Business of Broadway Flashcards

Questions and Answers

What does it mean for an option to be almost always exclusive?

No other producer will be given the right to produce that show during the period of the option.

What happens if a producer does not produce the work during the specified time?

The producer must surrender the option.

What are licenses in relation to productions?

Licenses are permissions given for other producers to produce works after the option is exercised.

Licenses provide no participation in future productions of the show for the producer who acquires them.

True Signup and view all the answers

What do licenses typically include?

All of the above Signup and view all the answers

What are all option payments considered as?

An advance against royalties. Signup and view all the answers

What does APC specify in the context of option payments?

The royalty due to the author from the Broadway production. Signup and view all the answers

The author's contract is usually the last to be negotiated.

False Signup and view all the answers

What is the front of the house and what does it consist of?

The front of the house is part of a performance venue open to the public. It consists of the lobby, box office, and marquee. Signup and view all the answers

What does the backstage area consist of?

Green room, crossover, fly system, dimmer room, shops and storage areas, call board, trap room. Signup and view all the answers

What are the different parts of the stage itself, spatially speaking?

Stage right and stage left from the actor's perspective. Signup and view all the answers

Which of the following are included in the sections of the theatre?

Box office Signup and view all the answers

What kind of budgets do commercial productions use?

The production budget and the weekly operating budget. Signup and view all the answers

What kind of budgets do nonprofit organizations use?

The annual operating budget and the capital budget. Signup and view all the answers

How does a financial manager create a budget?

By estimating earned income, contributed income, and expenses. Signup and view all the answers

What type of budgeting system is preferred and why?

Zero-based budgeting, because it provides the most accurate budgeting picture. Signup and view all the answers

What is the budgeting process like for a commercial production budget?

The general manager gathers information and creates the production budget for approval. Signup and view all the answers

How does the general manager make the weekly operating budget?

By estimating costs for salaries, rentals, and other weekly expenses. Signup and view all the answers

What is a copyright?

A form of protection provided by law to authors of original works of authorship. Signup and view all the answers

What is a work for hire?

Work created by an author as part of their duties for an employer will generally hold the employer's copyright. Signup and view all the answers

What is considered public domain?

Works that are no longer under copyright protection. Signup and view all the answers

What is an option in the context of producing a play?

An option gives the producer permission to produce a work in a specified manner and time. Signup and view all the answers

Who are all the people involved business-wise? (Select all that apply)

Producer Signup and view all the answers

Who are all the people involved creatively? (Select all that apply)

Play Author Signup and view all the answers

What are the different sources of intellectual property?

Writer - Play, Musical writing team, Multi-purposing sources like Books, Films, etc. Signup and view all the answers

What are the steps done in developing sources of intellectual property?

Define the property, Acquire property, Establish steps for development. Signup and view all the answers

What do you get when you acquire intellectual property?

The rights, vesting, the territory, compensation for use Signup and view all the answers

What are the components of the rights?

Exclusivity of use and purpose, Term of exclusivity, Underlying rights. Signup and view all the answers

What is the duration of copyright protection for works created after January 1st, 1978?

Life of the author plus 70 years Signup and view all the answers

What is included in a first-class rights package?

All of the above Signup and view all the answers

What is a workshop?

A production of an entire show staged in a rehearsal room for testing. Signup and view all the answers

Copyright protection prohibits the exploitation of the author's work by giving the owner of the copyright exclusive right to ____

reproduce the work Signup and view all the answers

When is a work copyrighted?

From the moment of creation Signup and view all the answers

How may a commercial producer transfer a show originating in a nonprofit theater?

Negotiate an agreement with the theater Signup and view all the answers

What is the legal structure of a non-for-profit organization?

Organized as a corporation run by a Board of Directors who hire an Executive Director. Signup and view all the answers

What defines the mission of a non-for-profit organization?

The mission is created by the Board of Directors and must serve a public purpose. Signup and view all the answers

A non-for-profit theater can be organized for a profit-making purpose.

False Signup and view all the answers

What are the main sources of funds for a non-for-profit theater?

Ticket Sales, Donations, Fundraising activities, Grants, Sponsors. Signup and view all the answers

How are non-profit goals defined?

