Who Says You Can't Make Money In The Theater?

The scene is Singapore, 1941: In Freddy's Song of Singapore cafe, ceiling fans whir, a jazz band plays, and a chanteuse entertains. Beneath a lantern glow, patrons dance or sip drinks called Taiwanons and Frank Sumatras. Suddenly, there's a news bulletin: Some famous Chinese jewels have been stolen. Moments later, a man rushes in, drops the gems, and dies.

Will the play's heroes--Hans, Spike, Rose, and Freddy--now be rich? Back in the real world, the question posed by Song of Singapore's May 23 opening in New York may be even more interesting: Can its producers--Steven Baruch, Richard Frankel, and Thomas Viertel--keep up their stellar record of theatrical hits? Capitalized at $950,000, Song of Singapore is their biggest show yet, as well as the biggest production ever designed to both start and stay off-Broadway.

Everyone knows the theater is no place to make money: Fewer than 25% of all commercial New York productions recoup their investment during their run. But someone apparently forgot to tell Baruch, Frankel, and Viertel. Their string of mostly off-Broadway successes--including Driving Miss Daisy--is unmatched in recent years. George A. Elmer, secretary-treasurer of the League of Off-Broadway Theaters & Producers (LOBTP), calls them the off-Broadway equivalent of Cameron Mackintosh, who produced Cats, Les Miserables, The Phantom of the Opera, and Miss Saigon. Only two of the trio's shows flopped: an improvisation revue called Sills & Co. and a London production of Frankie and Johnnie in the Clair de Lune. Returns for the others (table) are "all terrific, and very unusual," says William P. Suter, a former Merrill Lynch & Co. analyst turned producer of such shows as 'night, Mother.

With that track record, Baruch, Frankel, and Viertel had no trouble raising money for Song: It took just six weeks this spring. "Their money comes in as soon as they announce they need it," says producer Susan S. Myerberg, general manager of the Helen Hayes Theater. "Their investors stay with them."Even so, the pressure is on. As a cabaret-style musical that invites the audience to come early to dance, drink, and eat, Song deviates from the producers' usual pattern of small, simple, low-risk fare. It's a somewhat corny comedy offering good music and a flimsy story line that serves as a vehicle for one-liners--which makes for a fun evening, not memorable theater. Beyond staging Song, the three had to hire caterers and convert a hall owned by the Polish Army Veterans Assn. into a nightclub--with a working waterfall and 87 bird cages.

NEVER LOOKED BACK. Yet all three seem sure they've got a worthy encore to their production record, which began in 1985. At the time, Baruch and Viertel were real estate partners specializing in converting rental apartments into cooperatives--still their main business. While visiting Los Angeles, Viertel--whose father is a playwright and whose brother is creative director of Broadway's Jujamcyn Theaters--saw two guys named Penn and Teller do a distinctive conjuring show in a small club. He loved it. When Baruch saw it, he did, too.

They contacted Frankel, then the managing director of nonprofit Circle Repertory Co.: He owned the right to produce the pair in a show. Penn & Teller scored off-Broadway, on Broadway, and in a national tour; a new version is now back on Broadway. The trio never looked back. "We could use a lot more people like them," says Barry Grove, managing director of Manhattan Theater Club and LOBTP's president. "They do a handful of productions in a hands-on way."

That's their success formula in a nutshell. They only do shows that all three love, and they control costs, with Frankel usually acting as general manager. "Richard doesn't waste a penny that doesn't have to be spent," Elmer says. The failure of Sills instilled in them a Disneyesque desire to control all the details: Song's waiters and waitresses went through "auditions" and three callbacks as the producers searched for people with personality and striking looks.

Investors see this side of the trio, too. To attract money, Baruch and Viertel at first simply hit up their real estate colleagues. "Those were boom times, and it was peanuts for them," Baruch says. In contrast to the many theater producers who try to lure a few big investment "angels," the trio keeps investment units small and the number of investors large. "We like the idea that if a show fails, no one gets killed," says Baruch.

Since the biggest sum they had raised before was $650,000 for Penn & Teller's national tour, the team had to broaden its net for Song. They used direct mail, sending some 3,500 letters to country club members, theater subscribers, and investors in other plays. About 2% responded. In the end, 56 investors signed up, most chipping in $9,500 for one unit or $19,000 for two.

Whether or not investors make a profit--or even get their money back--they'll get more fun than corporate shareholders. There's a gala opening, show posters, access to house seats, and invitations to meet the cast. The potential of a quick return dangles beyond.

ADVANCE WORD. But it is within sight. Song could gross as much as $117,000 a week from ticket sales; $69,079 is the breakeven point at full capacity. Food and drink profits would bring success closer. And while no one's counting on capacity crowds, investors could be paid back in 28 weeks if the show runs at 75% capacity. Viertel claims that the prospect isn't unrealistic if the play is well-received from the start. More than good reviews--which would be a clincher--shows like Song depend on word-of-mouth. Advance word in the theater community is positive, and calls to the box office confirmed that preview tickets weren't available for many nights.

Baruch, Viertel, and Frankel have already been made whole on Song. They took out their investment in the show--preproduction costs of $175,000, including the cost of a 1989 tryout in Cleveland--from the new funds they raised. If the show goes beyond breakeven, they split profits with investors 50-50, a typical division. But they have more at stake than money: plans for other shows, including future productions of Song. They've already begun spadework to bring Song to other cities. Frankel envisions "a sea of rattan furniture from shore to shore." That's a bit much. But if audiences can suspend disbelief and enjoy Song as an amusing trifle, they'll certainly get their money's worth.

    Before it's here, it's on the Bloomberg Terminal.