In the nearly 20 years I’ve covered New York theater, I can’t recall receiving a press release advertising a theater as an investment opportunity. I’m not talking about a prospectus for investing in a show — those I’ve seen and they, too, are fascinating documents, especially if you’re jazzed by the minutiae of LLCs and such. This press release, however, announced that Louis S. Salamone, whose title is Owner/Creative Director at the theater complex at 45 Bleecker Street, “has created a new business model for Off-Broadway theater with his multiuse, hybrid theater complex which is open 18 hours a day, seven days a week.”
Salamone, the release goes on to state, “has created an investment package similar to a mutual fund, allowing investors to spread their investments among several shows as well as in the theatre complex itself.” Well, inquiring minds want to know more.
The prospectus is a comprehensive document running 26 pages and includes a nice selection of images from across the venue, which totals about 15,000 square feet and includes two main performance spaces as well as a third, rather informal one; plus a sandwich cafe, nighttime bar, art gallery and, most important, “multiple revenue streams.” (The complex’s latest tenant, by the way, is the return of Puppetry of the Penis. Ironically, it’s a show not known for giving theater owners the shaft.)
Still, none of the information in the release struck me as eyebrow-raising, only perhaps that a theater owners is aiming to run his venue like a mutual fund. The truth is, there’s been plenty of chatter through the years among owners of theaters, be they commercial or nonprofit, and in particular those involved in capital campaigns and being a landlord, regarding the importance of maximizing revenue from a space. It’s a discussion that ought to generate free-market thinking, so in that sense, Salamone’s proposal is perhaps organic to our times, if not surprising.
The prospectus is also finely detailed. It covers the ways Salamone and his team have kept the complex infused with activity, theatrical or otherwise. There is a long-term lease and an option to buy the building. “This is the permanent home for this theater complex,” it says.
On to the fiscal details. The “investment” will total $600,000, sold in 48 units of $12,500 apiece, although Salamone is open to one person making that investment; ownership’s investment is $300,000, “plus sweat equity.” Investors “will not be allowed to participate in the day-to-day operation and decisions of the complex, but they will be informed and allowed to vote on all major decisions involving the complex.” They will also comprise 48 percent of the ownership; Salamone, et. al., represent 52 percent. There are the expected statements regarding net profits (the first $160,000 is “held in reserve“; the next $600,000 is “proportionately divided amongst the investors until all investors have recouped 100% of their investment”…). And there are itemized figures on the start-up costs incurred thus far to get the complex up to speed. It’s a well-done document. The analysis of projected revenues and projected expenses is also fascinating if you’re an aspiring producer. Or, even if you have no plans to go the route of David Merrick, examining the document is educational. So I do think the plan has merit — only time will tell if, how and when it pays dividends.
Salamone, however, had some surprises and some strong, provocative statements to make about Off-Broadway, the nonprofit business model and especially Actors’ Equity.
Tell me what’s behind your business plan.
The thing that destroyed the commercial theater was nonprofit: they don’t have to make a profit or they can go get a grant or subsidy. There’s no more grants or subsidies, and over the past decade lots of them have produced nothing. Most theaters run only four hours a day. So my business plan changes that.
How does this work? The part about theaters being underutilized seems on target, but on Broadway the whole issue is about unions.
That right. Well, when we took over this theater, we went with the casino model: how much income can we get per square foot per minute per day. The way we’ve done that is that we have children’s shows in the morning, seven days a week. We’re not producing most of the children’s shows, but we here we have the Shadow Box Theatre, which is a nonprofit. They do two shows a day and bus children in from schools before 2pm. How many theaters have that? We know it’s something communities definitely want. And we worked with Shadow Box to negotiatea very, very favorable rate.
That’s 10 hours…
Then there’s Pinkalicious, the Musical-the book has sold something like half a million copies. That’s on at 1pm Saturdays and Sundays and we’ll have 300 children here-300 girls dressed in pink. That’s not the beginning of our weekend day, though: We rent the theater at 9am Saturdays and Sundays for I believe the largest AA meeting in New York. I won’t say AA pays full rent, but it counts toward per square foot, per minute of the day.