By the mission of the organization. Signup and view all the answers

What is a nonprofit presenting organization?

An organization that purchases pre-packaged events to present in local communities. Signup and view all the answers

What distinguishes a nonprofit producing organization?

It creates its own productions from scratch. Signup and view all the answers

If a nonprofit organization earns a profit, what must it do?

Invest it back into the organization to serve its purpose. Signup and view all the answers

What is the goal of a for-profit performing arts organization?

To return a profit to its investors. Signup and view all the answers

What must a commercial producer keep in mind when booking a season?

The balancing act between artistic process and budget. Signup and view all the answers

What are the various legal structures for a for-profit performing arts organization? (Select all that apply)

Limited Liability Company (LLC) Signup and view all the answers

What is the primary role of a nonprofit board of directors?

To hire the executive director and provide oversight. Signup and view all the answers

Which of the following is a common mission of commercial theater? (Select all that apply)

Make a profit Signup and view all the answers

What characterizes the budgeting of non-profit theater?

Budgeting is done on a calendar year basis, with the season typically running from July to June. Signup and view all the answers

What is risk in the context of performing arts organizations?

To take or run a risk is to expose oneself to the possibility of loss. Signup and view all the answers

What are the different kinds of risk in performing arts organizations? (Select all that apply)

Financial risk Signup and view all the answers

Define Sole Proprietorship.

Sole proprietorship is the least complicated type of producing entity, where the producer is personally liable for all financial losses and debts. Signup and view all the answers

Define Joint Venture.

A joint venture is formed when two or more producers agree to produce a property together for profit, with each producer having unlimited liability. Signup and view all the answers

Define Limited Partnership/Limited Partner.

In a limited partnership, investors known as limited partners contribute funding but do not participate in business operations. Signup and view all the answers

Define Overcall.

An overcall is an additional request for funds from investors, which may occur under certain circumstances if specified in the partnership documents. Signup and view all the answers

Define Priority Loan.

A priority loan is a request for additional funds from general partners or other sources when the production requires more money than originally capitalized. Signup and view all the answers

Define Front Money.

Front money is funds raised to cover pre-production expenses before the limited partnership becomes active. Signup and view all the answers

Define Limited Liability Company.

A limited liability company (LLC) provides liability protection for investors while allowing them to participate in business operations. Signup and view all the answers

Define Mini-max.

Mini-max is the minimum amount of capitalization that must be raised before funds from a limited partnership can be spent. Signup and view all the answers

How are production entities regulated?

Production entities are regulated by governmental laws, including Blue Sky Laws and federal regulations from the Securities and Exchange Commission. Signup and view all the answers

What are royalties?

Royalties are payments made by the producer for the use of a specific work, owed for each performance. Signup and view all the answers

What are the exceptions to the royalty pool rule?

There are exceptions when the net adjusted gross rises above a certain level, resulting in larger royalties than the pool calculation. Signup and view all the answers

What must a producer decide regarding royalties?

A producer must determine if to use the royalty pool formula based on projected royalty payments and the production's financial status. Signup and view all the answers

Does the producer pay some royalties regardless of the structure governing the production?

Yes, most arrangements require that a minimum amount be paid to royalty participants weekly, irrespective of production success. Signup and view all the answers

What is NAGBOR?

NAGBOR is the gross box office receipts adjusted for certain deductions. Signup and view all the answers

What are the different kinds of stages?

Proscenium, thrust, arena, flexible, profile, and end stage. Signup and view all the answers

Define Proscenium Stage.

A proscenium stage is framed like a window, providing a good view for the audience and eases hiding of backstage elements. Signup and view all the answers

Define Thrust Theater Stage.

A thrust theater stage is surrounded by the audience on three sides, creating a more intimate setting. Signup and view all the answers

Define Arena Theater.

An arena stage is surrounded by the audience on all sides, often with a raised central stage. Signup and view all the answers

Define Flexible Theater.

Flexible theaters, or 'Black Box' theaters, can be adapted in terms of staging and seating to suit different productions. Signup and view all the answers

Define Profile Theater.

Profile theaters place the audience on risers to the side of the playing space, with actors typically staged in profile. Signup and view all the answers

Define End Stage.

