Economics in Curb Your Enthusiasm: The Economics of Broadway
Larry David in a Broadway show?
Curb Your Enthusiasm is in its 12th and final season this year. The series is funny, entertaining, and shows situations from real life. Many of these situations provide economic lessons and during Curb Your Enthusiasm’s final season, I will be discussing an economic lesson from the series.
In the 5th season, Larry gets an intriguing offer from Mel Brooks – the opportunity to star in the Broadway hit The Producers. The Producers was one of the biggest Broadway hits ever when it launched in the early 2000s, with demand through the roof to see the Mel Brooks musical that initially starred Nathan Lane and Matthew Broderick. Larry doesn’t think he’s the best singer but thinks this is such an amazing opportunity that he decides to do it.
Star power can increase demand – and profitability – for shows
Many Broadway shows will try to cast celebrities to increase demand. Some of these casting decisions are because the celebrities are super-talented and might be the best actors for the roles. Others might be considered “stunt-casting”, where someone might not be the best fit, but the celebrity nature of the person being cast means they will increase profitability
This is basic economics. If the producers of a show can boost demand by casting a celebrity, basic supply and demand predicts this would result in a higher price
This is clearly part of Mel Brooks’s thinking in the show. He asks Larry David, but in the series there are initially plans for Ben Stiller to co-star, then he pivots to David Schwimer. This translates into the real theatre world as well. There are many examples of where stars translate into higher ticket prices – and therefore higher profits – for the shows. One example will be when Glee star Lea Michele entered Funny Girl in 2022. Look at the difference in gross weekly receipts in September 2022 when she entered the show. (From Broadway World.)
Lea Michele enters and there is an increase in revenue of about $1 million per week.
Another example from this year – new Broadway stars Aaron Tveit and Sutton Foster entered Sweeney Todd on February 10. This is from the ticket selling app Today Tix in late January. Before they were scheduled to enter on February 10th you could always find seats for $62-$70. Once they entered, the cheapest price was $82 and many shows had their cheapest tickets going for over $100.
Superstars Earn Less on Broadway
Economies of Scale keep top Broadway salaries far lower than top Hollywood salaries. Hugh Jackman is reported to earn over $100,000 weekly for his recent role in The Music Man. That’s a wonderful salary of over $5 million annually, but pales to the $20+ million per movie stars in Hollywood can earn. Why is this?
Movies have bigger economics of scale – meaning more people can see them without increasing the costs significantly. The cost of a feature film is almost all in the production, filming, and advertising. Once it’s made, it costs very little for firms to show it to one extra person, whether at home or in a movie theater. So the cost per person drops dramatically when you have a big hit. So top movie stars can receive much higher salaries as their movie might be seen by 1 billion people – not tens of thousands.
Broadway is big business. In Curb Your Enthusiasm, we see that Mel Brooks wants Larry David, in part from the superstar effect. But the pay Larry can expect to receive is much less than what he could make by doing more Seinfeld – or Curb Your Enthusiasm – episodes, given live products lack the ability to scale like TV shows or movies.