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An Empirical Study of the Determinants of the Run-Times of Broadway Musicals

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An Empirical Study of the Determinants of the Run-Times of Broadway Musicals AN EMPIRICAL STUDY OF THE DETERMINANTS OF THE RUN-TIMES OF BROADWAY MUSICALS A THESIS Presented to The Faculty of the Department of Economics and Business The Colorado College In Partial Fulfillment of the Requirements for the Degree Bachelor of Arts By Katie Ferguson May 2011 AN EMPIRICAL STUDY OF THE DETERMINANTS OF THE RUN-TIMES OF BROADWAY MUSICALS Katie Ferguson May 2011 Mathematical Economics Abstract With an economic impact of $9.8 billion in the 2008-09 season alone, Broadway as an industry which should be economically studied. Currently there is a large gap in scholarly literature about Broadway with only three quantitative studies having been performed. This thesis aims to help fill this gap by building off of these three studies to determine which factors influence the success- measured as total days on Broadway from opening to closing night- of a Broadway musical. This thesis focuses specifically on musicals as they have been shown in all three empirical studies to have longer runs and a larger economic impact than Broadway plays. The econometric analysis finds many variables- such as a movie version of the musical being released, and winning the Tony for Best Musical- that are predictive of loner run times. Revivals are found to have substantially shorter run times than original runs and over time, musicals are lasting longer. KEYWORDS: (Broadway, Musical, Theatre, Run-time) TABLE OF CONTENTS ABSTRACT 1 INTRODUCTION 1 2 LITERATURE REVIEW 5 Characteristics of the Film Industry..................................................... 5 Live Theatre................................................. ..................................... 7 Modern Day Broadway..................................................................................... 9 Empirical Studies................................................ ..................................... 12 18 3 THEORY 4 DATA & METHODOLOGY 32 5 RESULTS AND CONCLUSION 52 APPENDIX A 65 WORKS CONSULTED 67 CHAPTER I INTRODUCTION Broadway makes an enormous impact on the local economy of New York City. In the 2008-09 season alone, Broadway shows and the overall industry generated $9.8 billion of impact to the local economy.1 This is broken down into types of spending in Figure 1.1 below: FIGURE 1.1 Broadway’s Economic Impact 2008-2009 Source: “Broadway’s Economic Contribution to New York City 2008-2009”, The Broadway League – The Official Website of the Broadway Theatre Industry, 2010, available from http://www.broadwayleague.com/index.php?url_identifier=broadway-s- economic-contribution-to-new-york-city, (Date accessed: April 2011). The 2009-10 Broadway season grossed $1.02 billion with a total of nearly 12 million attendees.2 1 “Broadway’s Economic Contribution to New York City 2008-2009”, The Broadway League – The Official Website of the Broadway Theatre Industry, 2010, available from http://www.broadwayleague.com/index.php?url_identifier=broadway-s-economic-contribution-to-new- york-city, (Date accessed: April 2011). 2 “Broadway Facts”, The Broadway League – The Official Website of the Broadway Theatre Industry, 2010, available from http://www.broadwayleague.com/editor_files/Broadway-Facts(6).pdf, (Date accessed: April 2011). 1 2 The Broadway League Research Department found that “Broadway attendance for the 2009-2010 season topped those of the ten professional NY and NJ sports teams combined” (Mets, Yankees, Rangers, Islanders, Knicks, Liberty, Giants, Jets, Devils and the Nets).3 In addition, the Broadway industry supported 84,400 local jobs in 2009.4 The majority of individual spending is by tourists, whose decisions to visit New York are often based on attending Broadway shows. During the 2009-10 season, nearly 65% of all tickets to Broadway shows were purchased by tourists.5 Tourists who attend Broadway shows are both national (3.5 million people- $3.1 billion) and international (540,000 people- $2.1 billion). Together they contribute $5.2 billion to the economy just through ancillary spending while visiting Broadway shows.6 The impact of Broadway shows extends across the United States through touring productions, with touring companies traveling nationally and sometimes internationally, further extending the profits of the show through ticket sales, ancillary products and memorabilia.7 In the 2007-08 season, 15.3 million tickets were purchased to attend touring Broadway 3 “Broadway Facts”, The Broadway League – The Official Website of the Broadway Theatre Industry, 2010, available from http://www.broadwayleague.com/editor_files/Broadway-Facts(6).pdf, (Date accessed: April 2011). 