$HOW BUSINE$$: HOW TO INVEST IN A BIG MUSICAL.

Ever wondered what it would be like to invest in show business? Producer John Frost knows more about this than anyone in Australia. In 2012 he is staging Annie, Legally Blonde the Musical and the world premiere of An Officer and a Gentleman.

At the casting launch for ‘Officer‘ he gave Neil Litchfield the lowdown.

What is the budget for a typical musical? 

An Officer and a Gentleman is about $6.5 million, which will take in all the development costs of the show. It is not ridiculously high that you’ve got to ply for several years to get your money back. It’s a responsible budget. Dr Zhivago was $5.5 million.

How many investors do you usually need per production?

With Dr Zhivago, only three.  An Officer and a Gentleman it could be up to five. The wonderful thing about this show is that it’s brand new. It’s not a tried and true show that has a track record so it’s probably a little bit more dangerous – but it has is the ability to travel the world and earn income for the original investors in that production.

What is the minimum amount you can invest?

Probably around $50,000. My advice to any new investor is that if you can’t afford to lose it you really shouldn’t invest it in a show. Funnily enough, we find a lot of people that if they love a punt on the horses, or are a part owner in a horse, love investing in theatre.

What is a recent project where your investors lost their money? 

With Footloose, which I did many years ago we basically lost nearly all the 5 or 6 million we put into it, in a matter of seven weeks. I remember a show which I did on Broadway called Good Vibrations – the music of the Beach Boys – which cost $7million, and we put a million into it, and within 4 or 5 months we’d lost it all.

What do you think it was with Footloose that made it fail?

I don’t know. It was a fantastic opening night and I thought it was terrific. But  the reviews came out, and they were terrible, and also, the public just didn’t want it. You can never break it down and say the show failed because of this. I do remember it was around the time of the Bali bombing, so one grabs at excuses, and we thought maybe people don’t want to go and be a part of big groups. It could have been our marketing, it could have been our casting – no-one knows.

What’s an example of a show where your investors made a spectacular return?

Definitely – The Phantom of The Opera, Chicago, the Annie I did 12 years ago – extraordinary.

The best result?

Wicked, of course – they’ll make all their money back and get another 50% - could be more on a big hit. It probably sits around about 135% average you can get back.

What is your best result as an investor?

We had a million dollars in the original Broadway and Toronto production of Hairspray, and it’s paid back, and continues to get cheques from all the productions around the world.

Do you always invest in your own shows?

I try to. I’ve got money in Annie. I’ve got money in Zhivago, I’ll have money in An Officer and a Gentleman. A lot of investors want to see that.

Dr Zhivago…how did investors go? Where will it be on next?

They went very well – they’ve been very pleased. Doctor Zhivago continues to get its money back – that’s about to go to South Korea. They’ll certainly get their money back and more.

Any news on where it’s going to next?

Not at this stage. We have a co-producer in London and we’re hoping it will land around late 2013, early 2014.

Do you need any new investors?

Always looking for new investors, and I can say honestly that our track record has been fantastic – nothing is ever 100% guaranteed, but you can have a lot of fun doing it, and I’m always open to take a phone call and do a meeting if anyone needs any information on it?

 Are you going to burst this year staging all these shows?

Not really. We’re geared up and the good thing is we always work a couple of years out. We sort of have it down pat – what we need to do and how we do it. And of course we’re doing Dream Lover  in 2013.

We’ve seen a lot of speculation about Wicked returning?

It’s my intention to keep it out of Australia as long as possible, and if the company that goes to Singapore, Korea, then I’d like to think Taipei and New Zealand will eventually come back into Australia. It will be back some time, but not within the next couple of years.

WHY AUSTRALIA IS BECOMING A GOOD BET FOR PRODUCERS.

John Frost’s Co- Producer on An Officer and a Gentleman Sharleen Cooper Cohen explained to Neil Litchfield why Australia is becoming a happy hunting ground for Producers.

“On the American stage, you don’t want to take a project of this size, which hasn’t proven itself somewhere, to Broadway or London. The only way to do that in America is in a non-profit regional theatre. Those productions can cost up to several million dollars, but the theatres don’t have that kind of money to spend. So the producer has to raise that money and only has a  4 to 5 week run in their season  to recoup.  

In Australia in a commercial run we get to prove this show. We’re away from the gossip of the internet, where everyone sees it and writes to their friends.  We have a commercial production, which, based on other shows, has a potential to make lots of money back for the investors. “

THE OVERSEAS EXPERIENCE.

David Spicer reports.

In the West End and Broadway Investors are known as Angels. In the UK Investor units are typically between 250 and 10,000 pounds.

Most producers seek to raise the cost of a production from a private list of 50 or 60 investors who are expected to stay committed to a producer.

The money is usually paid back in instalments if there is a regular weekly surplus of box office receipts over running expenses.

If and when the whole capital has been repaid the subsequent 'profit' is usually divided 40 per cent to the producer and 60 per cent to the investors .

The producer does not receive his or her share of profit until it has recouped. However Producers are entitled to an on going management fee.

Anthony Field  from  The  Stage Magazine magazine has written a useful guide to investors.

“Investment contracts now carry a paragraph warning about the high-risk in theatrical production. This is because, unlike the stock market world where shares and dividends might fluctuate over the years, all or part of the entire investment can be lost in a short time. Furthermore, it can take weeks or months or even years before even a successful production goes into profit. Thus it is wise for any investor contemplating regular investment to spread it over a wide 'portfolio' of, say, five to ten productions and to limit investment in each one to a specific maximum sum.”

Originally published in the November / December 2011 print edition of Stage Whispers.

Images: Top - John Frost surrounded by An Oficer and a Gentleman cast members Alex Rathgeber, Kate Kendall, Amanda Harrison and Ben Mingay (Photogrpaher: James Morgan). Annie stars Todd McKenney, Nancye Hayes, Anthony Warlow, Julie Goodwin and Chloe Dallimore with John Frost (Photographer: Jim Lee). John Frost checks out Stage Whispers (Photo: David Spicer)

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