The Canaries in the Coal Mine

The clues are piling up.

New Yankee Stadium, home to perennial playoff contenders, is plagued by empty seats in the sections where the most expensive seats are. Even playoff games don't sell out anymore. The Yankees have announced some token price reductions, and an annoyingly unending marketing strategy that seems to go on all season long. The Yankees have severed their relationship with resale facilitator Stub Hub, because many games have seats available for sale on the Stub Hub site at a lower cost than the team sells them for.

Met Life Stadium, new home of the local Giants and Jets football teams has its own problems. Its long been taken for granted that the home games were easily sold out. Times have changed. Both teams require PSLs (Personal Seat Licenses), an extra fee to pay in order to have the right to buy the tickets attached to them. Jets games rarely sell out, and while Giants games typically do sell out, the fact is that many season tickets are held by speculators who make seats available to every game, often at a loss.

This month brings news from the prestigious Metropolitan Opera. They are instituting a reduction in the price of many of their seats. Management realizes that recent price increases may have been too “aggressive”, and have rolled back the cost of many of their seats. The Met, with its particularly ardent fan base, and status as an international cultural attraction, attributes a recent attendance drop to its previously higher prices.

There is clearly something in the air, and like in the unrelated case of global climate change, clear and distinct evidence is being ignored to the detriment and peril of all concerned.

What of the Fabulous Invalid? Broadway as a whole, after decades of mistaken calls of its imminent demise, continues to roll along, posting impressive yearly grosses. But if the industry's foundation was ever on uncertain shifting sands, it is now. Most of the gains in dollars are not coming from increased attendance, but from higher prices. How long can this trend continue? The answer is unknowable, but it can't go on forever. Ask the Yankees or the Met Opera. Is that a fat lady I hear singing?

Several Broadway houses are dark this spring, an unusual and uneasy occurrence. Sure fire marketing schemes of the past, fall flat now as often as they yield underwhelming results. Productions with big name stars fail or underperform with disheartening regularity. All that the brightest marketing minds have brought to bear, have not changed the historic and unmerciful failure rate of Broadway shows. The result is having to run ever faster just to stay in the same place. Dynamic pricing of theater tickets, an idea pioneered by the airline industry, allows for fine tuning of ticket prices to meet spikes in demand. Oddly, prices only seem to dynamically go up. Odder still, is adopting the pricing methods of the rare industry in worse shape than Broadway. 

To be sure, Broadway juggernauts remain. The Book of Mormon, Wicked, and a few other big musicals thrive with prices that are so high it seems almost embarrassing. While most of Broadway's yearly grosses come from these mega hits, things aren't all right in this rarefied air either. Deep structural problems are hidden from the casual observer.

With only several shows sucking up most of the money spent on Broadway, the result is the inevitable creation of a condition of haves and have-nots. Straight plays, long the weak sisters on Broadway, are obliterated in the marketplace. Without big movie star names or non-profit subscription productions, there is an even more diminished chance for them to succeed, or even to get produced at all. The discount TKTS Booth, longtime friend of the frugal theater-goer, is also stacked against straight plays. Even their dedicated Play Window at TKTS is insufficient to counter the looming and ever dominant presence of discounted musicals. The discounts offered by TKTS, from 10-50% may only be listed as percentages. Since plays are mostly less expensive than musicals, a musical can be more expensive at a 50% discount, than a play at a 40% discount. Pricing in simple dollars would be more useful to theater-goers looking for the lowest prices available, which typically are straight plays. The misleading TKTS price board unfairly hobbles the non-musical straight play. Broadway shows have become so enmeshed with and dependent on discounts, it's almost as if many productions exist only so that TKTS can sell their tickets, collecting commissions as the lifeblood of the shows themselves slowly drips away. A grotesque case of the tail wagging the dog. 

  

So who is calling the tune? The Broadway League is the industry trade group that represents theater owners and producers. In recent years, the producers have stepped to the forefront in shaping the League, and its policies. This recent era has been marked by frequently contentious labor relations, and stratospheric increases in ticket prices. Established ticket prices have no more relevance to actual prices paid by theater goers than the prices paid for cell phone purchases and contracts. Just as “Free Phones” somehow wind up costing thousands of dollars over the course of a contract, the listed price of an orchestra seat to a hit musical is unobtainable at its advertised price, but “Premium” seats in the orchestra, at twice the price or more, may be had.

