Why doesn't Broadway recoup? (From a producer's perspective)
Context
Design Systems at Northeastern University — Spring 2026
Timeline
12 weeks
Team
- Zach Marino — Creator
- Lee Moreau — Professor
Tools and Methods
Brief
The goal of this project was to pick any system in our world, map it, analyze it, and find points of leverage that can change the system. I decided to look at Broadway, since I found it interesting how Broadway (seemingly) has such a hard time recouping compared to Off-Broadway and the West End. I used Donella Meadows’ design thinking paradigm to analyze Broadway and its current form and potential futures. (NOTE: this project was from a producer’s perspective. It’s good for everyone if a show has a good run on Broadway, but the goal of this project was to find new ways to keep these projects profitable long-term if they aren’t immediate successes)
Insights
From my initial systems mapping, I found that to mount a Broadway show, there are three primary costs that make it difficult to recoup an initial investment: a lack of tax credits and subsidies, rent, and payroll. Just adjusting these leverage points would not lead to lasting change (at least according to Donella Meadows) or perhaps even make the situation worse. By zooming out and adjusting our mindsets to long-form IP, shows can outlast their initial run and turn a profit in the future (ex., Heathers, The Addams Family, Titanique, Bonnie and Clyde, etc.)
Deliverables
I created systems diagrams to map out the current Broadway system, and I then included ways to alter that system. I illustrated the map in action using current and past Broadway shows and presented it all in a presentation.
THE CHALLENGE
If you talk to anyone who works on Broadway, they’ll tell you the industry has been struggling. Since 2020, only 5 Broadway musicals have recouped their initial investment. Musicals like Death Becomes Her and Cats: The Jellicle Ball were huge successes critically and commercially, but their huge capitalization costs prevented them from profiting. From a broad view, Broadway is expensive due to three factors: A lack of tax credits and subsidies, rent, and payroll.
TRAPS AND LEVERAGE POINTS
At first glance, an answer to this problem would be to leverage the constants and numbers associated with show costs directly. However, Donella Meadows teaches us that this leverage point is ultimately weak:
Putting different hands on the faucets may change the rate at which the faucets turn, but if they’re the same old faucets, plumbed into the same old system, turned according to the same old information and goals and rules, the system isn’t going to change much.
Bringing back the tax credits and subsidies offered by the New York Government would significantly lower the capitalization cost of a show, but that doesn’t fix the core issue of costs being out of control. Rent is so high because many Broadway theaters have landmark status and therefore make it expensive to repair, but what guarantee do we have that landlords wouldn’t just pocket the difference if we remove their landmark status? Reducing through fewer unions would help shows recoup, but what effect would that have on actors’ morale?
LET’S ZOOM OUT
This is a systems diagram of a Broadway production's cash flow and how money is generated and spent. Weekly revenue is driven by supply and demand, which determine ticket prices, as well as concessions and merch sales. Any profits (revenue not used to keep the show running for that week) are passed off to the investors to cover their initial investment. Running costs include rent and payroll, the latter of which is determined by the unions. Marketing drives demand for tickets, which is what keeps this cycle going until a show closes.
Let’s zoom out further. The earlier diagram is now just a singular Broadway show. What that show is doing in the long term is forming intellectual property. That IP has a lot of ways it can live on past the original performance. Over time, these strategies chip away at the capitalization cost and hopefully turn a show profitable. While this does not necessarily help a show in the short term, it encourages producers to take more chances of interesting shows that may not show a return immediately.
CASE STUDIES
The Addams Family had a relatively successful Broadway run in 2010, but did not quite recoup its initial investment. The IP for The Addams Family already existed, but the show specifically took on a life of its own after its initial Broadway run. It has an immensely successful national tour and is consistently one of the highest-licensed shows for regional and school productions. The show has since recouped and continues to make money long past its initial run.
Titanique started as a wildly successful Off-Broadway parody musical. It was raking in money for several years, but is now running on Broadway with a celebrity cast. Those celebrities weren’t cheap, but the show is still running, so it remains to be seen if it will recoup. But frankly, it probably won’t. Why put this show on Broadway if it was fine Off-Broadway? My theory is that they determined the show will be a hit for licensing and touring. Bringing in the star-studded cast increases brand recognition for the show and will make people interested in producing it locally.
CONCLUSION
Donella Meadows believes that one of the most powerful leverage points in a system is to change the existing paradigm that guides the system. I propose that a paradigm shift needs to be made to support shows over the long-term and build their IP for future interest and investment. While a show’s initial run on Broadway may not recoup, it always has the chance to get hot and do so later.
FULL PRESENTATION
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