Thoughts from a Los Angeles Theater Producer

The “J” Curve of Los Angeles Theater

Posted in Producer's League by Rick Culbertson on October 25, 2009

I have a friend.  She lives is a beautiful 600 square foot loft in downtown Los Angeles.  Her rent is about $500 a month.  The loft next door is a 700 square foot loft that rents for about $1500.  Why the price difference?  My friend’s loft is subsidized by the government.  Each year, her income has to be roughly between $18,000 and $24,000.  If she makes more than $24,000, she will have to move out of her apartment and into a market-rate apartment, which would cost about three times as much.  Because of this, she can not take a raise or get a better job, unless that job or raise will jump her salary up to around $40,000 – this is what she would need to afford to move into a market rate apartment.  Anything less, and she would have to move into an apartment that is not as nice as her current one, thus lowering her quality of life.  So, my friend hovers at $24,000 income each year.  Its not that she doesn’t want to earn more, it’s that it’s simply not in her best interest to earn more because doing so will prevent her from keeping her nice apartment.  

 LA Theater is stuck in this same situation.  In Los Angeles, a huge gap exists between the maximum budget one can use to produce a 99 seat production, and the minimum budget one can employ for a HAT production.  I call this the J-Curve of Los Angeles Theater.  Using a graph to measure the maximum profit potential (week potential minus week cost) on the y axis and our budget (from small to large) on the x axis, we will see a curve that looks like a “J”.  Here is our graph:

 LA Theater J Curve

 

As our graph illustrates, low budget 99-seat productions offer a small profit potential, while high budget HAT contracts offer larger potential.  Many theater companies start out with low budget 99-seat productions.  However, these types of productions have many limitations.  For one thing, musicals on this level are unable to include live musicians (unless they are all volunteers). Additionally, most of the participants including directors and designers are volunteers, which means that the production will have very little potential for high quality production values and, quite frankly, talent.  This is why most theater companies that are successful try to raise their production budgets. Eventually they hit point A on our graph– which is the realm in which high budget 99-seat theater productions must stay if they want to have a reasonable chance of breaking even from week to week.  But many limitations with high budget 99-seat theater productions still abound.  Those who work on this level never see true livable wages, and rarely do shows on this level boast great production values.  And, of course, no 99-seat theater production can run longer than 80 performances. 

 Once a theater company does get to point A, therefore, they have to make a choice.  Either stay forever at point A, or make the enormous and risky leap to point B.  If they stay forever at point A (which almost all of our theater companies in Los Angeles have chosen to do) it means that actors will never be paid higher wages, and productions will never see high production values.  If they try to make the jump to point B, then this decision will come with the huge risk of the theater company falling short and landing in the bottom of our “J,” somewhere between Points A and B.  Since this is the most likely outcome, a theater company would need to have stored a tremendous amount of reserve capital in order to bridge the years that it will invariably take to reach point B.  With very few theaters able to amass the required capital, this transition is an extremely rare occurrence.

 For independent producers like myself, in order to produce at point B or higer, we would need a show to be an extreme crowd pleaser in order to guarantee that we will be able to sell the 300-400 tickets every week needed just to break even with our weekly expenses.  To keep expenses down, we use tracks instead of live musicians and look for shows with very small casts.  Recouping our capitalization would require us to sell even more tickets, and for a long period of time.  Add to this the fact that we don’t have a middle theater zone in which to produce—a circumstance that forces us into 99-seat theaters and limits the number of tickets we can sell on a given weekend. Because of this, the independent producer must look at LA simply as a place to develop their production—not as a money making production. It follows, that if a producer is just looking to develop, he or she would want to produce on the easiest level possible—the 99-seat contract– in order to loose as little money as possible.

 How do we change this situation, and raise the level of theater in Los Angeles?

 Well, in my opinion, we have to have a coordinated approach:

 Step One (1) We have to allow producers to recoup some capital (if not turn a small profit) on the current 99-seat plan.  Perhaps we need to look at profit sharing ideas with our actors so that they become stake holders in the 99-seat production.  This would prevent a producer making money on the back of very low paid actors.

 Step Two (2) We need to rework a new contract that sits somewhere in between 99-seat and HAT.  A contract that will bridge the gap so that theater companies that want to expand or spend more money on productions can do so without risking total failure (by falling into the bottom of the “J”).  This new contract must allow for shows to run open-ended.  This will help build long running shows that will promote our theater community by allowing more people to see our better shows.

