Are you a lover of theatre? Do you have an eye for investing? Well there’s an opportunity for you to combine these two passions of yours by investing in theatre. No matter what production(s) you choose to invest in — whether you go for a large scale show like Phantom, Matilda or Hamilton, you could start out, as many producers do, with a smaller scale production.  If you approach this venture with the right mindset, you could start to build a reputation as a theatre producer or investor and eventually move on to larger scale shows.

Investing in theatre, while risky, can be lucrative and highly rewarding. It is not, however, always a straightforward investment route to take. Are you going to partner with other producers, or go it alone? Additional producers can bring complementary skills and experience (and money), but they also come with their own set of opinions and that inevitably complicates the dynamics. Are you a passive investor, or are you going to be an active producer?

To make life as a theatre investor a little easier, here’s everything you need to know about investing in theatre productions:

Pick the right people

A business relationship is like a marriage… you are in it for the long haul. If you are going to partner with other producers, then you need to choose your partners carefully. You need to be on the same page regarding the creative vision for the show and agree on the people you’ll put in key creative and production roles. Your lines of communication need to be constantly open and you need to have a relationship where you can feel as though you can push back when required, but also listen to the advice of the group. If you are participating purely as an investor, research the backgrounds of the people staging the show and make sure they have a track record of producing successful productions.  As to speak to their investor group and do your own due diligence on them.

Chose a profitable production

If you’re to invest in a profitable production, you can’t just pin your hopes on any old show. You have to exercise your options, study your market, and research your competition.

If you are going to be a successful producer or investor, you must consider which audience you are seeking to appeal to.  Study your market.  Start by considering the demographic of the geographical area that you are looking to put your show on. Where is the theatre based? If it’s in the city, then you are likely to attach a younger, more progressive audience, so perhaps a show like RENT is a good one to start with.  If it’s in the suburbs, it might be more of a family friendly show, like Seussical, Beauty and the Beast or Shrek. If it’s an older demographic, then you are likely to be successful with a more “classic” piece of theatre like Anything Goes or Les Miserables.  To pick the right show and the right group to invest in, study the entire market, particularly Melbourne and Sydney, as they are the creative hubs of Australia.

Start small and build

Like all start ups, you need to test your product before you seek too much investment. If you over capitalise, too early, then you might be investing in a show that’s destined to fail. Many Broadway shows do an “out of town” trial before they stage a full Broadway production for just this reason. They pick a smaller theatre and scale back the sets, costumes etc and they give themselves the freedom to change and refine the show and they ensure they have the right product that investors can see, before seeing further investment and scaling up the show.

How much are you after?

Investment is all about return on capital. If you are going to seek investment in your production you need to be clear on three things:

1. How much is the production going to cost and how much do I need to put it on?
2. How much money am I seeking?
3. How much am I expecting to return to my investors (and at what point)?

You need to develop a prospectus that speaks specifically to these points. It’s not just about “asking for money” like a charity, you need to demonstrate to your investors when they can expect to see a return on their investment (3 weeks, 3 months, or 3 years?) and how much they can expect to see. What the the milestones you’ve set for these investors?

Advanced investing and CFD trading

Once you’ve chosen a production to invest in and decided how much money you wish to invest in it, you then need to hone in on a specific type of trading. In this instance, CFD trading is one course of action that you can take. What is CFD trading, and how will it benefit you? Taking this trading route will allow you to buy and sell contracts for difference without having to own the underlying asset. In layman’s terms, this will enable you to buy and sell shares in the production. You can also invest in other productions, worldwide.

Have you grown tired of investing in companies that mean nothing to you? If so, take the plunge and start investing in theatre productions. Your pre-existing knowledge of this niche market will be sure to help you make more profitable decisions regarding your investment.