The recent radical step taken by producers of the upcoming fall revival of On The Town seems to suggest to many that they may be in financial trouble. Howard and Janet Kagan released a statement saying that they created a website so readers can learn about the show and make an online investment if they meet certain financial standards. Based upon the criteria, potential investors must have an annual income that exceeds $200,000 individually or $300,000 combined or a net worth exceeding $1 million. So does this unusual move mean trouble for the production or not?
In business, when a company sells part of its equity it is normally a sign that the company is in danger of faltering and needs to sell part of their market equity in order to keep their core business afloat. The Kagans are the first producers to use a custom website to try to sell equity stakes for a Broadway show. The pair plan to allow investments via the website until opening night, when a show’s capitalization must be in place. Howard Kagan shared that he would consider the website to be very successful if between $1 to $2 million was raised for the show. He went on to share that they would turn to other investors or use their money in the event that sufficient funds are not raised.
As referenced in a previous Broadway Tour article entitled How to Invest in Broadway, investing generally occurs when producers reach out to a specific group of previous investors or when interested investors reach out to producers. The fact that this method of fund raising has been introduced so late in the process doesn’t look good to those on the outside looking in. Previews for the show are scheduled to begin in nearly a month (September 20), and the show is set to open October 16. Most shows that are financially stable and poised for success have their funds lined up well in advance. Then there are shows that hustle until opening night to generate the funds they need; On The Town appears to be falling in that category.
Despite concerns that the show is facing a financial dilemma, producers insist this just is not the case. Howard Kagan revealed that the website concept was a project that had been in the works since late last year and was not a last resort to attempt to raise funds; though it is not clear how much of the $8.5 million in funding the show has already raised.
Kagan went on to say in a statement, “With the theatre industry evolving rapidly, we aim to open up the once-closed circle and invite theatregoers who are accredited investors to invest in what they love, and to share the thrilling, one-of-a-kind experience of backing a Broadway show. By streamlining the investment process and increasing accessibility, we hope to expand the community of Broadway investors, beginning with an opportunity to join in the journey of a major musical revival, On The Town.”
It’s a concept that London has profited from in the recent past. The lead producer for Wind in the Willows was able to raise $1.7 million using a website, only he used investors with more limited means. However, this idea is new to American Broadway theatre and has many people wondering if the method will work, especially in such a short time span.
The major inhibitor to the process of fundraising and ticket selling for the show is the fact that it is lacking in two areas — stars and a fresh concept; elements that most revivals need in order to make people want to see them. Yet the Kagans remain confident that positive reviews received last summer for the show’s run in Massachusetts are a sign that the show will be a success. Additionally, this poses concerns about potential investors getting a return on their investment. If the show is not in a position to succeed, what value does an equity stake have?
Whether or not this step taken by the Kagan’s is truly a way for producers to connect with the public or an act of monetary desperation, only time will tell. Either way, here is to hoping that fans of the production get to see it make it to the Broadway stage.
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