To the relief of theatre producers and fans alike, Broadway shows came back in early 2022. After the longest shutdown in Broadway’s history, many wondered how strong of a comeback live theatre would make. So far, popular productions are doing well. Many shows flourished during this year’s Spring season, though not without challenges. COVID-19 is still affecting the industry, pausing many productions, and preventing stars from performing. This not only cuts directly into revenue, but it also makes insurance policy underwriting and contractual agreements much more stringent.
COVID-19 Drives Changes in Insurance, Contract Agreements
The marketplace for insurance has changed drastically as a direct result of the pandemic. The same coverage that had been available before has changed over the public health crisis, becoming more restrictive for smaller to medium-sized shows due to its prohibitive costs. Many insurers in the space have implemented stricter underwriting and become more selective about the shows they are willing to work with. As many insurance policies are purchased on a show-by-show basis, the unwavering factors remaining are high premium costs, limit adequacy and deductibles for Performance Disruption and Event Cancellation.
Similarly, contracts for theatre productions have seen changes resulting from the pandemic. Requirements specific to Non-Appearance policies are now commonplace for bigger stars attached to projects, as well as rules surrounding show earnings protections in case of a total shutdown.
Safety Protocols Increase Budgets
Shows are seeing additional costs for COVID-19 testing, as well as the implementation of strategies to prevent the possibility of contamination. While these safety protocols are in place to protect the cast and crew, they can account for a significant budget increase in comparison to pre-pandemic productions.
Revenue Concerns Remain
An added obstacle to Broadway Theatre’s sustained return is the decline in revenue over the past two years. These revenue reductions are attributable to many factors, including:
- Performance Interruptions: With performers having to cancel, or productions temporarily shutting down due to COVID-19, the lack of consistency cuts directly into the revenue for productions.
- Tourism Decline: The pandemic has been a major setback for tourism around the world. New York is seeing a 55.3% decrease in hotel occupancy this past year compared to 2019. As Broadway Theatre is a major beneficiary of New York’s tourism, this has created a major setback in ticket sales.
- Rising Crime: Overall criminal activity in New York City has seen a 38% increase in 2022 over 2021. As with the decline in tourism, an increased crime rate decreases ticket sales, with people less motivated to travel to high-risk areas.
Mitigating Risks and Drawing Crowds
To overcome slipping attendance, shows are leaning on the star power of their cast to lure back patrons. Despite the expense, high-cost premiums for Performance Disruption and Event Cancellation are essential for shows to lean on during this uncertain chapter of the pandemic. Both Risk Strategies and various insurers are happy to work with shows of any size to ensure theatre can progress beyond all challenges.
Want to learn more?
Find Peter on LinkedIn, here.
Connect with the Risk Strategies entertainment team at entertainment@risk‐strategies.com.
Email Peter directly at PShoemaker@risk-strategies.com.