Economics of the American Theatre

Economics of the American Theatre. The American theatre has moved from humble beginnings through decades of great strength and huge financial returns only to lapse, in the last decades of the 20th century, into a curious situation. Now rewards for occasional success are enormous, but on balance production and consequent employment have dwindled and most theatrical enterprises are economically precarious. The earliest years left behind little solid statistical evidence, but it may be safely assumed that the lots of performers and other professionals were uncertain and hard up for steady income. Not until the late 18th century had American cities grown populous enough and Americans themselves sufficiently prosperous to allow larger centers to support permanent ensembles. Even so, the record is unclear about how well the average professional lived. A few early luminaries were apparently able to save comfortable sums for retirement, and John Henry, sometimes called America's first matinee idol, led a flamboyant, expensive life, even maintaining a private coach. He realized a then significant $10,000 when he sold his interest in the American Company but seemingly never saved much and was in relatively poor financial condition when he drowned. Nor were theatrical impresarios or playwrights in better shape, as witnessed by the problems of William Dunlap and others. Costs of production, however, must have been comparatively small, since individual sets and costumes were rarely provided. Actors were expected to supply their own costumes, and most theatres kept a handful of basic sets—a domestic interior, a castle, a woods, a garden—which saw service in whatever play was being performed. Some of the figures relating to New York's Park Theatre are enlightening. Opened in 1798, it had been projected to cost just over $42,000, a considerable sum at the time, but actually cost an exceptional $130,000. Top seats were 75¢, soon raised to $1, and the cheapest tickets were either 12¢ or 25¢. Because of the house's large capacity, a performance could gross over $1,200. Ironically, this figure remained about the standard for capacity houses for over a century, since the higher ticket prices that came into being at the time of the Civil War were coupled with the development of more intimate theatres. The entire ensemble's salaries came to a mere $480 per week, with Hodgkinson receiving top reimbursement at $20 per week, plus $5 per week for wardrobe and $30 for his managerial concerns. When all other expenses were included (among them $150 for orchestra, $109 for lighting, and $68 for printing), the weekly nut was $1,200. In theory, the theatre could have been extremely profitable, especially since it was the city's only playhouse for many years, but extant records reveal many nights and longer stretches of dismal business.

The coming of stars in the early 1800s proved both a source of additional revenue and a drain on those revenues, as most stars' contracts called for them to receive a sizable portion of the gross. Yet even the Kembles rarely filled the Park, and on nights when they did not perform grosses averaged only $150. With the coming of competition, both in New York and elsewhere, theatres encountered new problems, often having to lower prices to attract trade. For a time during the lean years of the early 1840s, 75¢ was generally the top ticket price. At the same time, actors' salaries began to creep up, albeit slowly. Until the panic of 1857, the 1850s were comparatively prosperous times for theatres, and tickets again went to a $1 top. A few exceptional attractions demanded more, but Rachel is believed to have encountered stiff opposition when she charged a $3 top and a $1 minimum. (Three decades later her compatriot, Sarah Bernhardt, dared ask only a $2 top.) At the same time, actors' salaries again rose. For the 1857–58 season at Wallack's, Lester Wallack received a weekly $100 as both actor and director. William Rufus Blake was listed as earning $80, and the emerging Mrs. Hoey $55. It should be noted that contracts for all leading performers allowed them one or more benefit nights, at which they were entitled to a substantial share of the gross. Lesser players at the house were paid about $25 and shared no benefits. The leading scene designer received a salary on a par with lesser actors. By 1861, with the coming of wartime prosperity, salaries had risen still further. Prosperity and rising costs allowed Edwin Booth and his brothers to charge a then record $5 top when they appeared together in their 1864 special production of Julius Caesar; and two years later, in 1866, Wallack led the way to a standard $1.50 top, a figure which was to prevail at first‐class houses for the rest of the century. While most plays continued to be mounted for a few thousand dollars, with the coming of elaborate musicals new record figures followed one another rapidly. The Black Crook (1866) is said to have cost $50,000, and subsequent spectacles advertised yet larger, if somewhat suspect, figures. In 1869 the Times listed the previous year's grosses for leading Broadway houses. In all of 1868 Niblo's Garden, the home of spectacle, was reported taking in $359,879, while the elite Wallack's, given over to non‐musical attractions, grossed $263,319. The typical comic opera of the 1890s is believed to have cost between $10,000 and $25,000 to produce. Moreover, the basically healthy economic climate of the time allowed most shows to recoup their costs after four weeks at capacity business. De Wolf Hopper claimed that many of the era's musicals ran at a loss in smaller New York theatres, so that they could claim long Broadway stands and retrieve their investments at larger touring houses. His statement cannot be corroborated precisely, but as late as the 1920s many shows that failed in New York went on tour and closed with a profit. At the end of 1911, Adolph Klauber reported in the Times that in the first half of the 1911–12 season, from August 8 to December 31, sixty‐four plays of all variety had opened on Broadway and thirty of them had already recouped their costs. However, the road began to change noticeably in the early years of the 20th century, when films arrived to lure less affluent and less educated playgoers away from live theatre. Cheap touring companies such as the Ten‐Twent'‐Thirt' groups, which presented lurid melodramas, treacly comedy, and old operettas at prices between 10¢ and 30¢, quickly disappeared.

