‘Hamilton’ Investors Have Seen Returns of Over 600% on the Hip Hop Musical
Investors in the hip-hop musical Hamilton have made “unprecedented” returns of roughly 600%, according to one investor, on an initial investment of about $12.5 million.
Its London run, which begins on Thursday (two weeks behind schedule), is likely to follow in the footsteps of the New York production in making unusually generous returns, according to the Financial Times.
Hamilton has been one of the most successful productions in recent theatrical history, with list-price tickets almost impossible to come by, the New York Times notes. The musical won a Grammy in 2016; its album reached gold status; and celebrities from Beyonce to the Obamas streamed in to watch performances. Its massive success also had a large role in making the 2016-2017 season Broadway’s best, with to a 5.5% rise in sales and a total of $1.45 billion in revenue, according to Forbes.
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Upfront costs of musicals usually sit around $10 to $15 million on Broadway, or £2 million ($2.7 million) to £6 ($8 million) in London’s West End, industry insiders told the FT. Ticket sales first cover pre-production costs, royalties and running costs; any remaining profits are split between investors and producers.
The investors of Hamilton initially put up around $12.5 million, which would have been quickly recovered; during Hamilton’s first full year (starting in mid-2015) on Broadway the productions generated gross sales of roughly $74 million, according to data from the Broadway League trade group; in the 2016-2017 (May-to-May) season, the New York show grossed another $130 million.
“It’s definitely in the cultural zeitgeist right now,” Brisa Trinchero, co-producer of the Carole King musical Beautiful and a backer of Hamilton’s Broadway and London runs, told the FT. “There’s an opportunity to make real money if you have the discipline to invest in shows that are financially smart rather than just shows that you love.”
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Hamilton sits alongside musicals like Wicked and Mamma Mia! as productions that have expanded musical theater’s mainstream audience and created new outlets for theater production investors.
“These [shows] are having long runs, becoming globally successful properties and are increasingly up there with major film properties in terms of their financial success,” Neil Adleman, head of technology, media and entertainment at law firm Harbottle & Lewis told the FT.