It looks like Broadway is looking for an encore – not just applause, but also with cash.
The Broadway League, an organization of 700 producers, theater owners and operators, general managers, and others, is seeking to get the state to add more funding to a tax credit that is close to being used up for the year.
The New York City Musical and Theatrical Production Tax Credit, a 25% financial incentive against approved production costs with a cap of $3 million for Broadway and $350,000 for Off Broadway, is funded to the tune of $100 million for this year. But more shows than usual, along with high costs, resulted in a run on the credit — so much so that the New York State Empire Development, the state’s economic development arm, says it doesn’t expect it will be able to meet demand for all eligible shows.
ESD will not know the exact amounts approved applicants get based on projected budgets until actual expenditures are calculated and submitted later in the year. But it anticipates that most or all of the funding could be used up, leaving some shows without the credit even if they qualify for it.
The Broadway League is seeking to get the state legislature and governor to increase funding for the year, even retroactively, and set aside funding for three more years so eligible shows can receive funding.
“The New York City Musical and Theatrical Production Tax Credit continues to be vital to the funding of Broadway productions,” Broadway League President Jason Laks said. “We know that the governor and the state legislature understand how important Broadway’s success and the work of our thousands of employees are to the economy of the city and the state.”
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He said it’s important to “sustain this vital program” that helps fund an industry that employs tens of thousands of workers.
The credit was launched in 2020 amid the COVID-19 pandemic but remains in place as shows face rising costs, including inflation. The Broadway League says the credit encourages investment and fuels the industry’s growth.
Broadway is coming off a banner year with 43 new productions, nearly $1.9 billion in gross revenue, nearly 14,7 million attendees and more than 1,710 weeks of shows. Laks believes none of this is possible without the credit.
“The success of this past Broadway season is a direct result of the state sustaining the tax credit program to incentivize private investment in production,” Laks said. “Despite driving tourism and economic activity, productions still struggle to recoup the investments required to bring a show to Broadway.”
Some see the credit as favoring a New York City industry that generates tourism, producing revenue both for shows and many other industries in the city.
“It’s a crucial subsidy by the state of New York to one of our home-grown industries, Broadway,” state Sen. Brad Hoylman-Sigal, who represents the Theater District, told The Hollywood Reporter. “I would liken it to price supports for the dairy industry in Wisconsin; it’s that essential.”
The tax credit’s text describes itself as designed to support the “entertainment industry and support tourism in New York City” and “offset some of the additional costs associated with producing a show as New York’s economy continues to recover from the COVID-19 pandemic.”
Broadway shows eligible for the credit must be in the heart of the Theater District, which is bounded by 41st and 54th Streets between 6th and 9th Avenues. Off-Broadway shows are professional productions at venues across the city with capacities of between 100 and 499 seats. These shows can receive credits of up to 25% of qualified production expenditures up to $350,000.
Credits can be applied to production costs for sets, costumes, wardrobes, makeup, accessories, sound, lighting, and staging. Compensation can be up to $200,000 per week. Credits can also cover technical and crew production costs and half of advertising and marketing costs in New York State.
Ballet, opera, musical solo, group, band or orchestra performances, or stand-up comedy performances are not eligible for funding under the credit program.
Some Broadway shows close before they’re eligible for credits; others are ineligible for the credits because they generated large revenue on their own.
The credits include provisions to pay pack funds if shows reach certain thresholds, but none have reached those amounts. The League supports revising those numbers so they are stricter.
“The intent was to incentivize our investors and our shows to take the risk, which is a crazy, great risk, to open a show on Broadway,” Shubert Organization President Jeff T. Daniel told The Hollywood Reporter. “But they’re quite happy when they are successful. I think most everyone believes it’s reasonable to say, ‘Great, I shouldn’t get the full allocation, that should go back in the kitty for other shows and more economic development.’”
