Thoughts from a Los Angeles Theater Producer

To Run, or Not to Run

Posted in Producer's League by Rick Culbertson on September 5, 2009

Ok, my last post talked about how most LA theater rental contracts work. Today, I will talk about how they could work. Warning: this post gets a bit technical.

The most important thing that we, as producers, should be trying to protect is our hit shows. Everyone in the theater community benefits from hits. We all need them to run, whether they are ours or someone else’s. A long running show raises the profile of small theaters, helps word of mouth permeate, and gives group sales people a chance to book tour groups. It provides more stable jobs. It brings more money into the producer’s or theater company’s pocket, enabling them to turn around and produce more shows.
But as I discussed, long running shows are rare in LA because theaters are booking out their spaces before a show even gets a chance to open.

We need to establish open-ended rental contracts, and they must become the norm. Here is an EXAMPLE of how it could work: I, as a producer, would pay a large security deposit to the theater (enough to cover about four weeks of rent): a week for tech, a week for previews, and then opening week, all up front. Then I would make weekly payments out of the box office receipts (which I should be receiving on a weekly basis). This method would continue until I was ready to give two weeks notice. The theater would be able to have a stop clause saying that if, for two consecutive weeks, I fail to make 50% of my running costs, the theater can give me two weeks notice (however, the theater would not be able to invoke this clause until after the 4th week, and certain holiday weeks would also be exempt). In addition, the theater would be able to take a small percentage of box office revenue once the show has recouped or has run at least 26 weeks.

Now let’s plug some LA numbers into this example.

These are totally generic numbers but they are within the LA ballpark for 99 seat theaters.

Weekly Theater Rent = $2,500 (this includes four shows weekly)

So my budget breaks down like this:

Security deposit = $10,000
Tech Week = $3,000
Preview Week = $2,500
Opening Week = $2,500
Total Adv. = $18,000

As the show runs, if the weekly income is less than 50% of the weekly running costs for two consecutive weeks (after week four), I would probably want to close the show anyway. But if I didn’t want to close and another producer came in with a better show, then the theater could invoke the “stop clause” and give me two weeks notice, in essence forcing me to close. After all, my show had a chance but didn’t really catch on. If I am running at 75% of my costs and I have enough reserve funds to keep it going, however, then I would be able to stay open, and the theater would not be able to invoke the stop clause. If my show catches on, then I have a hit! And I am able to keep extending it without being afraid that the theater will kick me out (unless my revenue dropped for two consecutive weeks below 50% of my costs, in which case I would probably need to close anyway).

I know theater owners will likely say, “We need shows to be scheduled back to back in order to stay in business. In the model above, we will have a lot of dark weeks because producers need 6-12 weeks of lead time to get a new show up after they book our theater.” In response, our Producer’s League could increase the closing notice in the contract to four weeks instead of two. This would allow the theater to start looking for other productions to rent their space once the current production puts up a final closing notice. Of course, the smart theater owner would already have a show waiting in the wings. If not, then theater owners might very well have to tolerate some dark time. But you know what? That’s part of the game of owning a theater. I know that smart theater owners already forecast dark weeks into their budgets.
And at the end of the day, I don’t know why producers should be put in the position of sacrificing our business, in order for theater owners to make money.


One Response

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  1. theatremonkey said, on May 7, 2012 at 11:27 pm

    I have run a theatre for over 10 years, dealing with our own productions as well as rentals. One flaw I see in your post. You not talking into account that most theatre owners aren’t making tons of money. At least we aren’t. Most of my rental contracts are booked 3 months out. So in your scenario I should have shows in the wings, holding them on standby in case your show doesn’t moves forward. Would you want to be that show? Would you want to wait till the last minute to see if you even have a venue? We have always been very fair to our renters. We have never dumped a one week rental, just because a 6 week wants that same slot, days after the contract has been signed for the week run. We always ask as soon as we know about another group asking about renting right after another production. One quick question, with all this dark time you are slotting into our business, how many theatre’s do you think can stay open? On the larger deposit issue, I have not met many producers willing to put almost $20,000 down, 3 months before the show even opens. They usually put 1/2 down at the signing of the contract and half on their load in. That way, they have time to get tickets sales going to help pay the rest of the rental fees. I think their is a way that producers, actors, crew as well as the theatre owners can come out ahead. I just don’t think your idea makes that happen.

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