Sure, Broadway Shows Are Struggling — But Broadway Isn’t

In September, The New York Times ran an article headlined “The Broadway Musical Is in Trouble.” The facts it laid out were troubling indeed.

Not one of the 18 new musicals that opened on Broadway last season has made a profit. Several, including “Tammy Faye,” “Boop!” and “Smash,” cost over $20 million each, closed in under four months, and lost their entire investments.

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Looking further back, the situation is even more dire. Since the pandemic, 46 musicals have opened on Broadway costing around $800 million in total, and all but three failed to recoup their investments.

“It looks like 90 percent of the post-pandemic era’s new musicals will end their Broadway runs having lost some or all of their investors’ money,” the article said.

The issues are such that even an esteemed Broadway veteran like Andrew Lloyd Webber said in the piece, “Broadway is not a business anymore. I am very worried. I look at the economics of this, and I just don’t see how it can sustain.”

On its face, one contributor to this situation would seem to be a decline in international visitors, who traditionally make up around 20 percent of Broadway’s ticket buyers — 21 percent in the 2023-2024 season, according to the theater website Broadway World.

NYC Tourism + Conventions initially projected that the city would see 67.6 million visitors in 2025, but dropped that number to 64.1 million by May, a decrease inspired in part by “an 800,000 drop in foreign visitors, amid growing unease over U.S. immigration policies and trade tensions.”

Numbers from the International Inbound Travel Association (IITA) back this up, as the nonprofit notes that the number of international visitors to the U.S. in June 2025 was down 6.2 percent from June 2024, and that July’s year-over-year figures were even worse at a drop of 8.9 percent. 

The sad state of Broadway profitability mixed with the drop in global tourism could be seen as having ramifications not just for Broadway and Times Square — the nexus of so many of its theaters — but for New York City as a whole. 

According to data from trade group the Broadway League, as of the 2018-2019 theater season, Broadway contributed $14.7 billion to New York City’s economy on top of ticket sales, supporting almost 97,000 local jobs in the process. The League noted that Broadway attendance for that season topped the attendance of all 10 New York-area professional sports teams in the four major U.S. sports combined, and that 65 percent of Broadway tickets were purchased by tourists.

So, if making a profit on a new Broadway show has become close to impossible at a time when foreign tourism is in a tailspin, that surely must indicate a drop in visitors to the area, which must be affecting retail outlets, hotels, restaurants, concessionaires, and perhaps even the health and perseverance of the Broadway theaters themselves. 

Or one would think.

It was no small shock then to learn that according to numbers from the Broadway League, the 2024-2025 Broadway season — the same one that saw not one new musical make a profit — had the highest total gross sales in at least 10 years (and possibly ever, since we were looking only at numbers from the past decade), as well as the highest total attendance over the previous decade except for the 2018-2019 season.

In addition, numbers provided by business improvement district Times Square Alliance based on Visa credit card spending shows that international spending in Times Square in the second quarter of 2025 was actually up 6 percent from before the pandemic, and was down just 4 percent from the second quarter of 2024, a number more than made up for by the 9 percent increase in domestic spending over the same period.

All of which raises the question: How is the Broadway area seemingly prospering in the face of conditions more appropriate for a ghost town than a boomtown?

For one, while many of the newer shows have been struggling out of the gate, several of the old classics persevere, bringing sold-out crowds and occasional four-figure ticket prices along with them.

The Times piece notes that older standbys such as “Wicked,” “The Lion King,” “Aladdin” and “Hamilton” are still going strong, with the latter carrying a top ticket price of $1,500, a new high for Broadway.

While prices this high might seem an impediment for theatergoers, Tom Harris, president of the Times Square Alliance, said it doesn’t have a negative effect on business overall.

“We saw how much people craved live performance during the shutdown, and the huge influx when it came back,” said Harris. “When it comes to live entertainment, people will either pay the price or find value. As I look outside my window, I see a huge line at the TKTS booth with discount shows. So there’s a price point for people to experience live theater, if they just take the time to look for those values.”

