Broadwaynomics: The Economics of American Theater’s Risk, Finance and All That Jazz
In Cabaret (1951), Sally Bowles sings a tour de force in “Money,” exclaiming that “money makes the world go around.” Composers John Kander and Fred Ebb’s timeless lyrics are not only relevant to the Roaring ‘20s and nightclub scene of interwar Germany but also serve as a testament to the importance of funding in fueling Broadway.
When one traverses Times Square to find the name of their destination written in lights and arrives at the grand gold and burgundy painted theater, they ready themself with a Playbill in their lap and a glimmer in their excited eyes as the lights dim and the show begins. However, amid this special moment of respite, little do theater-goers realize the contrasting chaos behind the scenes. Behind the curtain, Broadway is a financial mess.
The COVID-19 pandemic that shocked the global economy in 2020 left lasting, devastating impacts on the already struggling Broadway industry. The shutdown and social distancing policies that ensued left the live theater industry largely without a source of income (Reinhart, 2022). Nearly half a decade since the initial onslaught of the pandemic policies, Broadway continues to struggle financially, despite continuing to produce new shows. However, the pandemic only exposed the risky and unstable nature of investment in Broadway (The Economist, 2024). These financial troubles have been historically persistent. Broadway supports a large portion of the country’s art community, and both the effects of the pandemic and the historically risky financial attributes of Broadway make it critical to examine to secure one of America’s most iconic forms of entertainment.
The shock of the COVID-19 pandemic reduced Broadway’s gross value by over $1 billion — a 55% decrease from the pre-pandemic 2018-19 season (Reinhart, 2022). Yet, the curtain on financial troubles does not close there. Recent evidence from the 2022-23 cycle indicated that box office revenue was still down 27% from pre-pandemic levels, with fewer than 20% of shows recouping their initial investments (The Economist, 2024).
Several factors have complicated Broadway’s reemergence. Rising prices coupled with ambitious and expensive projects have slowed regrowth. Production costs have been steadily increasing by 5% annually while the average ticket price from 2023-24 decreased from $128.43 to $125.27 (Huston, 2024). Despite financial hardship, producers have not backed down. The average production budget rose by $1 million during the same period. Death Becomes Her (2024) raised a budget of $31.5 million, making it the most expensive production in the past five years (Hershberg, 2024).
The natural reaction to these concerns may be to pause or shut down Broadway’s activity, but Broadway is inextricable from The Big Apple’s art scene, entertainment economy, and cultural identity. The industry supports over 96,000 jobs and contributed $14.7 billion to New York City’s economy in the 2018-19 season (Sands, 2023). Considering Broadway’s shutdown during the pandemic, the constant monetary losses by expensive and unsuccessful productions, and the attempts to persist through financial risk, Broadway’s perpetual failures to achieve stability are leaving drastic impacts on the job security and quality of life for thousands of artists.
The risk associated with financing Broadway has been a looming drawback to investing in the theater industry. Since the 1960s, an average 80% of investors did not recoup their investment (Dent, 2024). This is largely a product of Broadway’s bureaucracy and the numerous stakeholders seeking pay. The costs and revenue streams of Broadway can be summarized in three ways, respectively. Costs include the initial price to finance a production, weekly operating costs (for staff salaries, utilities, etc.), and, in many cases, royalties paid toward the show’s authors. These costs add up to millions annually, especially due to the royalties that generally include 40% of weekly profits, which further reduces profits for investors, if any. Revenues are mostly made through Gross Weekly Box Office Receipts (GWBOR), merchandise and cast albums (for musicals), and licensing shows out to community and school theaters (Schick, 2023).
Despite a grim financial setting, things are looking up and the curtain is rising. For instance, a GWBOR above $1 million is generally considered a success, and recent reports on the 2024-25 season indicate that an overwhelming majority, or 64%, of actively running productions are reaching a level of “success” (The Broadway League). Moreover, creativity and artistry are continuing to bloom in Times Square. This spring is bringing 19 new plays and musicals to the stage with large budgets and star-studded casts, including Shakespeare's Othello with Jake Gyllenhaal and Denzel Washington and Glengarry Glen Ross with Kieran Culkin (Simon, 2025).
Lastly, unlike other industries in which investors incur high risk, the value of Broadway’s artistic and cultural impact is immeasurable, which is also an incentive for many investors to finance productions. Broadway will continue to survive economic hardship as long as people enjoy live theater. While Broadway is still recovering from the pandemic and may not yet be back to pre-pandemic levels, revenue has been rising year after year since 2021, indicating that enthusiasm for theater lives on. Yet, on a pragmatic level, risk and low payoff continue to affect how productions are manufactured. Adapting popular Disney and other films, reviving shows, and sponsoring new musicals are all avenues through which the economics of Broadway impact artistry.
As Sally Bowles once sang in Cabaret, “money makes the world go around.” However, even more valuable to this discussion is Bowles’ lament in “Maybe This Time” in which she cries, “maybe this time I’ll win.” Despite a pandemic, despite the risk, and despite precedent that would make any other investor falter, the financiers of Broadway have surmounted and proved that its undying art simply requires an investor to believe this time they will win.
Edited by Yuhan Wu
References
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Hershberg, M. (2024). Skyrocketing Broadway show Budgets Scare Producers. Forbes. https://www.forbes.com/sites/marchershberg/2024/10/24/skyrocketing-broadway-show-budgets-scare-producers/
Huston, C. (2024). Why Broadway never bounced back. The Hollywood Reporter. https://www.hollywoodreporter.com/business/business-news/broadway-box-office-1235915277/
Reinhart, E. (2022). A look at Broadway before, during, and after COVID. ArcGIS StoryMaps. https://storymaps.arcgis.com/stories/7e37f4a1b0ea4dfaa0e500e8bb0c3056
Sands, R. (2023). Broadway: The engine that helps Fuel New York City’s economy. Forbes. https://www.forbes.com/sites/rogersands/2023/01/20/broadway-the-engine-that-helps-fuel-new-york-citys-economy/
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Simon, S., & Lunden, J. (2025). Broadway is seeing a steady revival after the pandemic, partly buoyed by tourists. NPR. https://www.npr.org/2025/02/08/nx-s1-5283976/broadway-is-seeing-a-steady-revival-after-the-pandemic-partly-buoyed-by-tourists
The Broadway League. (n.d.). Grosses - Broadway in NYC . The Broadway League. https://www.broadwayleague.com/research/grosses-broadway-nyc/
The Economist Newspaper. (2024). Broadway is struggling to find its rhythm after the pandemic . The Economist.https://www.economist.com/united-states/2024/01/11/broadway-is-struggling-to-find-its-rhythm-after-the-pandemic
Clary, T. A. (2022). People wait in the audience at the Broadway musical “Hamilton” on Sept. 14, 2021, in New York, as the highest grossing Broadway musical of all time returned after 18 months in the dark due the COVID-19 pandemic [Photography]. Getty Images. https://www.musictimes.com/articles/92224/20230425/hamilton-broadway-cast-now-2023-miguel-cervantes-leading-chicago-tour.htm
