630. On Broadway, Nobody Knows Nothing

Summary

Podcast Summary: Freakonomics Radio Episode 630 - On Broadway, Nobody Knows Nothing

Episode Information:

• Title: Freakonomics Radio
• Host/Author: Stephen J. Dubner + Stitcher
• Episode: 630. On Broadway, Nobody Knows Nothing
• Release Date: April 18, 2025
• Description: Part 2 of a three-part series exploring the economics of the theater industry, delving into the financial challenges, unpredictability, and intricate ecosystem of Broadway productions.

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1. Introduction to the Theater Universe

Stephen Dubner opens the episode by painting a vivid picture of the theater world as a "tiny universe" compared to more mainstream entertainment forms like TV and film. He emphasizes the resilience and passion of theater believers, highlighting how a single successful production can rejuvenate the entire Broadway scene.

Stephen Dubner [00:02:13]: "The theater universe looks like a distant and dimming star. And yet believers still believe."

2. The Miranda Family and Hamilton

Luis Miranda Jr., father of famed playwright Lin-Manuel Miranda, shares a personal anecdote about his son's passion for Hamilton and its profound impact on their family. Lin-Manuel's creation of In the Heights marked his entry into Broadway, which later evolved into the global sensation Hamilton.

Luis Miranda [02:49]: "I see hip hop singers jumping off the pages in my head. I'm like, he went crazy."

Hamilton's unprecedented success not only transformed Broadway's landscape but also elevated Luis Miranda's role to oversee his son's burgeoning empire.

Stephen Dubner [05:01]: "Luis Miranda himself had a dream for his son."

3. The Economics of Broadway Productions

The discussion shifts to the financial realities of producing Broadway shows. Jeffrey Seller, a prominent Broadway producer, explains the escalating costs of theater productions, citing higher labor, rental, and production expenses as primary drivers of inflation within the industry.

Jeffrey Seller [15:36]: "Because I employ all those people every night, almost 100 people. The good news is that every single one of those people is making well over $2,000 a week."

The traditional notion that Broadway can yield substantial profits is challenged by the increasing financial barriers, making the landscape more perilous for producers.

4. Cost Disease: An Economic Theory Explained

Economist Michael Rushton introduces the concept of "cost disease," a theory developed by William Baumol and William Bowen, which explains the persistent rise in costs in sectors where labor cannot be easily reduced through technology—such as live theater, education, and healthcare.

Michael Rushton [19:08]: "Technical change in labor-intensive sectors like live performing arts is rare."

This phenomenon elucidates why Broadway shows continue to grow in cost without a corresponding increase in productivity, placing immense financial strain on producers.

5. The Role of Major Broadway Landlords

The episode delves into the monopolistic control exerted by the three major Broadway landlords—the Shubert Organization, Nederlander Organization, and ATG Entertainment. Hal Luftig, a seasoned Broadway producer, explains how these landlords have significant leverage over theaters, including high weekly rentals and royalties based on show performance.

Hal Luftig [32:16]: "Theater owners now are very big profit participants. They get all of their expenses covered and then a royalty."

The landlords' control leads to increased production costs, as they pass rising expenses directly onto producers, exacerbating the financial challenges of mounting Broadway productions.

6. Interviews with Leading Producers

Jeffrey Seller recounts his experience in taking a chance on Lin-Manuel Miranda and In the Heights, highlighting the blend of artistic brilliance and financial risk involved in producing innovative theater pieces.

Jeffrey Seller [12:07]: "I thought, oh, Lin is a genius. How is he making these raps up on his feet?"

Sonja Friedman, a prolific producer with over 200 shows to her name, discusses her journey with ATG (Ambassador Theatre Group) and the delicate balance between creative independence and leveraging corporate support.

Sonja Friedman [37:05]: "I'm completely 100% creatively independent and raise the vast majority of the finance myself."

Hal Luftig shares insights into the unpredictability of Broadway success, emphasizing that even well-crafted shows can falter due to factors beyond creative control, such as audience preferences and market saturation.

Hal Luftig [51:20]: "Shows don't work on Broadway for a whole host of reasons."

7. High School Productions vs. Broadway

Stacy Wolf, author of Beyond the Pleasure and Promise of Musical Theater Across America, contrasts the Broadway ecosystem with high school and amateur theater productions. She highlights how shows like Newsies thrive in educational settings despite the financial struggles on Broadway, attributing their success to broader accessibility and lower production costs.

Stacy Wolf [56:41]: "Musical theater is thriving and continues to thrive in spite of all the odds against it."

Wolf emphasizes that the real lifeblood of theater lies in its grassroots productions, which sustain the art form's relevance and innovation.

8. The Unpredictability of Theatrical Success

The episode explores the inherent unpredictability of producing theater, where even high-profile shows like Tommy can fail financially while unexpected productions like O Mary achieve significant success. This unpredictability is encapsulated in the adage, "Nobody knows nothing," originally from Hollywood but equally applicable to Broadway.

Stephen Dubner [52:22]: "It just proves nobody knows nothing."

9. Navigating Flops and Financial Losses

Producers like Richard Winkler discuss strategies for dealing with failed productions, such as taking shows on tour to recoup investments. Touring allows productions to reach diverse audiences and reduce operational costs, offering a lifeline for shows that falter on Broadway.

Hal Luftig [53:35]: "Tours usually cost a whole lot less and are more focused."

The variance in financial outcomes between Broadway and touring productions underscores the complex economics of theater production.

10. Labor Unions and Production Costs

Labor unions play a significant role in Broadway's cost structure. Hal Luftig explains that union contracts are designed to protect workers, which often leads to higher production costs. While these protections are essential for ensuring fair labor practices, they contribute to the overall financial burden on producers.

Hal Luftig [42:44]: "Every rule that exists in every union is there because at some point somebody tried to screw them over."

11. The Future of Broadway and Theater Economics

As the episode concludes, the focus shifts to the future prospects of Broadway amidst soaring costs, monopolistic theater ownership, and an unpredictable market. The producers express a mix of optimism and realism, acknowledging the challenges while striving to innovate and sustain the art form.

Jeffrey Seller [41:57]: "I choose to be a producer seven days a week, 365 days a year."

12. Conclusion and Teaser for Part 3

Stephen Dubner wraps up the episode by previewing the next installment, which will explore solutions to the financial challenges faced by Broadway producers and introduce the new actors stepping into pivotal roles within productions like Three Summers of Lincoln.

Stephen Dubner [66:32]: "Coming up next time, in the third and final part of our series, we will meet the new Lincoln."

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Notable Quotes:

• Stephen Dubner [00:02:13]: "But believers still believe."
• Luis Miranda [02:49]: "I see hip hop singers jumping off the pages in my head."
• Jeffrey Seller [12:07]: "I knew I was in the presence of sheer brilliance."
• Michael Rushton [19:08]: "Technical change in labor-intensive sectors like live performing arts is rare."
• Stacy Wolf [56:41]: "Musical theater is thriving and continues to thrive in spite of all the odds against it."
• Jeffrey Seller [41:57]: "However, I wouldn't turn it down. It's a fantastic business."

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Key Insights:

1. Economic Pressures: Broadway faces significant financial challenges due to rising labor and production costs, making profitability elusive for many productions.
2. Cost Disease Impact: The theory of cost disease aptly explains the persistent rise in production costs within live theater, paralleling trends in other labor-intensive industries.
3. Monopolistic Landlord Control: The dominance of major Broadway landlords contributes to increased financial burdens on producers, limiting the diversity and number of productions.
4. Unpredictable Success: The episodic nature of Broadway's success underscores the high-risk, high-reward environment, where even well-crafted shows can fail, and obscure productions can triumph.
5. Grassroots Vitality: High school and amateur theater productions form the essential backbone of the theater ecosystem, ensuring the continuity and evolution of the art form despite Broadway's economic hurdles.
6. Future Outlook: Producers remain passionate and resilient, seeking innovative approaches to sustain and grow Broadway amidst mounting challenges.