 Step Three (3) With steps (1) and (2) in place, a new need will be created for theatres at the 199 seat level.  Theater owners will start to build them. 

 Step Four (4) Successful theatre companies will start to produce in the bigger houses, and with 199 seat houses popping up, commercial producers will be able to work in venues where profit numbers make sense to investors, thereby allowing them to produce better shows and experiment with bigger shows. All of this will mean higher salaries for actors.  (And sure it’s not going to be enough to live on, but $25 or $40 a show is better than $11, right?  And it’s better to be in a show that has good production values, as opposed to a show that doesn’t, right? and maybe there is a way to add in 1/4 health care shares where 4 weeks on this contract equals one on a full contract.  Then you would have 2 weeks toward your equity health care from an 8 week run.)

 Step Five (5) will be to start it all over again to work up to the 299 level.  It will be at this point that will we have a viable Off-Broadway theater scene in Los Angeles … With real money and real salaries.

 The thing that we need to understand is, we are not facing an audience problem.  Our audience is here.  People go to the theater.  The tourists are here.  They will go to the theater (especially when we work with solid and well-funded marketing plans like this).  The only thing preventing this new level of theater growth from occurring is, quite simply: the theater community.  If we don’t fight to change our situation, then it won’t change.  I think if we we’re smart as a community, and if we really work together with all of our best interests’ in mind, then we could put in place a 20-year Plan to make this vision a reality.

 Of course, we can simply keep going along as we are now.  But, just like my friend with the subsidized apartment, we will never have a reason to better ourselves.  And a successful, happy, nationally respected future will always be out of our reach.

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17 Responses

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  1. Gregory Franklin said, on October 26, 2009 at 4:44 pm

    You hit this on the head. We, the theatre community, are our own biggest problem and have been for the last 30 years. For theatre in LA to move to the upper right of the J, we must all seriously re-examine a system that we think is protecting us as artists when in reality it is killing us.

    • Rick Culbertson said, on October 26, 2009 at 5:16 pm

      And to be clear, I do want to point out that I am not in favor of getting rid of the 99-seat agreement. In fact, I think it is the best thing to happen to theater in LA (I will expand on this in a future post). What I am advocating for is to provide a path to move between 99-seat and HAT if a theater company wants to make the move (not all theater companies should). By providing a safe and incremental path, we will begin to build the demand for larger theaters (199-299 seats) to be built. And when the larger theaters are built, we will begin to see more commercial productions that pay full HAT wages.

      • alan blumenfeld said, on October 26, 2009 at 5:25 pm

        I do not like the 99 seat agreement, but that is another story.

        Your main points are so accurate and on target. Might I suggest putting together some house meetings with actors, producers at waiver theaters like Antaues, PRT and others and exploring how actors, producers and others can WORK TOGETHER to create more opportunities for people to work in theater in LA and get paid to do it.

        Alan

      • Rick Culbertson said, on October 26, 2009 at 5:36 pm

        I have been holding private meetings with people on a one to one basis. Please pass on my blog to people that you know who would be interested and have them email me directly. Thanks Alan!

  2. WAReilly said, on November 5, 2009 at 6:47 pm

    I’m not confident that any agreement could ever be reached with AEA. They still think the season runs from Sept. to May and then we all run off to summer stock jobs. And they are only interested in full time contracts. They are not reactive to the changing market place which is unfortunate since the entertainment business must be the most reactive of any.

  3. TB said, on November 6, 2009 at 11:10 am

    Since AEA does not seem to want to resolve this issue, perhaps the work around is to produce non-union. Lot’s of young actors are coming out of MT schools and other programs eager to work. I have always been a union supporter, but the leadership at AEA is brain dead.

    No one likes to hear this, and even members who do it feel a tinge of guilt, but Financial Core becomes a real option when a union locks membership into a dead-end cycle of a non living wage through this 99 seat code. I thought greedy producers were supposed to do that, not unions!

