A hit like Hamilton can come from nowhere while a sure bet can lose $20 million in a flash. We speak with some of the biggest producers in the game — Sonia Friedman, Jeffrey Seller, Hal Luftig — and learn that there is only one guarantee: the theater owners always win. (Part two of a three-part series.) SOURCES:Debby Buchholz, managing director of La Jolla Playhouse.Sonia Friedman, Broadway producer.Rocco Landesman, Broadway producer, former owner of Jujamcyn Theaters, former chairman of the National Endowment for the Arts.Hal Luftig, Broadway producer.Luis Miranda Jr., political strategist, founding president of the Hispanic Federation, the Northern Manhattan Arts Alliance, Viva Broadway, and The Public Theater.Michael Rushton, professor of arts administration at Indiana University.Jeffrey Seller, Broadway producer.Richard Winkler, Broadway producer.Stacy Wolf, professor of theater at Princeton University. RESOURCES:Theater Kid: A Broadway Memoir, by Jeffrey Seller (2025).Relentless: My Story of the Latino Spirit That Is Transforming America, by Luis Miranda Jr. (2024).Beyond Broadway: The Pleasure and Promise of Musical Theatre Across America, by Stacy Wolf (2019)."‘Hamilton’ Inc.: The Path to a Billion-Dollar Broadway Show," by Michael Paulson and David Gelles (New York Times, 2016)."On the Performing Arts: The Anatomy of Their Economic Problems," by W.J. Baumol and W.G. Bowen (The American Economic Review, 1965). EXTRAS:“How to Make the Coolest Show on Broadway,” by Freakonomics Radio (2024).“You Can Make a Killing, but Not a Living,” by Freakonomics Radio (2024).
Chapter 1: What is the theater industry like today?
The people who make theater exist in a sort of parallel universe. From inside this universe, it can seem vast. There are so many projects. The work itself is so immersive. And let's be honest, there is a lot of gossip to keep up with.
But in reality, theater is a tiny universe when you compare it to all the other flashier forms of entertainment like TV and film, live music and sports, video gaming. the theater universe looks like a distant and dimming star. And yet, believers still believe. And every now and then,
Someone takes a shot that is so unlikely, so audacious, and if that shot lands, it rejuvenates the whole enterprise and makes the larger world take notice. In other words, this tiny universe really can produce one singular sensation.
I'll start from a personal note. My son had been on vacation and he came back And we're 15 blocks apart. So usually he comes for breakfast and says, well, my next show, it's Hamilton. And I'm like, the Secretary of the Treasury of the United States of America? He's like, yes, I just read this amazing... And as I'm reading it... This is the Ron Chernow biography of Hamilton, correct?
Of Hamilton, correct. He's telling the story to my wife and I. I see hip-hop singers jumping off the pages in my head. I'm like...
He went f***ing crazy.
That is Luis Miranda Jr. His son is Lin-Manuel Miranda.
I tell my wife, you got to read this book because you understand that this is a journey. We're all going to be in for a long time. And in my family, it doesn't matter if you disagree.
We all have to work together. Hamilton wound up becoming one of the most compelling successes in any form of entertainment at any time in history. It made the dimming distant star of Broadway shine very bright, and it gave Luis Miranda a new full-time job.
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Chapter 2: How did 'Hamilton' change Broadway?
So here's their foundational paper. This is from the American Economic Review of 1965. They wrote, but to continue to do so into the indefinite future.
Otherwise, they must at some juncture fall behind the technologically progressive industries and experience increases in costs, which stem not from their own decisions, but from the inexorable march of technological change in other parts of the economy. On a scale of zero to 10, how true did that prediction become?
10 out of 10. We see the pressures of cost disease in all of the sectors that Bommel and Bowen mentioned where you can't really save on labor. Education would be one example. A teacher can only handle so many students at a time and teachers' wages have to rise with the rest of the economy or nobody's going to want to be a teacher anymore.
Healthcare is another example, and it's an interesting one because we think, well, there's been lots of technological change in healthcare. We have all these machines now. We have all these new pharmaceuticals. That's very, very true. But a large part of your healthcare costs are labor, paying nurses, paying technicians.
You can't just say, well, one nurse can handle 200 patients at once now because of technological change.
So I don't mean to insult your profession, but here's a question. This was a paper written, you know, nearly 60 years ago that laid out exactly the problem that we're seeing not only in theater and the other performing arts, but in, as you said, health care and education, which are much, much bigger sectors.
It strikes me that a lot of people are still flabbergasted that costs in things like education and health care have risen so much relative to other things. In other words, Baumol's cost disease has been around and understood and preached by economists for nearly 60 years, but it seems that no solution has arisen to actually combat the problem. Why do you think that is?
Is that a failure of economists to communicate the problem? Is it a failure of economists and others to come up with viable solutions? Is it a failure of policymakers? Or is this just the way things are and humankind has to figure out different ways to do things?
I think there is a communication issue. The first thing is actually calling it cost disease. What is it resulting from? It's resulting from our getting richer. You only have cost disease because the economy as a whole is becoming more productive and real incomes are rising. So that seems like an odd disease where you say, yes, we're all getting richer.
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Chapter 7: What makes a Broadway hit?
So here's their foundational paper. This is from the American Economic Review of 1965. They wrote, but to continue to do so into the indefinite future.
Otherwise, they must at some juncture fall behind the technologically progressive industries and experience increases in costs, which stem not from their own decisions, but from the inexorable march of technological change in other parts of the economy. On a scale of zero to 10, how true did that prediction become?
10 out of 10. We see the pressures of cost disease in all of the sectors that Bommel and Bowen mentioned where you can't really save on labor. Education would be one example. A teacher can only handle so many students at a time and teachers' wages have to rise with the rest of the economy or nobody's going to want to be a teacher anymore.
Healthcare is another example, and it's an interesting one because we think, well, there's been lots of technological change in healthcare. We have all these machines now. We have all these new pharmaceuticals. That's very, very true. But a large part of your healthcare costs are labor, paying nurses, paying technicians.
You can't just say, well, one nurse can handle 200 patients at once now because of technological change.
So I don't mean to insult your profession, but here's a question. This was a paper written, you know, nearly 60 years ago that laid out exactly the problem that we're seeing not only in theater and the other performing arts, but in, as you said, health care and education, which are much, much bigger sectors.
It strikes me that a lot of people are still flabbergasted that costs in things like education and health care have risen so much relative to other things. In other words, Baumol's cost disease has been around and understood and preached by economists for nearly 60 years, but it seems that no solution has arisen to actually combat the problem. Why do you think that is?
Is that a failure of economists to communicate the problem? Is it a failure of economists and others to come up with viable solutions? Is it a failure of policymakers? Or is this just the way things are and humankind has to figure out different ways to do things?
I think there is a communication issue. The first thing is actually calling it cost disease. What is it resulting from? It's resulting from our getting richer. You only have cost disease because the economy as a whole is becoming more productive and real incomes are rising. So that seems like an odd disease where you say, yes, we're all getting richer.
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