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Conclusion:

This episode of Freakonomics Radio offers a comprehensive exploration of the intricate economics underpinning Broadway theater. Through interviews with key industry players and the application of economic theories, listeners gain a nuanced understanding of the financial dynamics, challenges, and resilience that define the world of live theater. As the series progresses, the final part promises to delve deeper into strategies for overcoming these economic barriers and the evolving landscape of Broadway productions.

Transcript

[Stephen Dubner]

Freeconomics Radio is sponsored by Discover. It's smart to always have a few financial goals and a really smart one. You can set earning cash back on what you buy every day. And with Discover, you can get this Discover automatically matches all the cash back you've earned at the end of your first year. Seriously, all of it. And we trust you to make smart decisions. After all, you listen to this show see [e-mail] Credit Card Freakonomics Radio is sponsored by Mint Mobile. Do you say data or data however you say it? It's time to stop overpaying for your monthly data plan with Mint Mobile and their premium wireless plans that start at just 15 bucks a month. No matter how you say it, don't overpay for it. Shop data [e-mail] freak that's mintmobile.com freak upfront payment of $45 for 3 month 5 gigabyte plan required equivalent to doll new customer offer for first 3 months only. Then full price plan options available, taxes and fees extra. See Mint Mobile for details. The people who make theater exist in a sort of parallel universe. From inside this universe, it can seem vast. There are so many projects, the work itself is so immersive, and let's be honest, there is a lot of gossip to keep up with. But in reality, theater is a tiny universe. When you compare it to all the other flashier forms of entertainment like TV and film, live music and sports, video gaming, the theater universe looks like a distant and dimming star. And yet believers still believe. Believe. And every now and then, someone takes a shot that is so unlikely, so audacious, and if that shot lands, it rejuvenates the whole enterprise and makes the larger world take notice. In other words, this tiny universe really can produce one singular sensation.

[Luis Miranda]

I'll start from a personal note. My son had been on vacation and he came back and we're 15 blocks apart. So usually he comes for breakfast and says, well, my next show, it's Hamilton. And I'm like, the Secretary of the treasury of the United States of America. He's like, yes, I just read this amazing. And as I'm reading it, this is.

[Stephen Dubner]

The Ron Chernow biography of Hamilton, Correct?

[Luis Miranda]

Correct. He's telling the story to my wife and I. I see hip hop singers jumping off the pages in my head. I'm like, he went crazy.

[Stephen Dubner]

That is Luis Miranda Jr. His son is Lin Manuel Miranda.

[Luis Miranda]

I tell my wife, you gotta read this book. Cause you understand that this is a journey we're all gonna be in for a long time. And in my family, it doesn't matter if you disagree. We all have to work together.

[Stephen Dubner]

Hamilton wound up becoming one of the most compelling successes in any form of entertainment at any time in history. It made the dimming, distant star of Broadway shine very bright. And it gave Luis Miranda a new full time job.

[Luis Miranda]

I do all of the philanthropy for the Miranda family. I oversee all of Lin Manuel's companies and argue with him about what he should or should not do. Usually he ignores me.

[Stephen Dubner]

Everyone knows that Lin Manuel Miranda became a major player because of Hamilton, but his father was the original player. He's a longtime political operative and activist in New York City who has worked with mayors, senators and many others.

[Luis Miranda]

The theater of politics and the theater on a stage are very, very similar, Le Manuel says. All the time that I go through the world collecting money for candidates, and probably half of them never have a chance. But they're fights that you must fight. Theater is a bit the same way. You go and collect lots of money, and most of the shows don't make it the same way that many candidates won't make it. But there is art that needs to be made. Some shows, I always wonder, why did they do that? But hey, someone had a dream.

[Stephen Dubner]

Luis Miranda himself had a dream for his son.

[Luis Miranda]

I wanted him to be President of the United States, the first Puerto Rican president of the United States of America. And I know he could have done it. He is so good at it. I see him meeting with elected officials. He's so charming, but faithful to his beliefs. You're not gonna convince him to say something he doesn't believe in.

[Stephen Dubner]

But Lin Manuel wanted to do something different. When he was an undergrad at Wesleyan, he started writing a musical called in the Heights, a boisterous story about the spirit of community set in Washington Heights, a New York neighborhood close to where the Mirandas live.

[Luis Miranda]

Emanuel and his friends, all very arrogant young people. They needed money to hire the actors and really further develop. I asked, how much do you need? And say, 40,000. Like, no, he's going to give you $40,000. This is 2005, 2006, I said, but I know what I'll do. I'll ask my friend who's the artistic director of Repertory Espanol Spanish repertoire, to lend me. You guys do a reading. We'll invite people and we'll ask them.

[Stephen Dubner]

A thousand bucks a pop, a backers audition. This is correct.

[Luis Miranda]

Friends coming together because you're telling them that your kid is good.

[Stephen Dubner]

In the Heights eventually made it to Broadway, where it won four Tony awards and ran for nearly three years. Not long after that came Hamilton, which turned out to be a billion dollar franchise. There's an old cliche about Broadway. You can make a killing but not a living. There is an occasional smash hit like Hamilton, but much more common are the failures and the flops, which don't cost any less to produce than the hits and leave behind a trail of regret. And yet there is no shortage of producers, investors, writers and composers willing to give it a try. Why? Because almost no one gets into the theater just to have a career. Like I said, the believers believe, I.

[Luis Miranda]

Believe, that producing more art makes a society healthier.

[Stephen Dubner]

Do you have evidence?

[Luis Miranda]

Yes. I'm a poor kid from a small town in Puerto Rico that somehow felt that musicals were fantastic. I didn't know what they were singing. Do you understand that? I'm listening to SH T and I have no clue what they are singing. But there was something attractive, magnetic, magical about the form. Arts can create wealth, but it speaks to a different part of who we are as humans and as a society.

[Stephen Dubner]

Luis Miranda recently published a memoir about his work in Politics and Beyond. It's called Relentless. As nice as I seem, he writes, I was and continue to be relentless. I don't back down. I try to work with people, but if I can't, I throw an elbow and see where it lands. Today on Freakonomics Radio, Part 2 of our three part series on the economics of the theater industry. Last week we started following a musical called Three Summers of Lincoln as it was being built from scratch. We will get back to that story later, but today's episode is mostly about something else. Today's episode is about how to be relentless.

[Michael Rushton]

This is Freakonomics Radio, the podcast that explores the hidden side of everything with your host, Stephen Dubner.

[Luis Miranda]

Someone took a chance, only Manuel, and for me. You never finished paying for that.

[Stephen Dubner]

Who was it that took a chance on him?

[Luis Miranda]

Jeffrey Seller.

[Jeffrey Seller]

Good afternoon, Jeffrey Seller. Here I am, the producer of Hamilton on Broadway and all over the world.

[Stephen Dubner]

When Seller and I spoke, he had two shows running on Broadway, Hamilton, which is about to celebrate its 10th season, and a revival of Stephen Sondheim's Sweeney Todd. His past credits include Rent and Avenue Q. Seller is also about to publish a memoir called Theater Kid. He grew up in a chaotic working class family in a Detroit suburb.

