Theater Investing FAQs
Why should I invest in theater?
Art is what makes humans, humans. So investing in it can be extremely rewarding. Disregard the potential financial gains for a moment — you have a chance to make extraordinary projects possible, viable, and available to the world. You give yourself an opportunity to expand the way the world thinks about the arts. Not to mention social-impact support is an area often overlooked by investors.
Some reasons I’ve heard (and even given myself) include:
“I want to help create art my family and friends can experience.”
“I am sick of putting my money in the stock market.”
“I am simply in love with theater. I can’t act, I can’t write, but I can give.”
What benefits do I get?
House seats for shows, invite-only industry events, exclusive access to opening night performances, dress rehearsals, backstage tours, meeting the casts and creative teams.
How much money do I need to get started?
You can typically invest in a Broadway show for a minimum of $25,000.
How risky is it?
Very risky. Only 1 out of 5 shows recoups their initial investment. However, the ROI on hits that run for a long time can be incredibly financially rewarding. See more about statistics here.
Could I lose more than I invest?
Never. The offering documents limit your liability to only your initial investment. If a show needs more capital to continue running after it opens, producers do have a right to ask original investors if they could contribute a priority loan, and investors can always decline.
Which show should I invest in?
You will find the right project to support. It’s my job and privilege to help you understand which shows are right for you, based on your interests, your goals, your finances, and your current investment mix. Ultimately, I want you to support something you love. Imagine walking by that show’s poster and being able to say, “I helped bring that to life.”
And make sure you’re investing with a Producer you know and trust and has a good track record for returning investments, producing quality shows and communicating with his/her investors.
How do I make money?
Once shows are profitable, productions deliver returns to investors on a weekly basis. This continues until investors recoup their original investment. Once a show has returned 100% of all its investments, additional profits are then split 50/50 between the producers and co-producers as one group and the investors. (It’s important to note returns checks aren’t cut every week but monthly or quarterly. This cuts down on paperwork and admin. This is standard practice, so don’t be off-put or worried.)
Who can invest? Can I invest today?
Broadway shows can only accept investment from accredited investors. The criteria is set by the US S.E.C., and you can read the full definition and requirements here. Think of that as an honors system; you do not formally apply or receive a statement proclaiming you are one, but productions require you, the investor, sign a document stating that you meet the requirements.
How does this impact my taxes?
Producers shouldn’t be giving out tax advice; they should always refer you to your accountant. You will receive a K1 at the end of every fiscal year, just like you would with any other investment. Expect to pay taxes if a show is profitable. Expect you’ll be able to write investments off as a loss if the show isn’t. Remember that tax law evolves, so, again, confer with your accountant.