Investing 101
How much is a typical theatrical investment?
Theatrical investments are often split into “units.” Units for a typical Broadway production can range from $25,000-$50,000 on average. For an Off-Broadway production, units can range from $5,000-$25,000. You can invest in more than one unit, and on some occasions, half-units are also accepted.
Can anyone invest in a theatrical offering?
For most theatrical offerings, the opportunity to invest is limited to accredited investors. You don’t need to go through any sort of process to “get certified” as an accredited investor. Instead, you have to meet certain criteria determined by the US Securities and Exchange Commission (SEC). The two main ways people can qualify are:
An annual income of $200,000 or more (or $300,000 for joint income with a spouse) for the past two years, with a reasonable expectation of earning the same or higher income in the current year; or
A net worth in excess of $1,000,000, excluding the value of one’s primary residence
How risky is investing in Broadway or Off-Broadway? How should I go about deciding if investing is right for me?
There is an old adage that says you can’t make a living on Broadway, but you can make a killing. That said, theatrical investing is considered a “high-risk” investment and can be likened to investing in a start-up company.
Ultimately, your decision to invest should be based on your other portfolio of investments, tolerance for risk, and cash flow needs.That said, you should not invest if you cannot afford to lose your investment or wait a while to see a return, as theatre is a long-term investment. We are happy to answer any questions you or your financial advisor may have.
What are the benefits of investing in theatre?
First and foremost, investing allows you to bring stories that you feel are important to a wider audience. Without investors, shows do not see the light of day. Aside from supporting theatre in a tangible way, some other benefits of investing might include:
Tickets to an opening night performance and party
Access to purchase “house seats” to the show and other shows on Broadway, a perk reserved for industry members
Exclusive merchandise, like opening night gifts
Access to updates on the show’s development
Access to behind-the-scenes knowledge of the production and the theatre industry
Access to invest in tours or cast recordings, which are generally safer investments
Turning a profit from your investment that could last for years to come
Can I lose more money than I invest?
No, you cannot lose more money than you initially invest.
What steps do I need to take to invest in a show?
Once you decide to invest in a show, you will need to fill out some paperwork and either self-certify that you are an accredited investor or provide documentation to prove that you qualify. Once your paperwork is submitted, you can typically submit your investment funds either through an EFT from your bank or check.
What are the tax implications?
Theatre investors will receive a financial statement from the show (K-1) at the end of the year which will help in preparing the tax returns of the investing entity (either as an individual or an entity). Taxes are not due until the show distributes profit after it has returned the full initial investment to its investors. If the show is not profitable, investors can write-off their remaining unreturned investment on their tax return as a loss. Please ask your financial advisor or tax professional for more information.
Disclaimer: Our content is for informational purposes only and we do not intend to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.