[Jeffrey Seller]

I came to New York with my bar mitzvah money. I had maybe 1,100 bucks, $10,000 of student debt, and my first job netted me $205 a week in 1919 86. So I had no money. I had no family money. There was no one in my family I could ever call to say, could you put 20,000 or 10,000? I mean, that would be a joke.

[Stephen Dubner]

But Seller kept at it and defied the odds to become one of the most successful Broadway producers of his generation. We should say here that the word producer can mean a few different things in live theater. It can mean that you originate a project, whether financially, creatively, or both. That's what Seller calls a holistic producer. Or it could mean that you are primarily just a cash contributor.

[Jeffrey Seller]

Those are investors who we rely on. And by we, I mean the audience relies upon them. Us holistic producers rely upon them. Historically, they were called dilettantes. And it wasn't necessarily a pejorative. It was just a description of an arts lover and an arts supporter.

[Stephen Dubner]

Is there a relatively infinite supply of the people formerly known as dilettantes?

[Jeffrey Seller]

There's an interesting pattern, which is that by the late 70s and the 80s, there were very few investors on Broadway. If you look back to the 1980s, if you remove the four British mega hits, Cats, Les Mis, Phantom and Miss Saigon, all produced by Cameron McIntosh, we had very little musical theater or legitimate play theater going on on Broadway. People with money had not yet discovered Broadway. Maybe they discovered the world of visual art form first. But a lot of people with money started to discover Broadway. Enjoy going to Broadway and enjoy investing in Broadway. We are producing more musicals every year as a result of that activity.

[Stephen Dubner]

What Jeffrey Seller didn't say there was that a modern Broadway producer needs all those outside investors. Because it has become so much more expensive to create and run a show. We'll get into that as we go. I asked Seller to tell me how he came to take a chance on Lynn. Man.

[Jeffrey Seller]

Manuel Miranda, Lyn and his colleagues, Tommy Kail, who's his director, they walked in my office in the summer of 2003. None of them were 30. They weren't even close to 30. They were courageous and adorable and fun. And the next thing I did is I went and watched them do Freestyle Love supreme, their hip hop improvisation show.

[Hal Luftig]

Your last word is fracking.

[Stephen Dubner]

The last word is fracking.

[Luis Miranda]

And I am attacking this beat. Cause it's weird to be back on this street Broadway. Ever since I was a little kid.

[Stephen Dubner]

This was my only dream.

[Luis Miranda]

The only I ever wanted to. Did or do? I mean, do? I don't know.

[Stephen Dubner]

I like it.

[Luis Miranda]

Jesus, guys, I am so fracking excited.

[Jeffrey Seller]

And I thought, oh, Lynn is a genius. How is he making these raps up on his feet So I knew I was in the presence of sheer brilliance. When I experience a new musical, I want the music to prick my ear in a different way. And we created a reading of in the Heights with a small band. And this was my first experience of it when Lyn came out and started that warm, enveloping rap. Lights up on Washington Heights up at the break of day Lights up on.

[Luis Miranda]

Washington Heights up at the break of day I wake up and I got this little punk I gotta chase away.

[Stephen Dubner]

Pop the grate at the crack of.

[Luis Miranda]

Dawn Sing while I wipe down the awning hey, y'all, good morning.

[Jeffrey Seller]

And then this gorgeous chorus joined behind him, singing in the Heights.

[Stephen Dubner]

And Endless deaths and bills to pay.

[Jeffrey Seller]

I thought, I've never heard rap and Broadway choral music marry together so beautifully. It made the hair on my arms stand up. And I was in.

[Stephen Dubner]

So Jeffrey Seller produced In the Heights on Broadway, where Lin Manuel Miranda announced himself as a rare double threat. A theatrical writer who starred in his own shows. And while performing in the Heights eight shows a week, he began developing Hamilton. Seller first read the Hamilton script in 2014.

[Jeffrey Seller]

I'm an atheist, but it felt like there was divine intervention. I mean, if God was over Michelangelo's shoulders, then he was over Lynn's shoulders as well.

[Stephen Dubner]

Hamilton had its opening run at the nonprofit Public Theater, a downtown institution known for producing Shakespeare in the park and for having originated a number of Broadway hits, including A Chorus Line. After a few months at the Public, Hamilton moved uptown to Broadway and quickly became a monster hit, with premium tickets selling for over $1,000.

[Luis Miranda]

And the world's gonna know your name.

[Stephen Dubner]

What's your name, man?

[Jeffrey Seller]

Alexander Hamilton.

[Luis Miranda]

My name is Alexander Hamilton and there's.

[Jeffrey Seller]

A million things I haven't done but.

[Stephen Dubner]

Just you wait Just you wait Today, Hamilton tickets go for an average of around $190. And what about the other show that Jeffrey Seller had on Broadway? When we spoke, a full price ticket.

[Jeffrey Seller]

Sweeney Todd, 229 bucks.

[Stephen Dubner]

Okay, so of all, why.

[Jeffrey Seller]

Why does that ticket have to be 229 bucks?

[Stephen Dubner]

Correct.

[Jeffrey Seller]

Because I employ to do that show every night, almost 100 people. The good news is that every single one of those people is making well over $2,000 a week. And because they have a great union, they are making benefits that drive their salary closer to $3,000 a week.

[Stephen Dubner]

And as a producer, not as a human, but as a producer, how do you feel about that?

[Jeffrey Seller]

I am concerned today that we're losing the ability to hit, in baseball terms, a double. When I Did Avenue Q? The show cost $3.5 million to put on Broadway, same capitalization as Rent did six years before. That we could operate the show. That means how much it costs every single week to run for about $325,000. So if we were grossing $500,000 a week, we were making a nice little profit. And by the way, Avenue Q won the Tony, ran on Broadway for six years, and was what I call a solid double. Same exact same formula for in the Heights, which came five years after that. However, it was more expensive. There were 30 people on stage, more musicians, more scenery, more costumes. But it still was able to break even on Broadway every week for only $450,000. Which means that if I'm grossing 700 a week, I'm still making a little profit. Today, shows like Avenue Q or in the heights are costing 10, $12 million. That's more money I have to earn back. And the operating costs, instead of being 300, 400, 500, are 700, 800. In my case, for Sweeney Todd, over 900.

[Stephen Dubner]

And that massive inflation is being driven primarily by what?

[Jeffrey Seller]

It's being driven by higher labor costs, higher rental costs for equipment, higher production costs for building sets, higher production costs for building costumes, higher rent from the landlords, advertising costs. It is also true that there is nothing I can do to become more efficient. I need those 26 to 35 actors. I cannot do it with less. In the case of Sweeney Todd, I need those 26 musicians. That's what I signed up for. That's what it takes.

[Stephen Dubner]

Okay, if we're talking production costs and efficiency and inflation, it's probably time to bring in an economist.

[Michael Rushton]

I'm Michael Rushton. I'm a Professor in the O'Neill School of Public and Environmental affairs at Indiana University, and I teach in our Arts Administration program.

[Stephen Dubner]

How would you describe the major areas of your research and interest?

[Michael Rushton]

I'm one of that small group of people known as cultural economists who apply economic methods to looking at the arts and different issues in the arts.

[Stephen Dubner]

I have to say you are a small group because even you weren't easy for us to find.

[Michael Rushton]

Yes.

[Stephen Dubner]

So why are you trafficking in this area that seemingly few people care about?

[Michael Rushton]

What I have found is that many of the cultural economists began their careers like I did, being an ordinary mainstream muggle economist, studying public finance and labor economics and so on. And then you discover, oh, there's a group that does this. And actually, the questions are really interesting. Around the film industry, performing arts, and paintings and auctions. This has been an active field, I would say, since the 1960s when William Bommel and William Bowen first came up with their theory of cost disease.

