad, but most likely won’t change soon. Theater is just not a priority in the minds of most people.

YARNLADY's avatar

People won’t spend the amount of money necessary to maintain the theaters. Much of Broadway in New York is now dark. They all went out of business.

bpeoples's avatar

In Europe, there’s (typically) large government financing of theatres, in the US on the other hand, financing of The Arts is left up to philanthropists. Ergo, most theatres are NOT FOR PROFIT organizations. (Sorry, really annoys me the terminology that’s become commonplace in calling them (even in the California law) non-profit).

Basically, if you are an NFP, you can make all the profit you want, you just can’t disperse it to shareholders. You CAN give it as bonuses to employees, which has happened to me on more than one occasion.

Anyway—as an NFP, donations to you are tax deductible, which makes you more lucrative to companies and individuals to contribute to.

Most theatres tend to be about 50% self supporting, with the other 50% coming from donations. That means, if they could sell the same number of tickets, and charged twice as much, they’d be breaking even. But if you double ticket prices, you lose more than half the audience, etc.

It’s better, from a theatre’s standpoint, to convince the 1–5% of supporters to contribute large amounts of money charitably, than it is to attempt to break even on ticket sales alone.

Now, the way for-profit theatre generally works is that you have producers who buy shows, and produce them. Some flop, some make insane amounts of money, some break even. Shows have closed on opening night to cut the losses.

bpeoples's avatar

Which of course brings me to the term paper that The Don wouldn’t let me write, which was on how to operate a rural NFP theatre as a money laundering operation.

Purely theoretically, of course.

crisedwards's avatar

Brilliant. Calling a “not for profit” a “non profit” is a mistake all around. M’sry.The clear-eyed answers here are wonderful.

Lemme then amend my question a little: lots of startups have no idea how they will make money (ahem…Facebook). Can a theatre use a combination of ticket sales, ad sales, in-kind donations (bartering) and still be a legit company that is “for profit”?

wundayatta's avatar

A not-for-profit organization still has to take in more money than it expends (i.e., make a profit). It’s just that nfp businesses are subsidized by us. We let them get away with paying little or no taxes, because we consider their efforts to benefit the community, and if we lose them, we lose more than just an organization that does whatever.

Why are there few tax-paying live theater producers? You need a hit to make enough money to pay taxes, and most plays are not hits. Only Disney can reliably produce hits (and who knows what deal they made with the devil). I’m exagerating, but you get the point.

_bob's avatar

@crisedwards I’m usually both hilarious and simple. I’m always right.

Darwin's avatar

Having been involved in theater, I can attest to the correctness of what @bob has said. It is very difficult to make a profit with live theater unless you have one heck of a name to draw folks in (such as Disney) or can somehow convince famous names to perform for far below their usual fee (as in Paul Newman at the Westport Country Playhouse).

Nonprofits also can use a lot of volunteer labor, thus saving them huge bucks in salaries.

andrew's avatar

As a stage actor, it’s really about profits—which is really to say a lack of government spending/subsidization of public theater (and arts in general) in the US.

I think the television argument is a red herring—look at Germany or France, who, though they may have less of an appetite for pop culture, still heavily subsidize actors and theater, and as such, the theater-going populace in Berlin or Paris is much higher than in the states.

So, basically what @bpeoples said.

NuclearSnail's avatar

As a british musical theatre actor, I’ve always noticed that theatres struggle to break even for the entire year until around pantomime season, when they’re able to make enough money to support the theatre for another year.

I’m not sure about the situation in the US however.

bpeoples's avatar

@NuclearSnail That’s also true here in the US—frequently large theatres will do a big “cash cow” either in the summer (something cheap like “Forever Plaid” that runs all summer) or in the winter (That’s frequently what productions of “A Christmas Carol” are all about) that makes up the difference.

There are some theatres that do really well (TheatreWorks in the SF Bay Area is a good example of this)—the biggest difference seems to be if the company is run like a charity, it has no money. If it’s run like a business, there’s money. Good management can really make the difference between success and failure.

cwilbur's avatar

Consider how many people have to be paid each night of a play—and how much it costs to rent a theater. Consider how many people will pay to see a play—and how much they’ll pay.

Live theater can run in the black if it’s run by someone who’s savvy and ruthless—but even so, it’s not going to make the kind of profits that investors want to see.

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