An end stage is similar to a thrust stage but has the audience located only at the front. Signup and view all the answers

What are the different sections of a theater?

The sections of a theater include front of house, house, and backstage or offstage areas. Signup and view all the answers

What does the house refer to?

The house refers to any area where the audience is seated, including the lobby and aisles. Signup and view all the answers

Study Notes

Non-Profit Organizations in Theater

Legal Structure: Operate as corporations managed by a Board Of Directors (BOD) and Trustees who hire executives to fulfill the mission.
Mission: A non-profit's purpose is determined by its mission, which may involve producing plays, educational opportunities, and supporting artists in the theater community.
Tax Status: Non-profits are tax-exempt and must reinvest profits into the organization rather than for personal financial gain.
Budgeting: Non-profit theaters typically follow a budget cycle from July to June, referred to as the theater season.
Funding Sources: Major funds come from ticket sales, donations, fundraising activities, grants, and licensing.

Goals and Types of Organizations

Definition of Goals: Non-profit goals align with the organization's mission and include performance programming, educational initiatives, and facility support.
Presenting Organizations: Non-profit presenting organizations curate and host performances, booking pre-packaged events without incurring production costs themselves.
Producing Organizations: Nonprofit producing organizations create original productions, selecting all creative team members and managing the entire production process.

Profit and Commercial Organizations

Profit Reinvestment: Nonprofits must reinvest any profits to support their mission.
Commercial Goals: For-profit theaters primarily aim to generate profit for investors, emphasizing financial return over public service.
Types of Commercial Structures: Commercial organizations can be corporations, limited partnerships, or limited liability companies (LLCs), all governed by a board of directors.
Investors: Investors provide funding for productions with the expectation of recovering their investment plus profits.

Risk Management

Types of Risk: Include time risks (timing issues), financial risks (investment or budget failures), reputation risks (misalignment of production quality), and lost opportunity risks (neglecting potential projects).
Time Elements: The availability of creative staff, venues, and audience participation are critical for the successful execution of productions.

Collaborative Structure

Creative Contributors: Includes actors, directors, choreographers, designers (set, sound, costumes), and musicians who all play key roles in the development and execution of theater productions.
Business Contributors: Consist of producers, legal counsel, theater owners, general managers, marketing agents, and booking agents who manage the organizational and financial aspects of productions.

Intellectual Property

Sources: Intellectual property can be derived from various forms, including original plays, musicals, adaptations, or established works (books, films).
Development Steps: Involves defining the property to be acquired, assessing its completion level, and planning further developmental steps.### Production Development
A "retreat" is an intimate meeting among writers, directors, producers, and creative team members to align on a project and foster early collaboration.
Workshops, showcases, and readings are methods to test material and secure interest from investors or partners.
Regional Theatre presentations serve as pre-Broadway try-outs to enhance and develop productions for wider audiences.

Intellectual Property

Acquiring intellectual property entails rights, vesting, territory, and compensation for usage.
Key components include exclusivity of use, duration of exclusivity, extension rights, underlying rights (e.g., novel or movie adaptations), payment options, and residual rights.

Vesting and Rights

Vesting denotes an employee's eligibility for pension benefits after working a specified time with the employer.
Subsidiary rights cover subsequent uses by the original author. Producers share in these rights based on their contributions.
Ancillary income arises from non-performance activities, such as concessions or merchandising.

Finding and Developing Property

Producers find productions through three main avenues: direct commissions, existing scripts, or transferring previously produced properties.
Development from an initial idea to production can take two to seven years; adaptations from existing works take three to five years.

Production Transfers

Productions often transfer from nonprofit to commercial theaters, primarily originating from nonprofit theaters or other cities like London.
Producers negotiate agreements for rights, potentially enhancing the production for a commercial theater.

Enhancement Deals

An enhancement deal allows producers to contribute funds to improve a production at a nonprofit theater.
Nonprofits gain royalties and may participate in future commercial benefits in exchange for incorporating enhancement funding.

Workshops

A workshop is a staged production of a show after four to five weeks of rehearsal, typically presented to small audiences.

Copyright and Licensing

Copyright grants authors exclusive rights to reproduce, distribute, perform, and prepare derivative works.
Works are copyrighted at the moment of creation; copyright notice is advised for legal advantages.
Copyright duration varies: life of the author plus seventy years, or ninety-five years for earlier works.

