EXCLUSIVE: An investor in the failed $24 million Broadway revival of Cabaret has sued its lead producers, accusing them of fraud. Separately, the producers announced today that the musical will close Sept. 21, four weeks earlier than planned, after just 17 months of regular performances at the August Wilson Theater.
While grossing more than $88 million since it began previews in April 2024, the company presenting the revival of the dark musical by John Kander, Fred Ebb and Joe Masteroff hasn’t returned any money to investors, resulting in a total loss to-date. Backers were “induced to invest cash into multi-layered structures designed to conceal revenues, divert payments, and facilitate self-dealing among insiders,” Atlanta-based entertainment lawyer James Lorenzo Walker Jr. said in his Sept. 4 complaint in New York Supreme Court.
Walker invested $50,000 in Cabaret days before it opened, he said in his suit. The producers — led by ATG Entertainment, which also owns the August Wilson — had “a deliberate scheme intended to strip him and other investors of their investments in, and partnership profits from, the Broadway production,” according to Walker. He sued “individually and on behalf of KKC Productions NY Limited Partnership” — the company presenting the show.
On Sunday, the producers posted an early closing notice. ATG is majority-owned by the private equity giant Providence Equity Partners and minority-owned by Blackstone Inc.
“While we are incredibly proud of the artistic success of Cabaret at the Kit Kat Club on Broadway and deeply saddened by the fact it has had to close early, the production has not been in a position fiscally to make any distribution to investors,” the producers said in a statement to Broadway Journal. “We’ve offered to engage in a constructive dialogue with Mr. Walker regarding his financial expectations and to give him access to our accounts, but unfortunately, he has instead decided to file a lawsuit that lacks any merit.”
The complaint may resonate with co-producers and investors frustrated by Broadway’s ballooning budgets, dwindling returns and lead producers who aren’t always transparent, particularly when operating expenses diverge significantly from pre-production estimates. None of last season’s 17 commercially-produced Broadway musicals has fully repaid investors, much less earned a profit. Cabaret recently has been losing money every week at the box office. Its published gross in the week ending Aug. 31 was $505,000.
With an initial capitalization of $24.25 million and weekly expenses that the production originally estimated at $1.1 million, Cabaret faced long odds. Making matters worse, in the first seven weeks after the show opened, expenses averaged an astronomical $1.5 million a week, according to a Cabaret financial statement filed with New York State Attorney General Letitia James, which Broadway Journal obtained via a freedom of information request. Even as the show’s early published grosses peaked at $2 million a week thanks to the star power of the first Emcee, Eddie Redmayne, operating profits totaled just $704,000 in the first ten weeks of previews and performances.
It didn’t help that New York critics responded more coolly than their counterparts in the West End, where the revival originated. And although the show allocated $75,000 a week to campaigning for Tony Awards, its nine nominations yielded just one Tony — for Tom Scutt’s scenic design. When Redmayne left the cast in September 2024, grosses tanked .
Walker said in his suit that the producers “breached the Partnership Agreement by failing to distribute Plaintiff’s share of profits despite the Partnership earning revenue in excess of weekly expenses” for about nine months during the run. The suit includes a BroadwayWorld graph of Cabaret grosses.
The lead producers have waived their fees and royalties on Cabaret for about a year, according to a production spokesman, which isn’t unusual on a struggling show. It’s unclear whether, and for how long, ATG waived rent.
Walker was a co-producer on last season’s musical Dead Outlaw and an investor in the hit revival of August Wilson’s The Piano Lesson and the long-running musical MJ, among other shows. He said in an interview that producers had stonewalled him when he requested detailed information about why Cabaret hadn’t made distributions, and he requested his money back. “They’re not giving us transparent documents,” he told Broadway Journal. “At a certain point, it’s a hustle.”
In late July, Walker threatened to sue the producers unless they return his $50,000 stake, plus interest, plus $40,000 in attorney’s fees, along with a demand that they share bank, box office and other financial records, according to an email he filed in court. Investors are permitted to examine the show’s records — but only at the partnership’s office on West 44th Street, per the Cabaret operating agreement. Walker told Broadway Journal he never received an invitation to view the records. He said if he had, he wouldn’t have sued.
Walker said in his complaint that the revival’s producers “inflated production costs, particularly for theater renovations, and directed payments to affiliates through non-arm’s-length transactions, all without disclosure to or approval from Limited Partners.”
The investor-funded KKC Productions NY LP spent $7.5 million transforming the August Wilson into the Kit Kat Club, a facsimile of a Weimar-era nightclub, and on dressing rooms, according to the filing with the state. Requiring investors to pay for the renovation was controversial within the industry, but producers had disclosed the expense, more or less. “The Limited Partners [investors] acknowledge that a portion of the construction costs necessary to modify the Broadway theater will be borne by the Partnership and such costs are included as part of the Production Expenses,” according to the production operating agreement, which Walker filed in court.
In contrast, in 1987, producers Cameron Mackintosh and Andrew Lloyd Webber persuaded the Shubert Organization to pay for modifications of the Majestic Theater before agreeing to rent the house for Phantom of the Opera, which became the longest-running show in Broadway history.
The Cabaret operating agreement notes that the lead producers, known as general partners, may face financial conflicts of interest with the partnership presenting the show, such as “continuing a run of the Play when the interest of the Partnership might suggest that it should be closed, etc.” The agreement includes the standard caveat that investors “waive any and all rights and claims which they might otherwise have against the General Partners….as a result of such activities.”
“Fraud supersedes all of that,” Walker told Broadway Journal, when asked about the clause.
In his suit, Walker said the producers misrepresented the partnership’s profits by concealing revenue from merchandise sales and other income. Yet in the filing with the state, KKC Productions NY LP reported early merchandise income, net of royalties, of $78,000.
Walker said that it would be inappropriate to comment on financial documents “prepared without a judge or our accountants and forensic specialists reviewing and analyzing for the entire run of the show,” he said in an email to Broadway Journal. “We just know approximately $90 million has been grossed and investors have not been paid.”
In the interview, Walker complained that weekly box office reports distributed to co-producers is insufficient. “We haven’t gotten something every week that says where the money is going.”
Richard Roth, a lawyer who’s represented producers in Broadway disputes and isn’t involved in this one, called the Cabaret suit weak, given the lack of supporting evidence. “I’m very skeptical of the complaint, and that this big-time producer would intentionally defraud this plaintiff.”
Regardless of the outcome, the suit highlights the risk of funding shows with a multitude of co-producers and investors: that one or more may sue, yielding awkward headlines and potentially expose private industry practices to a public courtroom. ATG may be especially protective of its reputation, given the rumors of a possible multi-billion-dollar sale from one private equity giant to another.