[Stephen Dubner]

Okay, we need to slow down here for a second because this theory that Rushton just mentioned, cost disease, can explain a lot about the theater industry and some other much larger industries. The theory is famous among economists, but not as widely known as it ought to be. The original paper by Baumol and Bowen was called on the Performing the anatomy of their economic problems.

[Michael Rushton]

Their insight was regarding technical change and in particular, in what sectors can you have labor saving technological change, and in what sectors is that going to be very difficult to achieve? When they looked at the live performing arts, they said, well, here is an area where labor saving technological change is going to be really rare. You can't reduce the number of players in your orchestra, you can't reduce the number of cast you need to put on a performance of Macbeth. And wages have to rise with the rest of the economy, which means constantly your costs are going to be rising. And in theaters right now, we see that if you speak to any theater producer who is saying, well, we're struggling to get by, One of the first things they say is our costs keep going up and the main cost that they face is labor. You have to pay your performers, you've got to pay your crew, you've got to pay your back office staff, and it's just really hard to save on those kinds of numbers.

[Stephen Dubner]

So here's their foundational paper. This is from the American economic review of 1965. They wrote, in order to join the ranks of the rising productivity industries, the arts would somehow have to learn not only to increase output per man hour, but to continue to do so into the indefinite future. Otherwise they must at some juncture, fall behind the technologically progressive industries and experience increases in costs which stem not from their own decisions, but from the inexorable march of technological change in other parts of the economy. On a scale of 0 to 10, how true did that prediction become?

[Michael Rushton]

10 out of 10? We see the pressures of cost disease in all of the sectors that Bomel and Bowen mentioned where you can't really save on labor. Education would be one example. A teacher can only handle so many students at a time, and teachers wages have to rise with the rest of the economy or nobody's going to want to be a teacher anymore. Healthcare is another example, and it's an interesting one because we think, well, there's been lots of technological change in healthcare. We have all these machines now, all these new pharmaceuticals that's very, very true. But a large part of your healthcare costs are labor paying nurses, paying technicians. You can't just say, well, one nurse can handle 200 patients at once now because of technological change.

[Stephen Dubner]

So I don't mean to insult your profession, but here's a question. This was a paper written, you know, nearly 60 years ago that laid out exactly the problem that we're seeing not only in theater and the other performing arts, but in, as you said, healthcare and education, which are much, much bigger sectors. It strikes me that a lot of people are still flabbergasted that costs in things like education and healthcare have risen so much relative to other things. In other words, Bommel's cost disease has been around and understood and preached by economists for nearly 60 years. But it seems that no solution has arisen to actually combat the problem. Why do you think that is? Is that a failure of economists to communicate the problem? Is it a failure of economists and others to come up with viable solutions? Is it a failure of policymakers? Or is this just the way things are and humankind has to figure out different ways to do things?

[Michael Rushton]

I think there is a communication issue. The first thing is actually calling it cost disease. What is it resulting from? It's resulting from our getting richer. You only have cost disease because the economy as a whole is becoming more productive and real incomes are rising. So that seems like an odd disease where you say, yes, we're all getting richer.

[Hal Luftig]

We're.

[Michael Rushton]

What cost disease is referring to is that productivity changes are going to be different across sectors over time. Manufactured goods have become far, far cheaper. Raw food production has become cheaper. Transportation has become cheaper. Other things that involve personal services are going to get more expensive. Haircuts, teaching massages, live theater. Agatha Christie famously remarked that when she was young, she never thought she would be so rich as to be able to own her own motorcar and that she wouldn't be able to have servants.

[Stephen Dubner]

So, Michael, I guess if you wanted to put a positive spin on this, you could say that we as an economy, as a culture, as a civilization, are rich enough to spend an ever larger portion of our income on important things like education and healthcare.

[Michael Rushton]

Yes, we are getting richer, and we have more income to be able to spend on education, healthcare, personal services, and the arts, because other things in our economy have become so much cheaper.

[Stephen Dubner]

Once you know how cost disease works, you see it in a variety of places, including Hollywood. The economics of the movie industry is easily as weird and interesting as the economics of live theater. Maybe we'll do A series on that someday. It used to be that successful films would generate a lot of money for their creators. But that is no longer necessarily the case, especially for independent filmmakers. Two of the most acclaimed films from last year were Honora and the Brutalist. The filmmakers behind them, Sean Baker and Brady Courbet, have both described how the costs of making the film were so extreme that they were barely able to pay themselves. So what do you do if you are making theater and losing money? Here's the producer Jeffrey Seller again.

[Jeffrey Seller]

I have two choices. Close my show or put more money in the bank so I can finance the losses every week. So now you've just gotten to the second most important decision a producer has to make after what show will I do? When do I close? When the amount of money I bring in every week is less than the amount of money I need to operate my business, I close.

[Stephen Dubner]

What happened with Funny Girl? Can you explain that? Where it looked like it was destined for an early and huge loss and then it ended up recouping like the week before it closed. What happened?

[Jeffrey Seller]

Well, what happened is that a young talented star named Lea Michele came and completely 180 degrees turned that show around.

[Stephen Dubner]

Now why would it then not extend? Was the theater already spoken for?

[Jeffrey Seller]

I think they had her for a year. And stars like Lea Michele or Josh Groban to get them to come to Broadway for a year is a wonderful thing. And it's very rare that you would get someone of that caliber to extend. Many star, when they come to Broadway to do a play will come to do like a 12 week run and they're gone. Asking a star to play 52 weeks is an enormous lift. And only special stars who love musicals, Hugh Jackman, Lea Michele, Josh Groban are willing to do that because of their deep love for the form.

[Stephen Dubner]

Coming up after the break, yes, paying all those performers and backstage personnel is a huge cost center for a theatrical producer. But you also have to rent a theater and the economics of that are particularly tricky.

[Hal Luftig]

There's only so many blocks that make up Broadway.

[Stephen Dubner]

I'm Stephen Dubner, this is Freakonomics Radio. We'll be right back. Freakonomics Radio is sponsored by LinkedIn. As a small business owner, you don't have the luxury of clocking out early. Your business is on your mind 24 7. So when you're hiring, you need a partner that grinds just as hard as you do. That hiring partner is LinkedIn jobs. When you clock out, LinkedIn clocks in. They make it easy to post your job for free. Share it with your network and get qualified candidates that you can manage all in one place. And LinkedIn's new feature can help you write job descriptions and then quickly get your job in front of the right people with deep candidate insights. At the end of the day, the most important, important thing to your small business is the quality of candidates. And with LinkedIn you can feel confident that you are getting the best. Find out why more than 2.5 million small businesses use LinkedIn for hiring today. Post your job for free at LinkedIn.com freak that's LinkedIn.com freak to post your job for free. Terms and conditions apply. Freakonomics Radio is sponsored by Peloton. Everyone has a reason to change. Growing old Heartbreak. A fresh start. The road through life's biggest moments can feel uncertain and even endless. But along the way, something unexpected happens. You grow. You get stronger, faster and more grounded. Stepping into the best version of you Peloton is just there to help help you along the way with workouts that challenge and motivation that keeps you coming back. With Peloton's tread, an all access membership, you can set your targets, track your progress and get stronger, making your fitness goals a reality. Thousands of members have had their lives changed by Peloton. What will you accomplish? Find your push. Find your power. Peloton Visit 1 Peloton Freakonomics radio is sponsored by ebay. Picture this. You're halfway through a DIY car, fix tools scattered everywhere, and you realize you're missing a part. It's okay, because whatever it is, it's on ebay. Brakes, headlights, cold air intakes. Whatever you need. Guaranteed to fit. No more crossing your fingers and hoping you ordered the right thing. All the parts you need at prices you will love. Guaranteed to fit every time. Ebay Things People Love as we started putting together this series on the economics of live theater, we spoke with all sorts of people. Producers, writers, performers, economists, historians. There are a lot of people in this ecosystem and we wanted to hear from all of them. But there was one group of people that would not speak. The big theater owners. The landlords. They are the ones who own the buildings and decide which shows are coming in. They employ ticket takers and ushers, bartenders and security guards. The landlords are thought of as members of the Broadway community, but that's a bit like saying that the royal family are members of the British community. Their position comes with a guaranteed level of wealth and leverage.

