gramps3 wrote:

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Like almost everyone on the list I would like to see the show extend if even for only a short period such as the summer of 2008. And, again like almost everyone else, I have no real idea about how much is actually being made as far as profit is concerned.

Awhile back we had a long thread about costs and income and net and it seemed as though most had grasped the concepts involved. But I worry a little about people's hopes being shattered because it appears as though many (certainly not all) are not remembering that of a week's box-office take of $750,000 only a portion is net gain or profit.

There was some knowledgeable speculation early that the cost of a week of performances was about $500,000 give or take. Using the example figure of $750,000 for such it would mean that the week provided $250,000 net. Using Ian's statement that would mean that it would take about 40 weeks of such box office figures to reach the break-even point of $10,000,000. Only then does profit start to show. These example figures appear to be close to accurate because the equation fairly well matches Ian's prediction of 40 weeks of performance beine necessary to show any profit.

However, in contemplating added performances following the contracted year, it would mean that profit takers would have to agree to risk some accumulated profit on the assumption that the show would continue to make money with the added performances. And remember, investors do not simply want to get their ten million back, but want to show a profit on that too as they have had ten million dollars worth of capital tied up for 40 weeks when it might have been earning something somewhere else.

Additionally, if the enthusiasm about the original production is to any significant amount based on who is performing (as very well may be the case in Grease) if the opriginal cast is changed (e.g., Max or Laura or any other popular cast members) there are additional expenses in re-casting and a lot of additional risk.

Investors in such circumstances may be tempted to try to make more by investing risk capital in something new rather than take a chance on probably diminishing capital gain on an old production. In the entertainment business investors seem to be more willing to try something new than to delegate capital gains to a production which, by the general nature of such things, is likely on a decelerating curve of return.

To put it bluntly, investors or less excited overthe raves of established fans' than they are in the probability of extended box office receipts that produce profit.

Little of this is based on the Grease production per se but is simply a reflection of the facts of life in such investment endeavors. To use a cliche of the stock market, "One need not like bacon to invest in pork bellies,"

As one's broker might say, "Hope for the best, keep your eye on day-by-day return figures, but be careful about betting the farm on it."

Stan/gramps3

-- Edited by gramps3 at 17:52, 2008-04-21

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