Getting involved in Broadway

Getting involved in Broadway is considered insane by many. The fact of the matter is that if you have a certain amount of money,

your traditional financial advisor will probably tell you to diversify yourself by investing in higher-risk instruments, or “Alternative Investments,” which typically make up about

10% of your investment portfolio. In the United States, “accredited” means having a net worth of at least one million dollars or having made at least $200,000 ($300,000 if joint-income) in the previous two years for the majority of Alternative Investments. While accredited investors are preferred by many Broadway productions, this is not always the case.

With its high risk but potential high return, why is Broadway not on that list? Actually, it is not. “Investment product other than traditional investments such as stocks, bonds, or cash” and “wine, art and antiques, Broadway shows, movies, indeed any store of value, might also be considered an alternative investment” are the definitions provided for alternative investments by Wikipedia. There is no doubt that alternative investments, such as Broadway and Off-Broadway productions, carry a high risk. The statistic that only one in five Broadway productions recover their investment is frequently cited, and the ratio is even lower for Off-Broadway productions. However, this is not the only high-risk instrument available on the market.

Similar to investing in a restaurant or, frankly, any entrepreneurial start-up, investing in Broadway shows is similar. In fact, a recent article written by Nick Malawskey and published in the Centre Daily Times reads: In ten years, seven of every ten new businesses will cease to exist. Two will be profitable. Only one of them will truly succeed.” This brings the start-up success rate to the same level as the one I just mentioned: 20%! It’s not nearly as bad as we thought. And if you do your homework, you can make those odds better.

Also, keep in mind that even great rewards come with great risk. Even if you perform as expected, the goal and hope is that the one show out of five that recovers will make up for any previous losses—it’s a marathon, not a sprint—and more. Imagine investing in films like “Annie,” “West Side Story,” “Cats,” or “Wicked.”

Third Broadway Investment Myth: An exclusive “Club” of Broadway show investors does not accept new members.