So you take all these off-hour shows-9ams, Monday nights-and no, they aren’t paying as much rent as our main shows would pay, but our objective has been whether we could get these to equal 50% of our rent. And by this October, it’ll equal three-fourths. The last piece helping to push us over is Amato Opera.
So Amato is continuing, despite closing on the Bowery.
What happened was Tony Amato wanted to retire and did, which everybody knows. His niece and her husband, who’d really been running it for 20 years, started their own opera company and they’re going to present three shows a week-Wednesday at 2, Saturday at 1 and Sunday at 7-off-hour dates. They move in as of October. And we’re now on their board. If they’re healthy and survive, we’re healthy and survive.
Your prospectus, in the early section about the use of space, talks about the café and wine bar, which are central amenities and ancillary revenue streams for you.
That’s the second main point I was getting to before. We have a café in our lobby, much like European theaters. There was a sandwich shop, Crosby Sandwiches-this counter on the street for 10 years that lost their space. We had them move into our theater; they’ve been a hit since day one. Between that and the beer and wine license, we’re paying rent, basic bills without depending on a main show. It’s taken us two years to get here. As far as the main shows, we have two stages most people know: the Bleecker Street Theatre and the Green Room. When we don’t have shows, because of all the off-hour shows and the beer and wine and café, we’re still paying our rent and our bills. When we have main shows, they pay a very large rent, so we’re then able to pay off any improvements on infrastructure and make a profit. Our great luck was Sleepwalk With Me, which ran almost a year. Prior to that was Almost an Evening. We’ve had luck with the right shows. And the economy being bad has helped us. People aren’t taking big weekend trips. If they have kids, they want to get out, so they’re going to movies and Off-Broadway. Tickers are up 25 percent because people can afford to see shows like Pinkalicious. You know, a woman came up to me and said the four tickets she bought equaled one Lion King ticket and that she could take her family to see it. Like the first quarter of 2009, when McDonalds and Kmart did well, we do well because we’re affordable.
So walk me through more of the opportunity.
When I was starting this, I was underfinanced. We’re still trying to pay off start-up costs. Someone could invest one share for $12, 500 and with that we’ll offer a half-share of any shows we internally produce. I look at that as being the back-end. Here, if you’re investing in Off-Broadway, you’re investing in a number of shows. All you need is one hit, one hit like Blue Man Group. This spring, we did our first self-produced show. We’re dedicated to developing Off-Broadway shows. In other words, I don’t believe that shows should be developed by nonprofits. The greatest shows were developed by some lunatic mortgaging his house.
Aren’t you being a little rough on the nonprofit business model?
No. They can fail and still have a hit. They can walk in with all this money a commercial producer wouldn’t have. Let’s be honest: things like the Roundabout may have nonprofit banners but they’re commercial producers with a boost, basically. They hurt commercial producers because the unions have it set up where they can pay actors less money. People like the Shuberts and the Nederlanders have gotten smart-let’s set up a nonprofit and we will get all the benefits and we’ll still be commercial. It’s not hurting Broadway as much as Off-Broadway.
And look, I’ve general-managed shows; I’ve been in the theater business 12 years. Here, my logic was: How can I have a model that will succeed as commercial theater? I didn’t think about the nonprofit business model. And I think I’ve come up with something that works. Of the 10 longest-running and biggest moneymaking shows, not only are eight of them within walking distance of my theater, they were also nonunion.
The purist in me doesn’t necessarily consider Blue Man Group as theater. They’re a lot of entertainments.
I think Blue Man Group is as legitimate a theater piece as any other. A play or musical can’t be produced Off-Broadway today with an Actors’ Equity contract, and without a union contract it can’t be sold through TDF or through TKTS and it can’t be reviewed by the Times or Time Out. So we’ve had to find other ways to make money.
There are these kids who rent with us-the Barefoot Theatre Company, a small nonprofit who are the smartest kids off the block, I think, turning Dog Day Afternooninto a play. I feel the problem is smart stuff can’t advance because of the way Equity has things set up. The people who should get some of the benefits-the deal nonprofits like Roundabout get-don’t get them. They have to deal with the same stuff as commercial producers-either doing a Showcase, which is useless because no one will see it, or a mini-contract which they can’t afford. These small nonprofits are hampered by Equity and being put out of business by the same union that should be helping them.
