Inflation ruins Broadway romance with ‘Phantom of the Opera’

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The stage chandelier will be to fall for the last time when The Phantom of the OperaBroadway’s longest running musical closes in February after 35 years. The curtain falls on the work of Andrew Lloyd Webber, with his 130 actors, crew and orchestra, 230 costumes and 6,000 pearls replica of the light of the Paris Opera.

The whole production defies gravity, really. Musical theater has been the mainstay of Broadway since the 19th centuryand the recent revival of London Cabaret shows how important he is to the West End. But the business of putting on big musicals that force huge audiences to pay high prices for tickets is quite a gamble.

Cameron Mackintosh, co-producer of Phantom with Lloyd Webber’s Really Useful Group, likes to quote Alan Jay Lerner, the American musical librettist. “You know what a esteem success is, isn’t it? A fading success. The financial success of Mackintosh and Lloyd Webber with shows such as Cats and Phantom was to prevent them from doing so.

Phantom had been seen by nearly 20 million people on Broadway earlier this month, grossing $1.3 billion. It is still operating in the West End, having temporarily closed during the pandemic, and has play to 145 million people in 41 countries since it opened in London in 1986. It might not match classic operas as a work of art, but you can’t argue with an ATM.

However, the machine may suddenly break down, because Phantom has found on Broadway since its post-pandemic return last year, with a $10 million grant from a US government funds bring the theaters back to life. “Phantom is a huge showman, with lots of staff and performers, costumes and wigs.” Mackintosh told me this week. “Starting it today from scratch would be prohibitively expensive.”

The greatest difficulty is not the initial investment in a new production, however enormous; is that musicals are very expensive to continue. Mackintosh compares them to yachts. “It’s like owning a boat: the happiest days are buying it and selling it. It is extremely expensive to operate. »

Musicals are a prime example of the “cost sickness” in the performing arts identified by economist William Baumol in 1966. Rising wages and other costs cannot be offset by higher labor productivity because each performance requires the same number of people for the same output. Unless you lose the luster, it’s a struggle to be had Phantom more financially efficient.

The drag became larger with high inflation. Mackintosh estimates that the weekly cost of dressing Phantom on Broadway has risen from about $850,000 pre-pandemic to nearly $950,000, with further increases in energy and other spending to come. Since he only brought back one medium $850,000 a week this year, the sums no longer add up.

This is reinforced by the fact that long-running musicals in cities like London and New York tend to become increasingly dependent on tourists. Locals will be drawn to limited runs of new shows and revivals such as The music manbut shows such as Phantom rely more on visitors. Less have been to visit New York than before Covid hit, especially from Asia.

As demand declines, tickets are reduced and the economy of the old musical sags. Phantom performed to 71% audiences on Broadway this year, compared to hamilton‘s 96 percent, at an average ticket price of $93 versus hamiltonit’s $213. News of its closing in February should make it a hotter ticket as the deadline approaches.

This likely won’t be the last time New York sees the masked man in love; Phantom could be revived in the future, perhaps in a more viable form. He will continue to tour the world on limited tours in cities from Sydney to Vienna. If the tourists don’t come Phantom, it will come to them.

“The Broadway musical isn’t dead but things will be tougher. There will be more pressure to have smaller casts and orchestras,” says Matthew Rousu, a fan of musicals and professor of economics at the University of Susquehanna The group will continue to play, but with fewer players.

This raises an existential question about the future of spectacular musicals on the scale of Phantom Where Wretched. Musicals tend to be venture-backed, with a syndicate of investors bearing the high risk of shutting down before a new production recoups its initial outlay, for a small chance of getting really rich (Cats‘ early London investors received a 60 times return).

The halo effect of a huge hit on Broadway has always been huge: that’s why there are so many Phantom. Reducing the size of musicals will limit the risks, but it will also reduce the chances of a novella becoming a global phenomenon and generating money for decades.

Mackintosh has done very well at the top of the big musical industry: his production company paid him a £35m dividend at the end of 2019, before the pandemic and today’s inflation spike, and then none when the crisis hit. When the curtain finally falls on Phantomhe can shed a tear.

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