The question on many people's minds these days is how do you finance a Broadway show? Considering the lavish sum now required to produce an offering on the Great White Way -- which is now typically between two to three million dollars for plays, seven to ten million for a mid-size musical, and in excess of 12 million for a large-scale musical -- the answer is that it takes a select (and sometimes very large) group of people to get a show on the New York stage.

WHO ARE THE PRODUCERS?
Those who put money into Broadway shows run the gamut from theater owners like the Shuberts or Nederlanders who want a production mounted in one of their houses; presenters who want the right to take the show on the road; movie companies who want to promote their properties; investors who simply love the theater; people of all walks of life who want to hobnob in circles rife with glitz and glamour; and philanthropic individuals who want to contribute to the arts.

As veteran producer Liz McCann, whose past projects include such shows as Edward Albee's The Goat, or Who Is Sylvia?, explains: "There are now more people involved than ever before. "The theater was initially founded around one main person -- a David Merrick or a Hal Prince -- as the producer. You rarely saw more than one or two names billed above the title. Now you look above the title and you see hordes of names. That is due in large part to the Tony Award rule that if you're billed above the title, then you are a producer, and therefore, you are personally eligible for a Tony nomination."

Still, there are industry leaders such as Daryl Roth, who produced this year's Tony Award-winning revival of The Normal Heart. She is one of Broadway's most prolific lead producers, which means she often originates a project and both invests money of her own, and/or asks others to join her in investing in a show. Roth also often chooses her projects based on her belief in the material and its artistic or cultural merit, rather than the sole hope of making a profit.

For each show, a partnership is formed, with some producers becoming general partners, which means they participate in making decisions, and are also personally responsible for their share of the show's losses. The financial contributions of the general partners are split equally. For instance, if four general partners produce a musical with a capitalization of ten million dollars, each of the four will contribute 2.5 million.

These general partners will often ask other producers -- who will also receive above-the-title billing -- to help them achieve their share of the capitalization. These producers' financial contributions, in the instance of the aforementioned $10 million musical, would typically range from $500,000 to $1 million each.

Producers also typically turn to individuals who only want to invest around $25,000 to $50,000 each to help meet their costs. These investors, also known in the industry as backers, become limited partners in the production. They do not receive any billing, have no decision-making power, nor do they carry any liabilities. The benefit to them is not just the prestige that investing in a Broadway show brings them, but the potential of making a profit. Moreover, these investors are traditionally the first people to get their money back once a show recoups its initial investment.

However, there are numerous variations on how general partners can share their percentage of their profits. For example, if a show stars a box-office draw such as Nathan Lane, the general partner will probably stick to the traditional arrangement of a 50-50 split, but in the case of a hard-to-sell play with no stars, a producer may have to give away a larger share of his or her profit as an incentive to investors, says producer Tom Kirdahy, whose credits include the recent Broadway revival of Master Class.

The amount of the investment can also be factor. "An investor who is investing $10,000 or $25,000, for example, is still looking at a traditional 50-50 split," says Kirdahy. "However, someone who is giving me $250,000 to be above the title is going to get more money from me, because that person gave me more in order to help me meet my obligation."

If a production runs into financial difficulties and needs additional capital while running, and those involved still believe they can still make a profit, general partners can decide to infuse more money into the show. Those who make these additional contributions (known as "priority loans") are the first to get paid back if any profit is ever made.

Next page: Why does it cost so much to put on a show?