[Hal Luftig]

There's only so many blocks that make up Broadway per se, and there's only so much Land, Like Will Rogers said, buy land, because they're not making any more of it. My name is Hal Luftig and I'm a Broadway producer. Some of my credits include Here Lies Love, the Life of PI, Legally Blonde, the revival of Evita, Thoroughly Modern Millie, Kinky Boots, and it goes on. I've been doing this for 30 something years. To this day, I still get excited. Like a little butterfly effect in my stomach when I walk into a theater. The smell of it, the feeling of it. Being walked to your seat, handing a playbill, sitting there, knowing a curtain's going to go up, and you with all the people sitting around you are going to be, you know, watching and laughing or crying at the same thing.

[Stephen Dubner]

There are 41 theaters in New York that qualify as Broadway houses. 33 of them are owned or operated by one of three groups. The Shubert Organization, the Nederlander Organization, and ATG Entertainment, formerly known as the Ambassador Theater Group. The Shuberts and Nederlanders have been around for generations. ATG is a British newcomer that is majority owned by a Rhode island private equity firm. All of them declined our interview requests. I mentioned this to Hal Luftig. The landlords don't want to talk. The theater owners have no interest in talking. Shubert, Nederlander, Disney, atg. None of them want to talk.

[Hal Luftig]

Gee, I wonder why that is.

[Stephen Dubner]

Maybe you can tell me. I don't know why.

[Hal Luftig]

Oh, yes, I will.

[Stephen Dubner]

All right, tell me.

[Hal Luftig]

Theater owners now are a very big profit participant. And by profit, I don't mean after the show makes money. First they get all of their expenses. It's called weekly rental. And that includes everything from payroll to toilet paper. On top of that, they get a weekly royalty, which could be 3, 4, 5, 6%. Depends on the theater, the theater owner, the show. If the show is doing well, like a million dollars a week, do the math. So that is a chunk right there. And their costs have gone up. Insurance, mortgage payments, interest rates, things like that. So they pass that right on to the show. That has changed over the years.

[Stephen Dubner]

How did it used to be?

[Hal Luftig]

It used to be you paid a rent. There wasn't really a royalty attached to it. It was in the 70s, 80s, where they realized they could make a whole lot more money. They also realized, why don't you bump the tickets up $2 here and then $5 there? This is all before dynamic pricing. This was just, hey, if the show is successful, why sell a ticket for $25? That's how far back we're going. Liza Minnelli in The act was 25. Bu. Outraged, Stephen. I remember people thinking, what the hell, $25. When it opened and became sort of a hit, they bumped it up to 2750. You shared in some of that, sure, as the show, but they got the lion's share because of their royalty. So that's how theater owners kind of work.

[Stephen Dubner]

I mean, it sounds like what most economists would think of as a monopoly. They have. Have pretty total control over a limited capacity of places where people like you can do your work. Is that the way it seems from your end?

[Hal Luftig]

Yes, it totally does. But they would say, and there's part of me that does understand this, that when a theater is dark, they're receiving no income, and they do have all of these bills to pay. You know, if a show is in trouble, they'll reduce the rent or they'll waive the fee. So, yeah, they do. Help.

[Stephen Dubner]

Help. Of the three major Broadway landlords, ATG is both the newest and the smallest. They bought out a firm called JU Jamson, which had been run for years by Rocco Landesman. He's one of the producers we heard from in part one of this series. You will remember. He got his start by producing a musical called Big river, the Adventures of Huckleberry Finn. I asked him what it was like to compete against the bigger and more established landlords, the Shuberts and the Nederlanders.

[Jeffrey Seller]

We had to find some way to make a name for ourselves, a way to get recognized, because we were the third wheel there.

[Stephen Dubner]

We were the smallest. We didn't have the most desirable theaters.

[Jeffrey Seller]

We had to find a way to create a profile for ourselves, a way to be identified. One way of doing it was to do plays that maybe were more normally done in regional theaters because they were not obvious commercial plays. Our first successful show was M. Butterfly by David Henry Wong, which you wouldn't think of as necessarily a conventional Broadway show, but it turned out to be very successful. The big turning point for us was Angels in America. We were in a fierce competition with Schubert for that show, and we were.

[Stephen Dubner]

Able to convince Tony Kushner, the author, that he should go with us, that we'd be more committed to him as.

[Jeffrey Seller]

A playwright, to his career. I remember telling Tony that, you know, everyone wants Angels in America, but you're.

[Stephen Dubner]

Gonna write the next play or the one after it that's not as commercial.

[Jeffrey Seller]

But we're gonna do it. We're gonna be there for you, and.

[Stephen Dubner]

We'Re committing to your career, not just.

[Jeffrey Seller]

To the one play.

[Stephen Dubner]

A couple years ago, Jujamson was sold to ATG in a deal, valuing their theaters at around $300 million. ATG is thought of as a comer in large part because of this woman.

[Sonja Friedman]

I was headhunted to be the producer of Ambassador Group, ATG, as they were called, in 1999, 2000. I was really young.

[Stephen Dubner]

That's Sonja Friedman. She is the most prolific theatrical producer of our generation. On Broadway, in London's West End and beyond. She's produced more than 200 shows. She's won dozens of awards. It was Friedman, by the way, who brought in Lea Michele to save Funny Girl. By the time ATG headhunted her, she'd already had a good bit of success.

[Sonja Friedman]

Yeah, I'd had my own theatre company and I'd done quite a lot of West End work. I left the subsidized sector, the not for profit, as we call it here, to see if it is possible to do the same sort of work, but make it commercially viable.

[Stephen Dubner]

I mean, if we jump to the end, you kind of have done it, have you not?

[Sonja Friedman]

I'm not going to ever think I've sort of cracked it. Cause I haven't. I'm always chastising myself for thinking I'm not working hard enough to find the new voices and not being brave enough. I want to be as fearless as I was when I first started producing. But back to atg, same model.

[Stephen Dubner]

Bringing the fearless model into the commercial world.

[Sonja Friedman]

Yeah, bringing the fearless. And they were absolutely fantastic. This was two people, Howard Panter and Rosemary Squire, who. They supported me and they let me get on with it. Over the years, ATG got bigger and bigger and at one point I separated from them directly and formed my company, Sonja Friedman Productions.

[Stephen Dubner]

Totally separate or were they an investor?

[Sonja Friedman]

The official word is subsidiary. I'm a subsidiary. But in terms of the running of the company, I'm completely 100% creatively independent and raise the vast majority of the finance myself. It's like a first look deal with them. I absolutely have a partnership with them, but they basically leave me alone.

[Stephen Dubner]

As an essentially independent producer, though, you have access to their real estate?

