The tills are alive

The musicals business is bigger, more global and more fabulous than ever...

IN MEL BROOKS’S film “The Producers”, two men plot to make a fortune from a flop. They raise more money than they need to stage a musical, by selling all the shares in it several times over. Then they try to make the worst show ever: “Springtime for Hitler”. They assume it will close in a night and they will be able to abscond with the cash, since no investor will demand a cut of non-existent profits. To their horror, the audience loves it.

Musicals are risky in real life, too. So when David Geffen, a showbiz mogul, approached Mr Brooks about turning his movie into a musical over a decade ago, Mr Brooks dragged his feet. Mr Geffen tried to convince him it was worth the hassle: he had made more money on the musical “Cats” than on any film he had ever made. This helped win over Mr Brooks, says Alan Schwartz, his lawyer. They put “The Producers” on Broadway (see picture). Mr Brooks made a packet.

“You can’t make a living, but you can make a killing,” goes the Broadway adage. Musicals have odds like venture capital: only one in ten makes money, and two out of ten lose it all. The hits, however, are huge (see table). “Cats” probably made a 3,500% return for its initial investors. Since it debuted in London 27 years ago “The Phantom of the Opera”, a musical by Andrew Lloyd Webber, has grossed $5.6 billion worldwide, more than any film or television show.

Musicals had their first big boom in the 1940s, when Rodgers and Hammerstein wrote “South Pacific” and “Oklahoma!”. In the 1980s Mr Lloyd Webber and Cameron Mackintosh, another Brit, invented the “mega musical”, with big-budget shows such as “Phantom” and Mr Mackintosh’s “Les Misérables”. Now the business is belting out high notes again, with new shows, new markets and new interest in old hits.

Unlike films, musicals can run in theatres for decades. “The Lion King”, based on a Disney film, has prowled on Broadway since 1997. Shows can charge a lot for all that jazz. A ticket for the “The Book of Mormon” on Broadway can cost $477, plus fees, and even more if bought from a tout.

Musicals in America will probably generate $1.9 billion in revenue this year, according to IBISWorld, a research firm; most of that will come from tours beyond Broadway. Once a musical has been branded a success, producers roll out national tours. “Apart from holiday weeks it is hard to do $2m weeks” for big shows on Broadway, says John Gore, the boss of Key Brand Entertainment, a musical production, touring and ticketing firm. “On the road you can have $2m weeks all year long.”

Musicals have long toured in English-speaking countries, Japan and Europe. In Germany, where musicals grossed nearly €600m ($455m) in 2011, nearly a tenth of the population goes each year. It is the third-largest musical market after America and Britain. Western musicals are spreading to South Korea, Brazil, Russia and other emerging markets. China and India, which are starting to build big theatres, could become lucrative within five years.

Western musicals either run in English with subtitles or are put on by actors in the local language. It helps to have been a hit on Broadway, but it is not essential. Disney’s “Tarzan”, a musical about a brawny man who swings on vines, fell flat in New York but soared in Germany.

In mature markets popular television shows, such as “Any Dream Will Do”, in which people vie to be cast in musicals, have attracted a younger crowd into theatres. “People have now grown up with musicals, and the audience has expanded vastly,” says Mr Mackintosh. And people are willing to fork out for a night out. Spending on Broadway musicals was resilient during the downturn, partly thanks to tourists. Big shows are doing well even in crisis-hit Spain, notes Mr Mackintosh.

The business today is not all song and dance, however. Margins are not what they were. Labour costs, especially in unionised New York, have risen, as has the price of theatre rentals, sets and costumes. David Ian, a British producer, reckons that putting on a musical is three times costlier than it was 20 years ago. “When I first started, if you had a hit show you’d expect to make your money back in 20-25 weeks,” he says. “Now you’d absolutely expect a year.” Producers are losing more of their profits to intermediaries. “If you want to make money off of theatre, open a ticketing company,” harrumphs one producer.

Musical-goers now expect more spectacle. “Spider-Man: Turn Off the Dark” is thought to have cost $60m, because actors fly across the stage. Other big musicals have seen their budgets scale skyscrapers, too. Opening a big musical on Broadway can cost $10m-15m, and then another $500,000 a week to run it.

So producers and investors crave recognisable brands. Of the four Tony nominees for best musical, announced on April 30th, two were well-known films (“A Christmas Story” and “Bring It On”) and one a famous children’s book that had also previously been filmed (“Matilda”). “Juke box” musicals, which weave popular songs into a threadbare plot, are also in vogue. Critics say “Book of Mormon” was an unlikely hit, but its writers had “South Park”, the TV show they created, behind them.

An industry once composed of scrappy producers has become more corporate. Hollywood studios have muscled in. Studios have always licensed rights to their films; now they are trying to produce them on stage. Disney led the way. Universal Pictures struck accidental gold with “Wicked” (the studio had bought the rights to turn the book, about the Wicked Witch of the West, into a film, but was later approached to make it into a musical, which has grossed $3 billion). In May Warner Bros will help bring “Charlie and the Chocolate Factory” to the West End.

More musicals are opening in non-traditional towns and moving to Broadway and the West End after kinks have been worked out. A revival of “Dreamgirls”, with music by the Supremes, opened in South Korea and came to Broadway later. Chinese producers are hoping to develop a Chinese-language show, “Shanghai, Shanghai”, and eventually take it global. Stage Entertainment, a European production firm, worked with Sylvester Stallone to turn “Rocky”, a film about a boxer, into a musical. It opened in Hamburg, in Germany, last year. Next year “Rocky: Das Musical” will open in English on Broadway.

A hit about hitting people (while singing) may sound odd, but this is an odd business. The producers in “The Producers” speak for the whole industry when they ask: “Where did we go right?”