LOGISTICS
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There will be an initial 20 year net lease with rent starting at $1,350,000 per year. 49 Stages LLC will supervise construction and then manage the facility which will house:
One 399-seat theater
One 249-seat theater
Two 199-seat theaters
One 99-seat theater
Four rehearsal studios
The capitalization sought for the project is a minimum of 9 million ($9,000,000) and a maximum of 10 million ($10,000,000). Five and a half million ($5,500,000) - six million ($6,000,000) will be used for construction. A preliminary budget has been created
by the General Contractor, Sean Deacy who has substantial theater building experience.
Two and a half million ($2,500,000) - three million ($3,000,000) is required to purchase a Letter of Credit
as a security deposit and an additional five hundred thousand ($500,000) – one million ($1,000,000) will be used for preliminary construction costs – architectural, expediting, engineering and legal fees and as a reserve.
See below for a breakdown of expenses & revenue streams:
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When a producer/producers of an Off-Broadway show want to book an Off-Broadway theater, they sign a license agreement with the theater owner and pay a security deposit of a minimum of 4 weeks of license fees upon signing the contract. They also pay in advance for the time that they are rehearsing in the theater – usually one or two weeks.
HOW DOES A THEATER OWNER MAKE MONEY & GUARANTEE BOOKINGS?
Producers usually pay several months in advance to secure a theater. Producers also frequently pay a fee to be on a waiting list for priority when a desirable theater becomes available.
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Once performances begin, all the revenue from ticket sales, concessions, facility fees, etc. is collected by the theater owner through the box office. At the end of the performance week, the theater owner deducts the weekly license fee and all the additional expenses incurred by the production during the week – electricity, air conditioning use fee, staff salaries, toilet paper and paper towels, soap, cleaning services, phone and Wi-Fi – all these expenses are added up in a settlement report. The final total is deducted from the box office receipts. So, the theater owner controls the revenue and does not rely on the producer to pay him/her.
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If the revenue from the weekly box office receipts is not sufficient to cover the license fee and expenses, the security deposit is used and the producer has 48 hours to replace the amount or the theater owner can activate a “stop clause” and close the show. The theater owner always has four weeks’ worth of fees for each show and collects the box office revenue for each show, making the risk of non-payment non-existent and eviction – if necessary - very simple. The owner locks the door to the theater and stops selling tickets to the non-paying show. The stop clause can also be invoked if the show makes less than a previously agreed upon amount of money for two weeks in a row.
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Most of the building expenses – electricity, phone, Wi-Fi, cleaning services, exterminators, etc. can be passed on to the producers of each show. Each of the five theaters will be metered for Con Ed separately so 49 Stages will only be responsible for electricity bills for the studios and the general public areas.
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In addition, the theater owner also gets the “float” – the interest on all the advance tickets sold for each show. The producer of the show is only paid for the actual tickets that are used each week, not for any future performances. That income remains in the theater owner’s account until the actual date the tickets are used.