[Sonja Friedman]

Well, yes. So as I was growing up in the business, they were growing too. When I joined them, they had two theaters and then they were building and they were building. By the time Howard and Rosemary left, they had pretty much an empire in London and across the regions and a few across the world. And then they sold it. So it's still ATG that runs it, but in partnership with a private equity company. And they as you know, they've just.

[Stephen Dubner]

Bought Du Jamson, which owns five theaters in New York.

[Sonja Friedman]

I believe that's right. And they want to be a force for good.

[Stephen Dubner]

Not that I disbelieve you, but what makes you say a force for good? Because, you know, private equity.

[Sonja Friedman]

Because I know the people involved. And here's the key thing. They know the only way any of their operation will work is to do with what's on the stages. They know that what's on the stage is the only thing that matters, and everything around it is there to support that. I think where ATG will, I really hope, make a difference is in the ticketing. That sounds really boring, doesn't it?

[Stephen Dubner]

It does.

[Sonja Friedman]

That's okay. But I believe that theatre is a little bit behind the times in how we find our audiences, how we talk to our audiences, the data modeling and who our audiences are and where they're coming from and what they like and how we capture their imagination. And I think ATG are very, very forward thinking.

[Stephen Dubner]

So Sonja Friedman professes optimism for a more corporate form of theater ownership. But not everyone feels that way.

[Jeffrey Seller]

Theaters are best operated when it's a mom and pop business.

[Stephen Dubner]

That, again, is the producer. Jeffrey Seller.

[Jeffrey Seller]

We're not a real business. To expect a theater to have earnings growth every quarter is crazy. We go up and we go down. We have hits. But in between those hits, we have four flops in a row. One cannot guarantee shareholders or banks or whoever those people are, consistent earnings. The danger is that they're going to contribute to inflation by needing to take more of that box office pie to share with those money people.

[Stephen Dubner]

If you could wake up tomorrow and be magically turned into a landlord, a Broadway theater owner, or you could be you, which means having to reinvent the wheel every time to come up with a show that you then rent space from them to try to put on and maybe, maybe make a bonanza the way you did with Rent and the way you did with Hamilton. Which do you choose?

[Jeffrey Seller]

Oh, I choose to be a producer seven days a week, 365 days a year. I didn't come to New York to be a landlord. I'm a poor kid from Detroit who likes musicals. I don't like buildings.

[Stephen Dubner]

How good a business is the Broadway theater landlord business?

[Jeffrey Seller]

However, I wouldn't turn it down. It's a fantastic business. It's heads I win, tails you lose. Period. End of discussion. I'll say that to their faces and they know it. And no one's gonna say, how dare you say that, Jeffrey they know it, I know it, we all know it.

[Stephen Dubner]

There's one more factor that makes New York a particularly expensive place to produce theater. Labor unions. There are 13 separate unions involved in Broadway productions with three additional contracts that govern how people are paid. Every producer I spoke with for this series named unions as a major driver of production inflation. I asked Hal Luftig for his take on the Broadway unions.

[Hal Luftig]

Are you trying to get me killed, Steve? I will tell you this. I understand that every rule that exists in every union is there because at some point somebody tried to screw them over in that specific area. And so next time the contract was negotiated, the union said, okay, we're gonna deal with this.

[Stephen Dubner]

What's a for instance? What's a way that a producer might have been either taking advantage or not looking out for the safety of someone that became codified in a union contract?

[Hal Luftig]

For example, stage managers. You know, a producer who was not being very careful, not being very forthright might say, oh, we could do this show with two stage managers. And meanwhile, it's the most complicated set in the world. It's dangerous to not have enough stage managers who can watch the show and make sure everybody is where they're supposed to when they're supposed to be. Things like if a trap door opens during the show, a stage manager has to say, it's okay to continue. They're all on headsets, so the audience never hears this. To continue because the trap has been closed and the stage is now safe.

[Stephen Dubner]

Of all the potential problems faced by a Broadway producer, the most severe by far is that their show will simply be a flop. I was very devastated. I didn't understand it. Coming up after the break, how to salvage a flop. And what do you do when the star of your brand new musical suddenly drops out? I'm Stephen Dubner. This is Freakonomics Radio. We will be right back. Freakonomics Radio is sponsored by Mint Mobile. Do you say data or data however you say it? It's time to stop overpaying for your monthly data plan with Mint Mobile and their premium wireless plans that start at just 15 bucks a month. All Mint Mobile plans come with high speed data or data, your choice, and unlimited talk and text delivered on the nation's largest 5G network. Plus, you can use your own phone with any Mint Mobile plan and bring your phone number along with all your existing contacts. Ditch overpriced wireless and get three months of premium wireless service from Mint Mobile for 15 bucks a month. No matter how you say it, don't overpay for it shop shop data [e-mail] freak that's mintmobile.com freak upfront payment of $45 for 3 month 5 gigabyte plan required equivalent to $15 a month new customer offer for first 3 months only, then full price plan options available, taxes and fees extra. See Mint Mobile for details. Freakonomics Radio is sponsored by Rosetta Stone, bringing 30 years of learning experience to millions of users. Learn naturally, Speak confidently Rosetta Stone helps you absorb a language the way you learned your first through real world context and conversation. No memorization, just practical skills you can use right away. Available on mobile and desktop, Rosetta Stone is the go to language learning solution for a more natural and effective learning experience. Perfect your pronunciation with built in Truaxent speech recognition technology providing real time feedback to help you sound more natural. Unlock your learning potential. Today, Freakonomics Radio listeners can grab Rosetta Stone's lifetime membership for 50% off. That's unlimited access to 25 language courses for life. Visit RosettaStone.com freak freakonomics to get started and claim your 50% off today. That's RosettaStone.com freakonomics to start learning Freakonomics Radio is sponsored by Canva and a future filled with exciting presentations. Wow the crowd with Canva presentations. No design experience needed, just start with a stunning template and drag and drop graphics from Canva's massive media library. With AI inside your slides, you can animate text in a click or generate slides and text in seconds with a prompt. You will love the presentations you can easily design with Canva. Your clients and co workers will too. Love your work with canva [e-mail] if you choose to produce the kind of high stakes, high dollar theater we've been talking about, you just have to deal with the vagaries and vicissitudes of the industry. A huge hit can come out of nowhere and what looks to be like a sure thing can cave in on itself and burn $20 million. Of course, the vast majority of new shows live somewhere in the middle of these extremes. But it's the extremes that come to define the industry. Consider one highly anticipated show from last season, a revival of the who's Tommy with music and lyrics by Pete Townsend. The first Broadway production, which was based on the who's 1969 rock opera, played for more than two years in the early 1990s. This new revival was capitalized at around $15 million, but it lasted only a few months. I don't generally like to raise a half a million dollars and have it go down the tubes. That is Richard Winkler. He's one of the lead producers on Three Summers of Lincoln, the new show we're following in the series. He was also a co producer, one of many on the who's Tommy? I thought that the production was an absolutely first class piece of musical theater. I do not understand why it did not work. I thought every single baby boomer who saw the show would want to come back and see it again. I was very devastated. I didn't understand it and I don't like stuff that I don't understand. It's hard to predict, isn't it? You know, there's so much alchemy that's involved in a successful Broadway musical or a successful Broadway play. I'm going to see O Mary this evening. You're gonna laugh a lot. I understand. I'm gonna laugh a lot. Everybody tells me I'm gonna laugh a lot. But who in the world would ever think that a show that opened off Broadway with two unknowns in it would become the big Broadway sensation of the season? So what does that say about just the. I don't wanna say risk, but the unpredictability of what you do? What would seem to be the can't fail project, like Tommy fails on Broadway and oh Mary, which comes from nowhere, from nobody, relatively speaking. It just proves nobody knows nothing. So that was William Goldman talking about Hollywood. But it applies here too, I guess. Oh, it applies here too. 100%. 100%. O Mary is an absurdist, slapsticky comedy created by Cole Escola. The New York Times called it an unhinged historical fantasia that imagines its protagonist as an alcoholic cabaret singer married to a gay guy. The protagonist, by the way, is Mary Todd Lincoln. And her husband, the gay guy in O Mary is Abraham Lincoln. If Three Summers of Lincoln does make it to Broadway, it's hard to imagine there could ever be two shows on two stages about the same historical figures that bear such little resemblance to each other. O Mary was a small and simple show to mount. Capitalized at just four and a half million dollars, it was also the first show of the season to recoup its investment after just four months and it's still going strong. Like Richard Winkler said, nobody knows nothing. In 2007, the producer Hal Luftig opened Legally Blonde on Broadway. It was a musical adaptation of the movie starring Reese Witherspoon. It ran for a year and a half, but as Luftig told us, it made back only around 60% of its $11 million capitalization.

