Theatre Design & Technology - Feb 1966 - 12

Tickets, Attendance and Capacity of the Theatre Industry

Bruce

Birkenhead,

Brooklyn

College

(This article is adapted from an address before the
USITT Committee on Theatre Administration on
September 22, 1965)

The Broadway theatre has been praised and CrItIcized as an art, and has probably been subjected
to more lamentation of its economic problems
than any other industry.
Strangely, however,
it has really received little analytical attention as
an industry. Unti I recently economi sts have avoided
the theatre as a subject for analysis. Hopefully,
this situation is beginning to change. The Rockefeller Brothers Fund has published a study of the
performing arts which, while it may not say very
much that is new, at least has brought additional
attention to the problems] Too, W. J. Baumol and
W. C. Bowen of Princeton University are currently
engaged in an economic study of the performing
arts under the auspices of the Twentieth Century
Fund. 2
ECONOMICS OF THE BROADWAY THEATRE was
my own contribution
to at least one area of the
theatre industry, and it is from thi s study that
much of the following information has been taken 3
In addition, the recent season 1964-65 has provided
more current information which reinforces generalizations based on the earlier period and points up
possible long-term problems. Although the original
study covered more ground, one of the areas which
has proved most interesting is the relationship
between ticket prices and attendance. Related to
this is the degree of industry's utilization of capacity. Although only Broadway theatre is to be considered, I believe that the factors making for underutilization of plant capacity and the low degree of
response to changing ticket prices are more general
in nature, and that the conclusions reached can be
applied beyond the area called Broadway.
Ticket prices, of course, are not under the sole
control of the producer. With hi s rent depending on
the gross income of the production, the theatre owner
has at least as much to say about the schedule of
prices, and with the high degree of concentration
of ownership, very often more to say than the producer. Too, even the casual theatre-goer is well
aware that price schedules differ little from one
non-musical to another, or from musical to musical.
What one finds is a high degree of uniformity in

ABSTRACT: A study dealing with ticket price
changes, their effect on attendance, and the result.
ing utilization of industry capacity. The paper
underscores the elasticity of demand for theatre,
trends apparent over the last four years, use of
theatre real estate, and the wisdom of a purely
economic approach to solution of Broadway's problems. I. R. CODE: (ADMINISTRATION/ TlCKETS/
ECONOMICS / NEW YORK).

pricing when the "products" are similar. In fact,
even the difference between the prices of musicals
and non-musicals has narrowed, with the prices for
the latter showing a faster rate of increase in
recent years than has been recorded for musical
productions. <1
So far as the production is concerned, therefore,
we find little price competition. What we do encounter is typical of monopolistic competition:
non-price competition. Quality differences are the
basis for competition, not a lower price for the
product. In addition, the general trend for ticket
prices has been upward. Not only have individual
prices increased, but more seats are in the higher
price range in each house, with the "mezzanine"
euphemistically growing in size at the expense of
the "balcony" which sounds less desirable. Of
course, the fact that ticket prices have been going
up is not news. Nor is thi s, in itself, even significant. What is important is the degree of price increase, and the belief lying behind the increases
that public demand for theatre is inelastic.
Any attempt to measure over-all change in ticket
prices runs immediately into the problem that each
show itself "sells" for a range of prices depending
on seat location. A simple solution presents itself,
however. This is to divide the maximum gross income for each show by the number of seats in the
house. This automatically weights the resulting
figure by the number of seats in each price class.
The same technique can be used to compute an
average price for all shows in a given season. The
maximum gross of all shows opened in a given
season, when divided by the seating capacity of the
same shows, results in a weighted average ticket
pri ce for the entire season. Thi sis not a perfect
measure: unless weighted by length of run, equal
weight is given to all shows which open in a given
season. The error, however, tends to be small. When
a show closes, the incoming show often adopts a
simi lar price schedule. In addition, the shows
destined for a longer run do nat frequently change
prices during the season in which they opened.
Linked to this IS the fact that our method does

I OSITT

THEATRE DESIGN AND TEGHNOl(K;¥

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