There’s a lot of frustration with Equity in the Off-Off-Broadway community. They make incremental moves toward Showcase reform I don’t know anyone impressed by their commitment to change.
See, the models for theater don’t work anymore. In order for a small theater to survive, I had to find a new model. We’re surviving. The first three years here were difficult; we’re finally reached what our model was set up to do. Anyone investing in us will profit with us. I’m hoping it’ll become a model others will copy.
But Equity isn’t going to go anyway.
No. The two main problems in the business are unions have not been our friends and they really have not helped commercial Off-Broadway at all. There’s been this movement that Off-Broadway should be 42nd Street and above, and not much love for Off-Broadway that is below 42nd Street or downtown, where Off-Broadway should still be. Guys like Scott Morfee at Barrow Street, myself, Larry Page at Actors’ Playhouse, Dana Matthow at the Soho Playhouse-we all know each other and agree there are things going on that are just wrong. Like the League of Off-Broadway Theatres and Producers, which shouldn’t say it represents Off-Broadway theater.
Because the League signed a back-door deal with Actors’ Equity that its members will be 100 percent with the union. If you have a kids party in the lobby, you have to be Equity. Children’s shows tend not to be Equity-I couldn’t do them in my theater if we were a part of the League. Pinkalicious, run by the Vital Theatre Company-I mean, the League signed this deal, then went to Pinkalicious and told Vital they had to be Equity and Vital said, “We can’t afford that.” New World Stages told them, “You have to be union or you have to leave the theater,” so they left. The League no longer represents commercial Off-Broadway, it represents nonprofit Off-Broadway. So the Off-Broadway Alliance is trying to pick up the slack.
You really rattling some sabers, Louis.
TKTS will not run a show that’s non-Equity anymore-Blue Man Group will never be on TKTS again. How much sense does this make? They say it’s because it’s not professional if it’s not Equity. Well, let’s call it what it is: TDF and TKTS are monopolies and they’re breaking all kinds of rules and laws. We have trouble getting critics because Equity tells the Times, “Don’t go.” When you can’t be sold on TKTS, you don’t have that cushion.
But TDF is under no obligation with TKTS to sell anyone’s tickets, though.
But they can take taxpayer dollars and say, “We can’t sell your tickets”? TDF’s initial mission statement was to help develop theater. Where did it say that it had to be Equity theater? I general-managed a number of shows that were Equity and non-Equity and we weren’t on TKTS and it was the difference between running two weeks and 10 months.
I feel like I have to stop you here. Scott Morfee, as you say, is in your same boat and he makes a profit. Who’d have thought that Our Town, with a cast that large, in a house with limited seating, would run for months and run into the black?
All I know is these monopolies are lawsuits waiting to happen-not from people like me, not from people like Scott Morfee, but sooner or later someone is going to go complain to the government, and the Justice Department or the state Attorney General is going to step up and say, “You are discriminating and stopping commerce.” They’re going to be in lots of trouble. They cannot use as a criteria that you have to belong to a union.
So what do you recommend as a solution to the whole union issue, since Equity isn’t going to go away? Plenty of members like their union.
I have no clue. If I was an Equity member, I’d be screaming mad. They have done such awful, evil things to their own people. I can’t respect a union that treats its rank and file so badly. There’s two union contracts-one for the administration that runs Equity and one for the actors. Why is that? Basically, actors have to work six months before you can get healthcare while the people who work in the office have healthcare from the day they start-and dental, too. Unions have become above the people running them; it’s supposed to be rank and file running unions. Most actors want to act and don’t want to be involved in politics. But the lies actors are told-if you do a nonunion, “We’ll blackball you!” This is a right-to-work state and a right-to-work country. Equity’s dirty secret is the thousands of dollars in fines the government hits them with every year.
Equity comes down on its members who don’t do what they tell them like they killed the President. This kid I know-when he sent letters from Equity to this government official, the union not only backed off but paid a huge fine. Equity is its own worst enemy. If they worked with their rank-and-file and producers, things would be better all the way around. It’s easier for them if theater isn’t produced. Let them get off their lazy asses.