In a tough time for big Broadway productions, Hell’s Kitchen is burning up the box office.
Despite its surprise loss to The Outsiders for the Best Musical Tony Award, Alicia Keys’ semi-autobiographical show has consistently posted the biggest weekly ticket sales among new musicals from the past season. Just over two months after opening, it’s paid back 10 percent of its $22 million capitalization to investors.
Keys, who subsidized a developmental production at the Public Theater last fall, is eligible for outsized rewards should it continue to do well on Broadway and later on tour. In addition to the fees, royalties and profits she’s entitled to as its sole lead producer — an unusual designation for a celebrity on Broadway — the 16-time Grammy winner is being paid for the use of her songs and her life story.
Hell’s Kitchen could break a big-budget Broadway curse, as escalating production and operating expenses contribute to premature closings while crimping profits of the rare success stories.
As of April, Moulin Rouge!, which survived the pandemic thanks in part to tens of millions of dollars of Federal money and insurance proceeds, recouped its $28 million capitalization but paid its Broadway investors a mere 5 percent return. MJ, the $22.5 million Michael Jackson musical, recouped and distributed to investors a roughly 10 percent return. Both shows are still running and profit distributions are ongoing.
Contrast those numbers — in documents filed with the office of New York Attorney General Letitia James — with modestly-scaled blockbusters. In their prime, the Broadway companies of Hamilton, The Book of Mormon, Dear Evan Hansen and now Six paid an annual return of 100 percent or more to their investors. Those stellar results inspired wealthy new entrants to get involved in the risky business of theater.
Hell’s Kitchen could recoup its production costs early next year by sustaining its average weekly ticket sales of about $1.6 million, based on a chart included with the financial papers. That’s before factoring in a New York State tax credit of up to $3 million to encourage theatrical production.
One provision of the operating agreement that raised a few eyebrows: paying for the rights to the “life story, career and brand of Alicia Keys,” even though the heroine of Hell’s Kitchen — a rebellious, gifted teenager in the Manhattan Plaza housing complex — is only loosely based on Keys.
For the underlying rights, Keys is paid a royalty based on box office or weekly operating profits, plus 10 percent of net profits at recoupment, rising to 12.5 percent of net profits at 150 percent recoupment. That said, no members of the small coterie of co-producers — including Jay-Z and former Public Theater executive Mandy Hackett — were compelled to get involved in the in-demand offering.
Likewise, if and when Hell’s Kitchen gets to 200 percent recoupment, 35 percent of net profits will be shared by Keys, book writer Kristoffer Diaz, director Michael Greif, general manager Foresight Theatrical, executive producer (and Foresight partner) Aaron Lustbader, the Public Theater and actors who appeared in the off-Broadway tryout at the Public.
That’s a lot of profit off the top for insiders. But to get there, Hell’s Kitchen must generate more than $40 million of operating profit — a rare milestone for any musical, particularly an expensive one.