4 “Broadway’s Economic Contribution to New York City 2008-2009”, The Broadway League – The Official Website of the Broadway Theatre Industry, 2010, available from http://www.broadwayleague.com/index.php?url_identifier=broadway-s-economic-contribution-to-new- york-city, (Date accessed: April 2011). 5 “The Demographics of the Broadway Audience 2009-2010”, The Broadway League – The Official Website of the Broadway Theatre Industry, 2010, available from http://www.broadwayleague.com/index.php?url_identifier=the-demographics-of-the-broadway-audience, (Date accessed: April 2011). 6 “Ancillary Spending by Broadway Tourists”, The Broadway League – The Official Website of the Broadway Theatre Industry, 2010, available from http://www.broadwayleague.com/editor_files/Report%202008-2009_SamplePage17.pdf, (Date accessed: April 2011). 7 “Touring Broadway Facts”, The Broadway League – The Official Website of the Broadway Theatre Industry, 2010, available from http://www.broadwayleague.com/editor_files/Touring-Broadway- Facts(9).pdf, (Date accessed: April 2011). 3 productions, most of which were musicals.8 Touring Broadway shows, both musicals and plays, grossed $947 million in the 2008-09 season, with nearly 16 million people paying for tickets to the shows. Touring shows contribute over $3.4 billion to metropolitan cities that host touring shows. On average, these tours generate impact on local economies that is 3.5 times the gross ticket sales.9 Musicals gross more than four times as much as plays on Broadway, with attendance almost five times as large.10 Previous literature and research into the arts industry has left a gap in the area of the Broadway industry. Only a few studies (one conducted in 199811, one in 200312, and a third in 200413) have attempted to empirically determine the factors that influence the success and longevity of Broadway shows. Not one study has studied musicals independently. With Broadway continuing to play a major role in local and national economies, it is an important process to understand - it’s time for a new study to be conducted. With such a high risk involved in producing Broadway shows, and musicals especially, it is important to figure out how to make a show successful- that is, how to extend the run time. Other studies have looked at audience attendance as a measure of success. However, even a 8 “The Audience for Touring Broadway- A Demographic Study 2007-2008”, The Broadway League – The Official Website of the Broadway Theatre Industry, 2010, available from http://www.broadwayleague.com/index.php?url_identifier=new-the-audience-for-touring-broadway-a- demographic-study, (Date accessed: April 2011). 9 “Touring Broadway Facts”, The Broadway League – The Official Website of the Broadway Theatre Industry, 2010, available from http://www.broadwayleague.com/editor_files/Touring-Broadway- Facts(9).pdf, (Date accessed: April 2011). 10 “Broadway Season Statistics at a Glance”, The Broadway League – The Official Website of the Broadway Theatre Industry, 2010, available from http://www.broadwayleague.com/editor_files/81010Broadway%20Statistics%20at%20a%20Glance.pdf, (Date accessed: April 2011). 11 Srinivas K. Reddy, Vanitha Swaminathan and Carol M. Motley, “Exploring the Determinants of Broadway Show Success” Journal of Marketing Research, Vol. 35, No. 3 (August 1998): 370-383. 12 Jeffrey S. Simonoff and Lan Ma, “An Empirical Study of Factors Relating to the Success of Broadway Shows” The Journal of Business, Vol. 76, No. 1 (January 2003): 135-150. 13 David Maddison, “Increasing returns to information and the survival of Broadway theatre productions” Applied Economics Letters, Vol. 11, (2004): 639-643. 4 sold out show cannot recoup its costs if it only runs for a week, nor will it go on to the level of national recognition that longer-running shows potentially can. It is because of this fact that it is important to empirically determine which factors affect how long a musical will run on Broadway. This thesis aims to help to fill the gap in the academic literature by conducting a current empirical study of how various internal and external characteristics of Broadway musicals affect how long they run on Broadway. CHAPTER II LITERATURE REVIEW This chapter will discuss past studies and articles relating to the field of theatre and specifically the Broadway industry. It will start with a section on the film industry and similarities found between the film and theatre industries. The next section will focus on the general field of theatre and then go on to focus on Broadway shows. The final section will discuss the three studies that provided the foundation for this thesis. This chapter will conclude with how this study ties into the current literature on Broadway musicals and the determinants of their run times. Characteristics of the Film Industry The film industry has a much wider scope of marketing and distribution than that of live theatre because filmmakers can simply send the
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