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Chapter 13 - Performing arts and culture

from PART III - Live entertainment

Published online by Cambridge University Press:  01 June 2011

Harold L. Vogel
Harold L. Vogel
Affiliation:
Independent Analyst
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Summary

Break a leg!

It has been said of all the arts generally that they are a product of disciplined virtuosity in which you are the resource that perceives the value. As such, then, the performing arts in particular generate more psychic than pecuniary income, and they operate under somewhat different economic assumptions than the other entertainment industries thus far discussed. In fact, many organizations in this segment are nonprofit, requiring for their very existence substantial subsidy from government and private-foundation grants and from contributions by individuals

Although the fundamental creative processes in the performing arts have remained essentially unchanged for centuries, technological developments have been important in mitigating the pernicious effects of inexorably rising costs. Fortunately, it still doesn't cost anything to wish performers well by telling them to “break a leg.”

Audiences and offerings

The potential widespread appeal of live performances notwithstanding, there are severe time and financial constraints that limit audience size and scope. This was already apparent even as far back as the eighteenth century, when a theater ticket cost more than a full day's wage. As Baumol and Bowen (1968) indicated in their seminal study, the audience for high culture is dominated by highly educated individuals in high income brackets, an observation supported by the more recent data presented in Figure 13.1.

Although education appears to have a somewhat stronger effect than income, another hypothesis as to why the audience for live performances seems to become ever more exclusive was offered by Linder (1970), who noted that as economic growth increases our incomes and the available array of consumption goods, there is a tendency toward more “goods intensity” at the expense of time spent on cultural activities.

Type
Chapter
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Entertainment Industry Economics
A Guide for Financial Analysis
 , pp. 479 - 507
Publisher: Cambridge University Press
Print publication year: 2010

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generating more than $500 million of revenues (compared to Ringling's estimated $600 million) as of 2005. See Collins, G. (2005) and Pogrebin, (2001)
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On the Waterfront, which lost its entire $2.6 million capitalization after eight performances. But in early 2003
The Mambo Kings in 2005
Bombay Dreams with 284 performances in 2004
Seussical with 198 performances in 2000. See also Mandelbaum, (1991)
Variety of February 15, 1989, Cats had become the most profitable (in absolute dollars) theatrical production to date
As of June 1997, when it became the longest-running show in Broadway history, Cats was still grossing more than $350,000 a week and had generated revenues of more than $329 million on Broadway and $2.2 billion worldwide
Phantom of the Opera had by early 1998 actually grossed more
By 2003, Phantom had become the third–longest running show after Les Misérables
By the end of 2009, Phantom had become the longest-running show with more than 9,000 Broadway performances, had grossed $5 billion worldwide
Avenue Q required 10 months to recoup $3.5 million. See Grimes, (1997)
Variety, January 26, 1998
New York Times, October 3, 2002
Disney's, Beauty and the Beast, with an initial investment believed to be $11.9 million, was also a huge success despite its cost. See Witchel, (1994)
Disney's Lion King is believed to have been the most expensive, costing $20 million (New York Times, November 29, 2003)
And through 2008, Mamma Mia! has generated worldwide revenues of $2 billion
In 2008, Shrek the Musical was capitalized by DreamWorks at $26 million and started well
Healy, (2010a) describes the musical, Spider-Man: Turn off the Dark
the cost of The Phantom of the Opera was $8 million in 1988, and Wicked was $14 million in 2003

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