There is a difference in the quality of Broadway producers currently plying their trade and what they bring to the table, from those of previous generations. Generally speaking, many of the current producers on Broadway are business men and women that have made their fortunes elsewhere. In many cases, they come from the world of finance, hedge funds and the like. They bring with them an attitude and methodology that, while amassing great wealth for themselves, is precisely what has brought this country to the brink of economic ruin. They frequently set out to bend Broadway to their particularly laissez-faire style of business. As neophytes are wont to do, they seek to reinvent the wheel. 

The new breed of producer has ratcheted up the “greed is good” maxim to the max. Squeezing every last penny out of ticket prices may make sense as an intellectual exercise in an economics class, but in practice, there are other costs to contend with. There is no goodwill left among theater goers. They are resentful and angry at the arrogance of Broadway pricing policies. That's not the way to build customer loyalty, or foster a habit of theater going in what one might hope will be new generations of frequent Broadway attendees. A Netflix subscription is $8.00 a month, and the same star on stage is available on the tube at an all you can eat price.

Broadway has always had an identity problem. As an industry, it fancies itself as, and strives to create an image of itself as a luxury item. Like a fine piece of jewelry, and almost as expensive, two Premium priced tickets to a hot show can cost close to a thousand dollars. The reality remains that the fifteen hundred other seats available for that show eight times a week can not all be such fine baubles. There is no great cachet attached to discounted items, and the illusion of luxury melts away quickly. As such, the great majority of seats are subject to a byzantine array of discounts, smeared with small print and arbitrary exclusions. The simple act of buying affordable theater tickets becomes as excruciating as that cell phone contract purchase.

Ticket buyers have been trained to game the discount system as well as you might expect. Advance sales for shows are hurt because people wait for the discounts they know must be offered. The practice of ticket buying has become a twisted game of chicken, with producers not fortunate enough to have one of the golden, once in a decade, smash hits, must live or die with the discounted offerings he has to employ. Now the established price is unsellable, as the ticket buyer has his choice of discounted tickets for a discounted show. Truly a death of a thousand cuts. This illustrates the bifurcation of Broadway, with a few mega hits, and many anemic shows just treading water, limping along.

So, what's really new? The present situation is simply the result of long standing demographic and economic trends, and Broadway has survived countless calls of its impending demise. After all, that's show biz.

As the country emerges from five years of economic dislocation and wealth destruction, there has been what has been described as a “re-set” of the economy, a “new normal” of lowered expectations and slower growth. The busted housing bubble has re-set the prices of homes at a much lower level. There has been no such re-set on Broadway. During this time inflation was mostly quiescent, and Broadway unions accepted negligible salary increases, but Broadway ticket prices marched ever upward.

The situations at Yankee Stadium, Met Life Stadium and the Metropolitan Opera, with lowered attendance and the rolling back of some prices ought to be instructive. It may be a momentary blip for these institutions, or maybe it's the start of a new downward trend. If the producers of the Broadway League think that Broadway is and will be forever immune to this tectonic shift in the public's response to ever higher entertainment prices, they may well be in for a most unwelcome and most unsatisfying of second acts. What's been lost is the fact that "mass entertainment" be it sports, opera, or live theater, must be priced so that the masses may partake of it. 

Broadway producers come and go. They arrive with their shows and leave when they close. Theaters and their owners, and workers who make their livelihood on Broadway have nowhere to go. It's a shame that the direction of the Broadway League has been ceded to producers who are only looking to create the next Book of Mormon, at the expense of the entire industry.

For Broadway to survive, there will have to be new enlightened outlook from the Broadway League. It needs to abandon its antagonistic position against labor, and implement new ways to enable small productions to exist and thrive.

When the auto industry was on life support, it's survival was achieved only through drastic and unprecedented intervention. NFL Football and Major League Baseball have created profit sharing schemes. These courses of action are sadly decried as socialism by the hedge fund types now producing on Broadway. Yielding control for the sake of the greater good should be embraced. Let the mistakes of the past and of others be the canaries in the coal mine informing a more enlightened path to prosperity. The unique connection audiences have with live theater is in the greatest of dangers of becoming unaffordable, or worse, unwanted and unneeded.

  

It has long been said that "you can't make a living on Broadway, but you can make a killing". Under the shortsighted stewardship of the Broadway League, the only killing that will be happening on Broadway will be of Broadway itself.