  4. james carey said, on February 15, 2010 at 3:12 pm

    Rick,

    You have some good points and I agree with most of them, but you left out a very important part of the larger theatre equation. I have been producing small theatre in LA for over 28 years, and 24 at my own space. The LA City Fire Codes allow small theatre to exist up to 49 seats as a meeting room. That means one exit, no fire doors, and no sprinklers – all store front churchs and AA meeting rooms operate under the same code. When you cross 50 seats and more, you are required to invest about 250,000 to 300,000 dollars to just become a legal small theatre. Many of the 99 houses are grandfathered in by the City, and many others are like Theatre Row in Hollywood, where I served as the co-founder and the first president back in the mid – 90’s, are built by investors who then charge the theatre opeartors amazing rents with no hope of profit recovery. When you jump to over 100 seats you enter an entirely different code that increases your investment and possibility that your theatre will not be approved as a venue. You have a better chance opening a large night club, then a legit 199 seat theatre in LA proper.

    So part of your equation to increase theatres and theatre sizes and everything that you suggested in your blog needs to include the City and how it views legit theatres and how they are constructed. It is a very real reason that small 99 theatre is the only place where a theatre owner or producer/company can afford to try and stay open.

    • Rick Culbertson said, on February 15, 2010 at 3:30 pm

      Since I do not own or operate a theater, I am unfamiliar with the building codes. Certainly, they would need to be addressed by the city.

      My hope is that once we can sustain a more profitable small theater scene in the theaters that we have, then the need for larger theaters will increase. I would think that producing in this scene would require production budgets of anywhere between $300,000 to $600,000 (in today’s money). Equivalent to production budgets of similar size Chicago theaters or small Off-Broadway shows in New York. Which (I hope) would make more economic sense to theater owners since they could charge higher rent.

  5. murph52 said, on February 15, 2010 at 3:27 pm

    “For one thing, musicals on this level are unable to include live musicians (unless they are all volunteers).”

    A falsehood and you know it, Rick.

    I’ve been the musical director/orchestra contractor for 20 Equity waiver productions in the
    past 13 years. Not once has any producer even suggested that I try to obtain volunteer musicians. And so far, only one of those productions later opted for canned accompaniment.

    David O did NOT play piano for Divorce, the Musical for free.

    • Rick Culbertson said, on February 15, 2010 at 3:43 pm

      “For one thing, musicals on this level are unable to include live musicians (unless they are all volunteers).”

      This sentence is specifically referring to low budget shows that are produced on the high left side of the curve where your production budget is around $20,000 or less. Divorce! in relation to other 99-seat theater shows, was not low budget. It was not produced at the high left side of the J-Curve where I would have a better opportunity to turn a profit. It was produced right at point A on the J curve.

  6. Roy said, on February 22, 2010 at 11:35 am

    So clear. What is the artistic cost of this financial trap?

  7. Martin Bedoian said, on March 2, 2010 at 6:55 pm

    Sorry to respond so late to this…but I just found the post 🙂

    Much of your position is accurate and well thought. However, there are huge gaps in peoples perception that there are no points between HAT and 99-seat.

    My company, The Syzygy Theatre Group has been producing in the space between 99 seat and Hat for 6-1/2 years. In that time we have provided over 50 AEA LOA contracts to members of the union that provided payment for rehearsal, performance and benefits. What we pay is not a living wage, but our contracts provide artist’s with about $2500 for a typical 12 week contract. That amount is a far cry from “volunteering” under the 99-seat plan. We have NEVER produced under the 99 seat plan (but always in 99-seat spaces).

    Through it all AEA has functioned as a union should, pushing for the best for its membership, but they have also cooperated with us so we could do business a different way and financial reward our artists.

    In the last couple of years other companies have begun to operate under similar contracts, including Furious Theatre, Salem K and Versus.

    One thing to note…this has not lead us to be more profitable than our 99 seat plan contemporaries. Then again, we are a not-for-profit 501c3 organization, so the “J-Curve” doesn’t really fit our world.

    The Marvelous Wonderettes however, as we all know, was remarkably successful, and to my knowledge operated under an LOA contract with the union during it’s lenghty run.

    Martin Bedoian
    Artistic Director
    The Syzygy Theatre Group

    • Rick Culbertson said, on March 2, 2010 at 7:11 pm

      I’m not sure what contract that puts you on, but you are right that it is between HAT and 99 seats. What ever it is you have it was not offered to me, I was put on a HAT when I extended beyond 99-seat (though AEA did make concessions and work with me to keep my cost to a minimum). And as far as I know Marvelous Wonderettes was on a HAT, but as we all know they didn’t have a band. And for those of us that are not not-for-profit, we need to recoup our entire budget, not just the weekly cost. My guess is this is why Marvelous Wonderettes did not have a band, though I wouldn’t know for sure.