[Hal Luftig]

Shows don't work on Broadway for a whole host of reasons. It doesn't have to be that the show is awful. You come to Broadway, let's just say you have 30 other choices. What people choose can be a byproduct of where they are at that moment. We learned this on Legally Blonde. If you are coming into the city and you have two kids, a boy and a girl, invariably the boy said, oh, I don't want to see that. That's a girl story. So they choose another show that everyone's happy with. There are people who feel like, I don't need to see that on Broadway. I saw the movie, not really comprehending that. A good adaptation has its own vocabulary. It's not just the movie on stage. If a movie is associated with a star, as was Legally Blonde with Reese Witherspoon. Well, is Reese in it? No. I'll go see something else.

[Stephen Dubner]

So what do you do with a big musical that loses millions on Broadway? You might take it on tour. Broadway may be the epicenter of live theater with the most attention and the highest ticket prices, but the theatrical touring economy is robust and global. After the who's Tommy lost its $15 million Broadway investment, the producers announced they were raising another $5 million to take it on the road. Here's Richard Winkler again. I think it's going to be very successful, but it also depends on what city you go to and how long you're there. The world is not the same as it used to be and the appetite for what we do is not the same. There was an appetite for a tour of Legally Blonde. Here's producer Hal Luftig again.

[Hal Luftig]

It went on the road, a several year US tour which did recoup and made a profit. It went to London, where it did make a small profit and that UK company then turned into a UK tour that went to Ireland and other countries. And that was very profitable too.

[Stephen Dubner]

So how can a middling Broadway show do so much better on the road?

[Hal Luftig]

The houses are bigger. There are some tour houses that are over 2,000 seats. When you come to New York, you have a choice of, let's say, 30 shows. When you're in Cleveland, usually you're the only one or you're one of two. So it's more focused and you do pretty well. And tours usually cost a whole lot less.

[Stephen Dubner]

In addition to costing less, producers usually get much better terms on road tours. A bigger cut of ticket sales, for instance, than they do in the Broadway hothouse environment where the landlords have so much leverage and A show like Legally Blonde can also generate licensing fees from productions much further down the chain.

[Hal Luftig]

That show is done so many times in so many different high schools in so many different languages. The year before the pandemic, and that's the last report I recall seeing, it was three or four hundred productions in one year.

[Stephen Dubner]

Oh, my goodness, yes.

[Hal Luftig]

It was done everywhere. And if you think about it, Stephen, the casting is very easy for a school. It has enough males, it has enough females. The songs aren't terribly difficult to sing, and it speaks to high school kids and certainly younger women because the message is you don't ever have to dumb yourself down.

[Stacy Wolf]

A lot of shows fail on Broadway financially and critically, and then do extremely well once they get out into the rest of the country in amateur venues.

[Stephen Dubner]

That is Stacy Wolf. She is the author of a book called beyond the Pleasure and Promise of Musical Theater Across America, and she teaches theater and American studies at Princeton.

[Stacy Wolf]

Students like to take my classes because they are musical theater fans or kids, and they think, oh, this is gonna be fun. And then they realize that musicals are among the most important cultural artifact. So we treat as seriously as we would treat Shakespeare or a symphony by Beethoven. We think about South Pacific in relation to gender relations and race relations and class relations in the 1940s. We look at Phantom of the Opera in conversation with a backlash against women in the late 1980s. Pretty much any musical that you look at, even the ones that seem the silliest and most escapist and most not conversing with US culture and society, really are in conversation with the society. Especially if they were hits, they have.

[Stephen Dubner]

To be for many, many, many, many people. Not all, but many. To them, Broadway and the theater are one and the same. To many others, they know many different parts of the ecosystem, but in terms of public perception and in terms of, you know, size of industry and number of participants and so on, how do you see it? Broadway is, to the whole ecosystem, tiny.

[Stacy Wolf]

Tiny in terms of number and outsized in terms of symbolism, just symbolism.

[Stephen Dubner]

And not, let's say, profits, since we're.

[Stacy Wolf]

Talking about an industry, not in terms of profits. A lot of great things happen on Broadway. Broadway is the place where it begins. It's symbolically important. It creates the canon, it creates the version by which all other versions are compared. But the real lifeblood of the form. Why? Musical theater is thriving and continues to thrive in spite of all the odds against it, in that it's face to face, it's slow, it's hands on, it requires incredible collaboration. Only a Few people can see it at a time. All of those things that happen in high schools, community theaters, summer camps, that is really the lifeblood of the form.

[Stephen Dubner]

Persuade me that when you call the non Broadway or even the non commercial side of theater the lifeblood, that's not an emotional description versus an empirical description.

[Stacy Wolf]

For example, in 2017, 2018, the educational theater association, which does a survey every year, found more than 37,000 high school productions took place that year with more than 46 million people in the audience.

[Stephen Dubner]

That compares to around 12 million people who see a Broadway show in a given year. So, yes, technically, the audience for high school musicals is at least three times bigger than the Broadway audience. But without Broadway, high schools wouldn't necessarily have shows to produce.

[Stacy Wolf]

Once the show has the as seen on Broadway imprimatur, it then has a certain kind of stamp of approval that makes it legible to anyone. Another example of this, not of a show that didn't succeed, but a show that was never intended to succeed, was Disney's Newsies.

[Stephen Dubner]

What do you mean it was never intended to succeed?

[Stacy Wolf]

Newsies, from the beginning, was answering the cry of fans who had seen the movie, who really wanted a stage musical of the movie. So they created Newsies to have just a super brief run on Broadway. And it was meant to go out and tour and then become an amateur production. It did very well on Broadway, and because it was fairly, because it had a set that was always meant to tour, it made back its money very quickly. Once it went out on the road, it did well. And once it went to schools, it was and continues to be very, very popular.

[Stephen Dubner]

What is it about that show that works in schools?

[Stacy Wolf]

It has a very light romance between a feisty girl and a delightful boy that has a huge chorus that's endlessly expandable. And even though they're news boys, they can also be. It doesn't have any bad words. The politics are kind of, I won't even say Marxism light, but kind of labor movement light. So it has a good uplifting message. There's nothing to offend anyone in Newsies. And also it can allow a completely multiracial cast. It has a character with a disability, so it has a lot of great stuff going on for a school. And it's very entertaining. The music is super catchy, easy to sing. It can have a lot of dance, or doesn't have to have a lot of dance, depending on what you have in your school. Because for high schools, the teacher or the director is always having to calculate who they have in Their population. So it's never an arbitrary choice for them. It's a very calculated decision about what show can they do? Do they have enough parts for girls? Can their kids sing the show? Do they have musicians?

