Commercial plays and musicals are usually financed as separate entities and at Cahoots we set up a limited company for each of our productions.
We will calculate the estimated production costs and the estimated running costs in order to determine the level of capital investment needed to enable a production to proceed. As a means of minimising overheads, we will engage administrative support staff on a production-by-production basis. These staff costs will be included in the relevant production budget. The cost of any support staff involved in more than one production will be apportioned appropriately.
The capital investment will be sufficient to pay the production, running and support staff costs described above and will also include a reserve contingency. The reserve will be sufficient to cash-flow weekly running costs and other expenses in advance of box-office being received.
The capitalisation for a production is usually provided by a number of investors who each invest a finite amount of capital in the production and whose liability is fixed at this amount. The investors receive their capital back from the first profits of the production. Once all the capital has been repaid and the production is in profit the investors share a percentage of the profits with the producers retaining the remainder. In the UK the split is usually 60% to the investors and 40% to the producers.
The smallest investment accepted on plays is usually around £2,000 and on musicals around £5,000.
Theatre investment is very high risk and investors can lose all of their investment, however it can also be profitable.
At Cahoots we understand the importance of sharing the financial risk with our investors.
If you are interested in investing in one of our productions please contact us at firstname.lastname@example.org to request the financial details of our next production(s).