      In regards to your agreement with AEA, do they cap your ticket price or the number of performances you can run?

      • Martin Bedoian said, on March 3, 2010 at 11:42 am

        Speciifcally we have been operating on individually negotiated (per-show) Letter of Agreement, Per Performance contracts referencing either SPT (originally) and then HAT

        I think the reason you went from 99 to HAT with nothing in between, is that is part of the 99-seat plan agreement and the agreement with the union specifies what happens when a production gains that sort of momentum.

        It is specifically designed to define a point in the curve where union members (which AEA exists to support) are being exploited by producers for profit. They figure if you can run for that many performances at common ticket prices without paying actors, you have re-couped your initial costs, are beginning to make a profit and are therefore you are ready to cover week to week expenses under the HAT. I’m not saying this is accurate, just saying I believe that is the reasoning.

        I am reasonably certain that Marvelous Wonderettes was on a LOA (at least initially), because they were discussed in one of our contract negotiations with AEA.

        We start our productions on contract and so the asumption is that we are not re-couping our production costs before goingon contract. In fact our greatest expense comes during the rehearsal period. Also our commitment to contracts hass shown the union that we are committed to growing to a HAT level using a growth path common in the NFP producing world.

        We specify how many performances (minimum) the actors are guaranteed, as well a a guarantee of a minimum number of rehearsal hours they are guaranteed. There is no cap on our ticket prices, but they fall within the average for small LA theatres, so I am not sure what the union’s response would be to significantly higher prices.

        The main point of my post was to point out that sometimes people discuss what the union does, what the 99-seat plan means, and what is possible based on facts that get completely modified as the information passes from person to person. I know many actors are furious when they are referred to as “volunteers” who are “subsidizing” the producing body, but that is in fact exactly what the 99-seat plan says.

        From my experience comments above such as “Since AEA does not seem to want to resolve this issue” and “I’m not confident that any agreement could ever be reached with AEA” are just false. Sysygy, and many other producers, have made agreements with AEA and it’s been done cooperatively. The agreements may not be 100% advantageous to the producer, but there ARE concessions on the union’s side. And I’ve learned through the years that a good mediation result is one where BOTH sides feel they “lost” a little.

        M-

      • Rick Culbertson said, on March 3, 2010 at 1:05 pm

        I would agree that the comments that you point out are a bit provocative, and perhaps not the most elegant phrasing that I could have used. However, I think that having individual theater companies and producers negotiate different contracts is not the best solution. That process forces each producer to reinvent the wheel. And if you are in the middle of a run and you have to go through the process of negotiation then it is even worse because it puts the producer under duress. I would rather there be a clearly defined path that everyone knows and understands. And one that is fair to everyone. 99-Seat to HAT conversion is not a smooth process when you are in the middle of a run.

        I also agree that AEA makes concessions. They made many to me, and I would say that my contract did end up a LOA because it was not the true version of HAT and I was still given a cap on ticket prices.

        The reason I am focusing on AEA, is that they are the union with the power in this town. Even though we also have SSDC, USA, etc. I think it would be much better if there was a clearly defined contract, providing for a seamless transition from 99-seat to professional with every union. Then, with that in place, producers can produce, instead of wasting time trying to work out their individual union deals.

  8. Martin Bedoian said, on March 3, 2010 at 4:33 pm

    In fairness to you Rick…the quotes I referred to weren’t yours :-).

    And some of us who are producing under LOA right now have discussed the idea of a standard “Bridge” contract that resides in the space between 99 and HAT. But that would involve collective bargaining…and that is a big ol’ can of worms for us little guys to open.

    Best

    M-

    • Rick Culbertson said, on March 3, 2010 at 4:41 pm

      Ha! I have been called out for not reading my own writing… 🙂

      Yes, Collective bargaining is a can of worms. But the is the can of worms that I want to open and 99% of the reason I started this blog– to speak from a producer’s point of view in hopes that other producers would say, “hey, yea, that sounds right, now what?”


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