Opinion: ‘Phantom of the Opera’ is yet another victim of US inflation

The stage’s chandelier will fall for the last time when “The Phantom of the Opera,” the longest-running Broadway musical in New York, ends in February after 35 years. The curtain is falling on the work of Andrew Lloyd Webber, with its 130 artists in the cast, crew and orchestra, 230 costumes and a 6,000 crystal replica of the Paris Opera chandelier.

The entire production defies gravity indeed. Musical theater has been the mainstay of Broadway since the 19th century, and the recent revival of “Cabaret” in London shows just how important it is to the West End. But the business of performing great musicals that require large audiences to pay exorbitant prices for tickets is quite a gamble.

Cameron Mackintosh, adjunct producer of “Phantom” with Lloyd Webber’s Really Useful Group, likes to quote Alan Jay Lerner, the American musical librettist. “You know what a ‘succès d’estime’ is, don’t you? A success that runs out.” Mackintosh and Lloyd Webber’s financial achievement with shows like “Cats” and “Phantom of the Opera” was to keep them from running out.

“Phantom” has been seen by nearly 20 million people on Broadway as of earlier this month, grossing $1.3 billion. It is still playing in London’s West End, after temporarily closing during the pandemic, and has been seen by 145 million people in 41 countries since its premiere in London in 1986. It may not compare to classical operas as a work of art. art, but you can’t argue with a cash register.

However, the machine can suddenly break, as “Phantom” has discovered on Broadway since returning after the pandemic last year with a $10 million donation from a US government fund to revive theaters. “The ‘Phantom’ is a beast of a show, with lots of staff and performers, costumes and wigs,” Mackintosh told me this week. “Starting it from scratch today would be impossible.”

The biggest difficulty is not the initial investment in a new production, however large it may be; is that musicals are too expensive to continue playing. Mackintosh compares them to yachts. “It’s like owning a boat: the happiest days are buying and selling. It’s extremely expensive to operate.”

Musicals are an excellent example of the “cost disease” in the performing arts identified by economist William Baumol in 1966. Rising wages and other costs cannot be offset by higher productivity at work, because each performance requires the same number of people. for the same production. Unless you run out of the chandelier, it’s a struggle to make the “Ghost” more financially efficient.

The problem was compounded by high inflation. Mackintosh estimates that the weekly cost of putting “Phantom” on Broadway has risen from approximately $850,000 before the pandemic to nearly $950,000, with further increases in energy and other expenses to come. Since he’s only raised an average of $850,000 a week this year, the accounts aren’t quite right.

This is reinforced by the fact that long-running musicals in cities like London and New York tend to become increasingly dependent on tourists. Locals will be drawn to limited seasons of new shows and reruns like “The Music Man,” but musicals like “Phantom” are more dependent on visitors. And there are fewer of them visiting New York than there were before Covid, particularly from Asia.

As demand drops, tickets are discounted and the economy of the older musical drops. “Phantom” has already been presented at 71% capacity on Broadway this year, compared to 96% for “Hamilton”, at an average price of US$93 (R$ 489) against US$ 213 (R$ 213). $1,120) from “Hamilton”. The announcement that it will end in February is expected to increase demand for tickets as the deadline approaches.

This probably won’t be the last time New York sees the masked man in love; the “Ghost” could be revived in the future, perhaps more viable. He will continue to tour the world for limited seasons in cities from Sydney to Vienna. If tourists don’t come to “Ghost”, it will come to them.

“The Broadway musical is not dead, but things are going to be tougher. There will be more pressure to have smaller casts and orchestras,” says Matthew Rousu, a musical fan and professor of economics at Susquehanna University in Pennsylvania. The band will continue playing, but with fewer musicians.

This raises an existential question about the future of spectacular musicals on the scale of “Phantom” or “Les Misérables”. Musicals tend to be financed by venture capital, with a group of investors taking the high risk of foreclosure before the production recovers its initial outlay, for a slim chance of getting very rich (the original investors of “Cats” in London had a 60-fold return).

The effect of a Broadway hit has historically been enormous: it’s the reason why there are so many “Phantom” productions. Making smaller musicals limits the risks, but it also reduces the likelihood that a new one will become a global phenomenon and generate money for decades to come.

Mackintosh did very well at the height of the big music business: his production company paid him £35m in dividends at the end of 2019, before the pandemic and the current rise in inflation, and then zero when the crisis hit. . When the curtain finally falls on “The Phantom of the Opera”, he may be crying.

Translated by Luiz Roberto M. Gonçalves