As Sleep No More prepares to close after a historic 12-year run, the producers of the immersive show are in an epic battle against their landlord.
Producers Arthur Karpati and Jonathan Hochwald owed $4.5 million in rent as of July 1, 2024, having guaranteed the payments on their West 27th Street lease, according to their landlord, Harlan Berger, in a sworn statement filed in New York Supreme Court. The debt has increased by about $500,000 a month, per court records.
Robert Friedman, a lawyer for the producers, countered in a filing that “an unscrupulous and unethical commercial landlord, defrauded its tenant…to sign a lease amendment using false promises…”
The saga is a reminder that even far from Broadway, theater can be big business and a source of prolonged conflict. Karpati, the self-described “co-founder, co-CEO, creator, producer and janitor” of lead producer Emursive, disclosed in a March 2024 court filing that Sleep No More‘s revenue was about $650,000 a week.
After announcing multiple “final performances” and “final extensions” over the past year, Sleep No More is due to play its “absolute final New York performance” on Jan. 5, 2025. More than 2 million attendees wearing obligatory masks have roamed through the immersive adaptation of Shakespeare’s “Scottish play,” according to the producers.
All quotes in this story are from court documents in the multipronged litigation. Berger, a real estate developer, controls Sleep No More‘s space via an affiliated company, 27th Street Property Owner LLC. The LLC producing the show, PDNYC (for creator Punchdrunk NYC), is also part of the litigation.
“[T]his is not a simple landlord-tenant dispute,” the producers said, “but rather a complex business divorce involving multiple related parties and transactions.” Berger’s company, Centaur Properties, is an investor in the Macbeth-inspired interactive show, in addition to owning its sprawling, nearly 100,000-square-foot space.
Jonathan Gordon, a lawyer for Berger, mocked the producers’ arguments as “a tale filled with sound and fury, signifying nothing,” and “a desperate ploy to avoid their plain and unambiguous contractual obligations.”
Randy Weiner, a high-profile impresario of immersive theater, some of it adult-themed, is a defendant in one of the suits but hasn’t filed a response. A co-founder of Emursive, he’s no longer listed as one of its principals. He declined an interview request, as did Karpati, Hochwald and the landlord.
Sleep No More opened in Chelsea — a neighborhood better known for art galleries and the High Line elevated park than theater — in April 2011, capitalized at $2.4 million. Reviewing it in the New York Times, Ben Brantley wrote that the set “might have happened had Stanley Kubrick (of Eyes Wide Shut and The Shining) been asked to design the Haunted Mansion at Disney World.” It was designed by Livi Vaughan, Beatrice Minns and Punchdrunk founder Felix Barrett.
When theaters shuttered in March 2020 due to Covid-19, “Landlord did not ask for rent, and Tenant did not pay rent,” the tenant said. The landlord’s rent ledger, filed in court, tells a different story.
PDNYC paid $100,000 per month beginning in April 2020. While a significant sum for a show on hiatus, it was less than a quarter of what the lease with Centaur Properties stipulated. With a $27 million mortgage from Signature Bank, the landlord was under pressure. Berger wrote to Karpati in March 2021 that “we are clearly in default and they can call the loan” — i.e. the bank can demand repayment.
In August 2021, PDNYC received $10 million from the Small Business Administration’s Shuttered Venue Operators Grant program, the maximum award, according to SBA records. Emursive received an additional $1 million. In 2021, PDNYC paid $2.5 million to the landlord ahead of reopening in February 2022. An amended lease, dated June 15, 2022, waived more than $5.5 million in unpaid rent that had accumulated during the shutdown, and increased the rent going forward every year through January 2032.
The producers claim that the landlord “induced” them to sign the amended lease, with the assurance that they’d be responsible for only the first year’s rent, $5.1 million. They agreed to the “above market rent” “to assist Landlord with renewing its mortgage,” and were assured “that they would not be responsible for the rent set forth in those documents year over year,” the producers’ lawyer wrote.
The court papers don’t include emails or other substantiation that Centaur had promised to renegotiate the nearly 10-year lease after year one. Gordon, the landlord’s lawyer, called it a “ridiculous assertion” and legally irrelevant. The original, 2010 lease said it “contains the entire agreement between the parties” and the 2022 amendment said that it “may not be orally changed or terminated, nor any of its provisions waived, unless by an agreement in writing…” (Both contracts were filed in court.)
Arguing that an oral assurance alters the terms of a lease is a tough sell, said Richard Roth, a litigator and Broadway co-producer who isn’t involved in Sleep No More. “Without something in writing changing the previously agreed to terms, they’re going to lose,” Roth said after reviewing the producers’ complaint for Broadway Journal.
According to the rent ledger, PDNYC fell behind on the rent in the summer 2023 and stopped paying altogether in 2024, with the exception of $120,000 in April 2024. The producers said they were putting money in escrow.
“We have been having conversations off and on for several years in an effort to find a path forward, to no avail,” Berger, the landlord, wrote Karpati on Jan. 11, 2024. “Let me be clear; the only agreements we have are the ones that have been executed.” Berger threatened to take legal action if the producers didn’t pay $1.5 million, which he said was their debt at the time.
Karpati responded: were their discussions “a PLOY to be able to take legal action to collect rent?” The producer wrote that they had discussed how PDNYC would be compensated for producing in the space longer than it planned to. “This all started with your desire to keep us in the building into 2024,” Karpati wrote.
Centaur sued the producers in February 2024 for breach of contract in connection with unpaid rent. The landlord followed with legal action seeking to stop performances because the show was operating without a required permit, a suit Karpati called an effort to extort the producers over allegedly unpaid rent. PDNYC said in its suit that the landlord made “material misrepresentations” in persuading the producers to sign the lease.
Interest in the show appears to be robust. The Washington Post, Wall Street Journal and New York Times all published stories about how Sleep No More “superfans” are grappling with the anticipated closing. Tickets are selling for as much as $432 for Thanksgiving weekend, which includes “375ml of our finest champagne, a reserved table at Manderley Bar, priority entry and complimentary coat check.”
Meanwhile, the cases are advancing via civil court filings. No masks required.