[Stephen Dubner]

Okay, so what does it cost? If I'm a high school and I wanna put on newsies or Three Summers of Lincoln, let's say three years from now, what's it going to cost and how does that licensing work?

[Stacy Wolf]

Typically, a full length show costs somewhere around $3,000. If you were going to do a Broadway junior show, a 60 minute show, that would run you closer to $700 for the show.

[Stephen Dubner]

So if I'm the originator of a show that played on Broadway, it succeeded, it failed, it was somewhere in the middle, whatever. I hear you say some high school wants to license it for somewhere between 700 and $3,000. How many productions might there be in a given year and how much money might that represent?

[Stacy Wolf]

There can be thousands of productions per year and it can be some millions of dollars per year.

[Stephen Dubner]

Let me just tell you a little bit more about Three Summers of Lincoln. So it's a musical, it's got comic moments, it's got serious moments, it's got some gospel, it's got some kind of Broadway music, it's got some field music, it's got some jazzyish bluesy stuff. It's primarily about the relationship between Abraham Lincoln and Frederick Douglass and really how Douglas radicalized Lincoln, turned him into an abolitionist, and how Lincoln, to his surprise, won reelection when he thought he was going to lose. What does that sound like to you as a high school musical? What do you think the prospects are?

[Stacy Wolf]

Honestly, it sounds challenging because why? Because any musical that deals with something as overtly political as race relations could have a hard time in our country at this moment. There probably will be certain segments of the country that would be absolutely thrilled to do a show like that. It also sounds to me there's a great friendship in the center of this, which is always something welcome for high school shows.

[Stephen Dubner]

How have issues around free speech and hate speech and identity politics? How has all that affected which shows get chosen to be produced in high schools?

[Stacy Wolf]

I can't overstate how much those issues have affected what's produced. It's so difficult for a high school teacher and students to get their show past a school board, a principal, and a community that finds problems with every single issue.

[Stephen Dubner]

Okay, so if Three Summers of Lincoln isn't going to make its money back on high school productions, it better hope it succeeds on Broadway or At least hope it makes it there. When we last heard about Lincoln in part one of this series, they had just produced a successful workshop performance in New York. After that would come another round of revisions and then a world premiere at the nonprofit La Jolla playhouse in early 2025, with the of moving to Broadway sometime in 2026. But if you remember, the actor playing Lincoln, Brian Stokes Mitchell, announced that he was dropping out of the production the day before tickets went on sale at La Jolla.

[Stacy Wolf]

You know, it's live theater. It happens. What can I say?

[Stephen Dubner]

That is Debbie Buchholz, managing director of the La Jolla Playhouse. I'd called her up after I learned that Stokes was leaving the show. I'd heard all sorts of rumors about what his quitting meant, but the official line was simply that he withdrew for personal reasons and that the show must, you know, go on. I asked Buchholz if anyone involved had thought about postponing the La Jolla premiere.

[Stacy Wolf]

That was never on the table. The thing about a musical is, particularly in a musical where you have the seniority and caliber of the creative team that's on this, part of the Magic Game of Tetris is lining up some really, really challenging schedules. And these schedules are lined up.

[Stephen Dubner]

I can recognize that for your theater, a postponement would probably be a big drag, right? You don't have something that could be slotted in right there, I assume.

[Stacy Wolf]

That's right. That's correct.

[Stephen Dubner]

On the other hand, if I think about the commercial producers, they are playing the long drive. And so if they're hoping to get to Broadway in, whatever, a year, 18 months, they might say, well, you know, this was a big step back, and we need to reassess and. Or wait for Stokes and. Or find someone that we won't be able to find as quickly as this. So what if they came to you and said, hey, you know what, Debbie? We love La Jolla Playhouse. We love you, but we're pulling out of this production. What would happen then?

[Stacy Wolf]

Look, there's all sorts of different things that could happen then. It just doesn't happen. Frankly, the agreement between all of us wasn't contingent on any one particular person in that role. This piece would be incredibly challenged if it tried to put itself off. It wouldn't be putting it off for 12 or 18 months because they would need to find another developmental home for it as well, another regional theater that had a slot, and it would be putting it off for a very long time.

[Stephen Dubner]

Do you have a dream replacement for Lincoln?

[Stacy Wolf]

No, I don't it's like fantasy casting.

[Stephen Dubner]

No?

[Stacy Wolf]

I'm excited to see whoever comes in to do it.

[Stephen Dubner]

Coming up next time, in the third and final part of our series, we will meet the new Lincoln.

[Jeffrey Seller]

I felt like if I still want to be an actor, I'd have to do this.

[Stephen Dubner]

We'll hear from Mary Toddler Lincoln. Not the alcoholic cabaret singer from O Mary, but the Mary from Three Summers of Lincoln about losing her original Abraham.

[Sonja Friedman]

I was concerned, I was concerned.

[Stephen Dubner]

And we'll ask the commercial producers how they're feeling. I believe that after La Jolla, people will be throwing money at the project. That's next time. Until then, take care of yourself and if you can, someone else too. Freakonomics Radio is produced by Stitcher and Renbud Radio. You can find our entire archive on any podcast app [e-mail] where we publish transcripts and show notes. This episode was produced by Alina Coleman. It was mixed by Jasmine Klinger with help from Jeremy Johnston. The Freakonomics Radio Network staff also includes Augusta Chapman, Dalvin Abuaji, Eleanor Osborne, Ellen Frankman, Elsa Hernandez, Gabriel Roth, Greg Rippon, John Schnarz, Morgan Levy, Neal Carruth, Sarah Lilly, Teo Jacobs, and Zach Lipinski. Our theme song is Mr. Fortune by the Hitchhikers and our composer is Luis Guerra. As always, thanks for listening.

[Hal Luftig]

If you're the producer of a show, you're like a parent, and that's like asking you, do you ever stop working with your children? I don't think so. They could be 30 years old. You're still going to be working.

[Stephen Dubner]

The Freakonomics Radio Network.

[Michael Rushton]

The Hidden side of Everything.

[Stephen Dubner]

Stitcher.

[Jeffrey Seller]

Hi, I'm Roman Mars, host of the podcast 99% invisible. Design is everywhere in our lives, but it's easy to not notice or take it for granted. Granted, 99% invisible is a weekly exploration of the process and power of design and architecture. It's stories of who we are through the lens of the things we build. Like have you ever wondered why we use the 1kHz bleep sound to cover up inappropriate words on radio and TV? Or what aspects of infrastructure allow 5 year olds in Japan to run errands by themselves while kids in the US are completely dependent on their parents or their parents cars? Or why the historic flag of South Vietnam shows up at right wing protests all the time? Or why people are obsessed with houseplants? And when did we start bringing plants from halfway around the world into our.

[Stacy Wolf]

Homes to begin with?

[Jeffrey Seller]

99% invisible we'll explore all of that and more every Tuesday. Follow and listen to 99% invisible wherever you get your podcasts. This episode is sponsored by E Trade from Morgan Stanley. Dive into the market with E Trade's easy to use tools and now there's even more to love. Get access to expert insights from Morgan.

[Stephen Dubner]

Stanley to help navigate the markets. Open an account and get up to.

[Jeffrey Seller]

$1,000 or more with a qualifying deposit. Learn [e-mail] terms and other fees apply. Investing Involves Risks Morgan Stanley Smith Barney LLC Member SIPIC E Trade is a business of Morgan Stanley.