Real changes started to affect theatrical economics about the time of World War I. Wartime inflation was coupled with the rise of unions, most notably Actors' Equity. The justice of union demands for rehearsal pay, overtime pay, better working conditions, and higher salaries cannot be gainsaid but nonetheless played a major role in the marked escalation of costs and therefore of ticket prices. Top prices, which had remained at $1.50 or at best $2 since the Civil War, rose during World War I to $3.50. By 1919, while plays could still be mounted for under $10,000, musical production costs had soared. The Ziegfeld Follies of the era cost about $200,000 apiece, admittedly an exceptional figure. Irene (1919), a more typical example, cost $40,000. By 1927 Good News!, again typical, cost $75,000 and charged a $6 top. Some musicals went as high as $8. Nonetheless, both Irene and Good News!, along with many other successes of the era, returned their investments in four weeks. The economic pinch began to be felt during the Depression, when the theatre found itself competing with radio's and Hollywood's glittering rewards and confronting union militancy. Although ticket prices plummeted ($3 and $4 became standard tops again), the costs of productions did not necessarily fall proportionately. Shows began to take longer and longer to pay off. These discouraging developments led to fewer mountings, and in the late 1930s the number of major productions dropped below one hundred for the first time in the century and never again passed the mark. World War II brought a measure of prosperity, and the theatre seemed reasonably healthy for the next decade, albeit the number of plays continued to fall and the percentage of shows to repay their investment decreased. For example, Variety reported that for the 1955–56 season only about a dozen of some fifty commercial productions showed a profit. A one‐set, small‐cast comedy such as Fallen Angels could run nearly three hundred performances and a musical such as Mr. Wonderful run almost a year without closing in the black. The rampant inflation that was precipitated by the Vietnam War and the international oil cartel threw theatrical economics into turmoil. By the early 1980s simple plays cost hundreds of thousands of dollars to mount and musicals were budgeted at a million or more. Cats (1982) was reputed to have cost $5 million. Top ticket prices skyrocketed to $55, actually not excessive in view of inflation and the rise of other prices, but dissuading to many casual theatregoers kept at home by “free” television. Producers, too, had to be dissuaded since a $55 top for a musical costing $5 million could not possibly promise the prompt payoff that a $6 top could for a $75,000 production. No small part of the problem derived from the absurdity of union demands. Union bonds alone, which had to be figured into initial costs, were in the hundreds of thousands of dollars. Nor were union demands conducive to reasonable weekly running costs. Actors' Equity, for example, negotiated contracts in which a performer's minimum salary per week was $850 (1990) at the same time that the Bureau of Labor Statistics reported the average American's weekly salary at $399. Ever more questionable were such practices as the musicians' union frequently requiring producers to pay musicians who were not used. Many smaller theatres, especially on the road, became uneconomical, and producers, who now demanded huge guarantees from playhouses instead of simply a percentage of the gross, sought out grotesquely large old film‐houses and convention halls as auditoriums for their attractions. At the end of the 1980–81 season, Variety recorded that only three of the forty‐odd productions were commercial successes, although one or two others were expected to prove profitable eventually.

The picture has not improved appreciably in subsequent seasons. The pattern in the late 1980s and beyond was one of feast or famine. A musical costing $8 million to open may have had to run six years to break even, but the financial rewards were staggering, especially taking into account tours and international companies. On the other hand, a modest $5 million musical that only ran eighteen months would end up losing millions. Plays were in an even more precarious position since few ran longer than a year. The result was that two and three‐character plays or one‐person programs were the only entries making a profit in a reasonably short period of time. Manhattan non‐profit theatre groups, such as the Roundabout Theatre and the Public Theatre, have sometimes found success by opening a show in their Off‐Broadway space and then, only after winning rave reviews and strong popular demand, moving the piece to a Broadway house. A hit like A Chorus Line kept the Public solvent for years; but that same organization has seen millions of dollars lost when, say, a popular Central Park production was moved to Broadway, where it floundered and increased its financial loss while trying to find an audience. Ticket prices by the end of the 20th century had reached $100 for a musical, though most kept their top ticket around $95. Considering inflation, this top price was no greater than what Broadway was asking in the 1920s. The difference was in the lower‐price tickets. Theatres that used to offer seven or eight different prices for the same show, based on location and performance day, were now priced with only three or possibly four choices, none qualifying as “cheap seats,” though the poor location was the same as in the past. This has resulted in the loss of younger audience members attending the theatre on a regular basis. A popular favorite like Rent or Hairspray has a strong appeal for young patrons, but attendance is in the form of a special event, not a matter of routine theatregoing. Despite all the youths seen at many New York musicals, the average age of the Broadway audience climbs higher and higher. Particularly for non‐musical plays, this does not bode well for the future.