Rights Packages

A first-class rights package includes rights for Broadway and potentially touring and London productions.
Off-Broadway rights cover the Off-Broadway production and rights for touring; they may also include commercial use rights.

Producing Entities

A sole proprietorship involves one producer financing a production and assumes personal financial liability.
A joint venture sees multiple producers collaborate with shared unlimited liability, but can be organized into limited partnerships for reduced risk.
Limited partnerships consist of general partners managing the project and limited partners providing funding without operational control.

Financial Strategies

Overcall provisions allow producers to request additional funds from investors up to a specified limit.
Priority loans may supplement funding needs and are repayable before investors receive profits.
Front money is raised to cover pre-production expenses, typically limited to a small number of investors for high-risk compensation.### Limited Liability Company (LLC)
An LLC protects its investors (investing members) similarly to a limited partnership but allows for active participation in management.
Unlimited number of investing members can be part of an LLC.

Mini-max

Refers to a minimum amount of capital that must be raised (usually 75%) before funds can be spent.
Example: If total capitalization for a production is $3 million, a mini-max might be $2 million.

Regulation of Production Entities

Governed by various laws, including state-specific Blue Sky Laws, which protect investments in securities.
Theatre financing also regulated at the federal level, requiring registration documents for partnerships and LLCs.
Consulting with legal professionals is advisable when forming commercial producing entities.

Royalties

Royalties are payments for the use of a work determined either as a fixed amount per performance or as a percentage of net adjusted gross.
Payments are ongoing after a production opens and are part of weekly operational costs.
If ticket sales are low, royalty recipients might receive payments prioritizing them over investor returns, leading to potential deficits.

Royalty Pool

A system developed to split profits between royalty participants and investors, negotiating based on performance profitability.
Example calculation shares profits where investors could receive 60% and royalty participants 40%, based on their contractual agreements.

Exceptions to Royalty Pool

When net adjusted gross exceeds certain levels, royalty payments can surpass standard percentage distributions.
Decision-making is case-specific, based on profitability.

Producer's Decisions on Royalties

Producers decide on implementing a royalty pool based on anticipated payments and production costs.
Detailed box office statements are required to justify the usage of a pool to royalty participants.

Minimum Royalties

Producers must pay a minimum royalty amount to participants, regardless of the chosen payment structure.
Minimum calculated based on a defined monetary value for every point in the royalty pool.

NAGBOR

Stands for net adjusted gross box office receipts, factoring in various deductions like taxes and credit card fees.

Types of Theater Stages

Proscenium Stage: Framed stage for audience view; simplifies set design and backstage functions.
Thrust Stage: Surrounded by three sides of audience; background serves only as a backdrop.
Arena Theater: Center stage with audience on all sides; often raised for better sightlines.
Flexible Theater: “Black Box” style; adaptable staging and seating according to the production's needs.
Profile Theater: Audience on risers side viewing; best for narrow spaces.
End Stage: Audience in front with limited wing space; scenery typically focused at the rear.

Sections of a Theater

Front of House: Includes all public areas such as lobby, box office, and auditorium.
Backstage: Areas not visible to the audience, including dressing rooms and technical rooms.

House Definition

Refers to any area where the audience is seated, including the auditorium, aisles, and lobby facilities.

Front of House Definition

Part of a venue open to the public; responsibilities include ticket sales and managing audience areas.

Backstage Area Components

Includes green rooms, dressing rooms, crossovers, fly systems, dimmer rooms, and storage areas, essential for production preparation.

Stage Orientation

Stage right and left are defined from the actor's perspective; actors should face the audience when referencing directions.

Parts of a Theater

Includes stage elements (upstage, downstage), backstage facilities, audience seating areas, lobby areas, and the marquee for signage.

Theater as an Enterprise

All ticket sales managed by the theatre under a licensing agreement, aligning interests of producers and venue management.

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Description

This quiz focuses on the key legal structures and missions of non-profit organizations within the context of Broadway. It provides essential definitions and organizational structures vital for understanding the business side of Broadway productions. Perfect for students and professionals alike!