Sunday, March 3, 2013

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.


  1. Insightful and well thought out. Who is this masked blogger?!

  2. Just your friendly neighborhood gunslinger, ma'am.

  3. Wow, it's a very articulate assessment on the complexities of Broadway. Well done, sir. RC in Austin, Texas (PattiLuPoneFANatic on Broadway

  4. So So So true.

    -A Broadway friend

  5. I was in whole-hearted agreement until the end and the labor section.
    Does he think unions havent made tix prices go higher?
    Those producers, and investors--are HOPING for the "killing" for the 80% of the time they lose money. Every Producer on each of the behemoth shows (Wicked/Mormon/Lion King) have all taken their losses (and I'll assume their investors too), keep coming back with, and for, more! If the unions want a piece of the pie--let a percentage of their salaries/raises go to INVESTING in their own productions. You'd see how quickly they'd balk at that suggestion. I don't disagree that tix prices are WAY TOO HIGH--but its always the consumers who vote with their wallet. Tho I can afford a Mormon ticket, I WON'T pay for one. It's "just" a show.

    1. Is there any show that you would pay Book of Mormon's prices to see?

      I'm worried that soon many more theatergoers will share your assessment that "It's 'just' a show", and opt to find their entertainment elsewhere.

    2. Book of Mormon had discount offers available. I saw it from the front mezz for $75 during previews. Shows with absolutely no discounts from the first performance are rare, you just have to be quick on the uptake.

  6. Thank you. I used to buy full price tickets as soon as they went on sale, in order to get great seats. The producer had my money months in advance. Now, unless I am willing to pay for premium seats (which I won't), the full price seats are terrible. So I wait until a couple of days before the date I want to go to the theater and almost invariably get good seats at a discount (or at the worst, full price). How does this help the producer's bottom line.

  7. There are so many misstatements in this article I'm not sure exactly where to begin
    1) Attendance is up as well as ticket prices. Last year had the highest attendance in years. This is a fact.
    2) There are 13 shows currently running above cost right at this moment. 2 of those shows are plays.
    3) Theater owners are the true power brokers on Broadway, no producer can get a show up unless a theater owner lets them have a theater. That being said, The community is small and theater owners and producers work together all the time to serve each others interests. The league leadership is made up of both parties and also includes other professionals in the business.
    4) High ticket prices aren't a problem if people are willing to pay them. Obviously many people are willing to do so otherwise it wouldn't be happening and no one would be making any money. This is called capitalism. These are for-profit operations, the goal is to make product and sell it for the highest price point possible. Some shows are succeeding and others fail, like in any business. Broadway has always had a track record of having about 25-30% of the shows recoup their investments. This is a better track record than some industries, especially if you consider that each show is essentially a start-up. Its doubtful the tech industry has that good of a track record with start-ups.
    5)The idea that only mega-hits are what is selling is totally false. Shows like ONCE, the 25th Annual Putnam County Spelling Bee, AVENUE Q and NEXT to NORMAL are perfect examples of this. ONCE in particular has been incredibly lucrative even though it is in a small theater and its grosses rarely break a million dollars in a week. Its still running and has no signs of slowing down.
    7) Broadway isn't "mass entertainment" At least not in the way that sports or hollywood movies are. Our theaters seat less than 2000 people a pop. We don't need to fill a Yankee stadium in order to survive. Despite this Broadway remains the number one tourist draw for New York City, because unlike Major League Baseball, you can't experience it in any other city.
    8)I'd like to know where the dissatisfied audience members are at the way ticket pricing is handled. I'd argue that variable ticket pricing is something that folks are used to in the 21st century.

    Are there things Broadway can do better on the customer service side or on the programming side? sure, there's always room for improvement. But to argue that the industry is in any kind of real trouble is a gross misstatement given the fact that shows make more money and play to more people than ever before.

    1. Also, the idea that the best seats are 'impossible' to get is nonsense. Just go to the theatre's website, and be careful to avoid scalpers masquerading as primary sellers, and you can pretty much get anything you want (so long as you're willing to wait a bit on the better attended shows). Also, there are TONS of ways to buy discounted tickets online - the average price of a Broadway theatre ticket sold last year was just over $80, not bad for an experience you can't get anywhere else.

    2. The point I'm trying to make is that I believe we could be at an important tipping point. Without going over everything again, there is no question that what we are seeing at Yankee Stadium, Met Life Stadium and the Metropolitan Opera is something hitherto unseen. The empty seats and reduction in prices, given the context of an at risk middle class in a country that has endured the economic upheaval of the past five years, may yet have a similar impact on Broadway. You may look at these facts and arrive at different conclusions, but I think that may very well be wishful thinking.

      I also disagree that Broadway isn't mass entertainment. The impact that it has on the city's economy, and the city's place as a cultural leader of the country fairly well establishes it's mass entertainment bona fides. If it weren't so, why the need for movie and TV stars to move product? Why would there ever be touring productions of Broadway shows?

      I'm not happy to join the long conga line of Broadway doomsayers. Broadway has survived wars, depressions and creative droughts for decades. The twenty-first century has brought to bear it's own challenges.

      What Broadway had in the past, was a component of democratization. In a Broadway theater, the common man could find himself seated next to anyone of any class, be they entertainer, captain of industry, politics, letters, etc. Like America itself, a microcosmic melting pot, enjoying a uniquely singular entertainment. For the reasons I highlight in my post, Broadway risks losing this, and with it its connection to its audience and its relevance.

  8. Pretty erudite piece... just surprised that its author (or typist) misspelled ITS (at least twice) and CACHET!

  9. Thanks for asking!
    No, there is probably no show that I'd pay $150. But I still go to about one show a week--and most "theatregoers" wont give up going. That's why they're/we're "theatregoers." I knew of the Mormon discount in previews, but thought I could wait. Didnt expect it to become a PHENOM. My loss FOR NOW--but I'll wait, and one day, maybe not soon, there will be discounts. In the meantime, I'll see dozens/hundreds of other shows.
    --and your response below to compare to sports and opera is a bit off. Opera has been EXORBITANLY high for years, and I think that is a much harder audience to cultivate--its a tough repertory to create new ones to current tastes, or to put a "celeb" into a role, to goose tix sales
    --as for sports, the Mets/Yankees have had terrible seasons--and most buyers remember the low prices when "they were kids." So while the teams lose, games can be watched at any sports bar, or premium sports channel at home. People will go to the stadiums again when the teams begin winning!