There’s also a bifurcation in the shows. Getting new musicals off the ground is proving to be a challenge, but straight plays have been more profitable, especially those featuring movie and TV stars such as Denzel Washington and Jake Gyllenhaal, who co-starred in “Othello,” and George Clooney, who starred as Edward R. Murrow in “Good Night, and Good Luck.”   

Beyond that, a dive into the nature of Broadway economics begins to explain how shows are losing money despite strong attendance numbers, and also why the surrounding area continues to prosper in spite of that.

As it happens — Lloyd Webber’s concern to the contrary — a majority of Broadway musicals tanking financially is pretty much a long-established norm.

“It’s a terrible investment, the Broadway theater,” Rocco Landesman, veteran producer and former head of Jujamcyn Theaters, told Stephen J. Dubner on his “Freakonomics Radio” podcast for a three-part series on the economics of live theater in April. “Fifteen to 20 percent of the shows that are put on Broadway earn their money back.” 

Yet, new Broadway musicals continue to be staged every season, as deep-pocketed producers and investors rush as ever to invest in an art form that shows little opportunity for profit.

“Why do people invest?” said Landesman. “They can’t help themselves. They fall in love with the shows.”

Landesman noted that part of the reason producing shows is so expensive is that “there’s no economy of scale. And there’s no economy of mechanization. It’s handmade, live every night.”

This partly explains the vast rise in the cost of putting on a Broadway musical in recent years.

Jeffrey Seller, producer of shows including “Avenue Q,” “In The Heights” and “Hamilton,” told Dubner that while “Avenue Q” cost $3.5 million when it debuted in 2003, it would cost at least $10 million today due to higher costs for labor, equipment rental, set building, costumes, advertising and theater rental.

It’s this last factor that explains why Broadway’s stumbles don’t more deeply affect the surrounding area, and why Broadway theaters are likely as financially healthy as ever even if the shows they host are not.

There are currently 41 Broadway theaters — an official designation meaning a theater in Midtown Manhattan with at least 500 seats — and 33 of them are owned by just three companies: The Shubert Organization, The Nederlander Organization and ATG Entertainment, the latter the result of a 2023 merger between Jujamcyn Theaters and the Ambassador Theatre Group.

Shubert and Nederlander are the veterans of the form, and they’ve owned many of these theaters since before some of our parents or even grandparents were born. To illustrate, a 1980 New York Times article about the rivalry between the two cites a feud dating back to 1957, caused by a dispute over the ownership of the Shubert-Lafayette Theatre in Detroit.

The Shubert Organization, the Nederlander Organization and ATG, as well as Disney Theatrical Group and Second Stage Theater, which each own one Broadway theater, all either did not respond to requests for comment or declined to comment for this article. 

Dubner noted on the podcast that out of all the people throughout the Broadway ecosystem he reached out to for his series on Broadway economics, the “one group that would not speak” was the big theater owners: “the landlords.”

“The landlords are thought of as members of the Broadway community, but that’s a bit like saying that the royal family are members of the British community,” Dubner said. “Their position comes with a guaranteed level of wealth and leverage.”

Whatever the strength or weakness of a show’s appeal, the landlords (usually) collect the same rent for as long as the show runs. 

When a show closes — even if it’s much earlier than expected — another deep-pocketed, Broadway-loving dreamer like Landesman or Seller is right there ready to sign the next lease, hoping to make their long-gestating dream a Tony-winning reality.

In a 2019 article for Variety, theater journalist Michael Riedel noted that at the time every Broadway theater was booked with several backup shows waiting for an available slot, and noted that some Broadway theaters “might never be on the market again.”  

“All we do is open the door in the morning,” one theater owner told Riedel, “and there’s a line of suckers — well, I should say producers — begging to get in. This business has never been better.”

The Emory Economics Review, in an April 2025 report on the economics of Broadway, echoed Landesman by noting that “since the 1960s, an average 80 percent of investors did not recoup their investment.” At a certain point, it’s like Atlantic City with show tunes — the gamblers keep losing, then keep coming back for more.

To illustrate how tough turning a profit on Broadway can be, “Maybe Happy Ending,” which won six Tony Awards this year, including Best Musical, is running at Shubert’s Belasco Theatre. 

But in advance of these critical victories, the $16 million production still experienced a series of financial hardships before opening, forcing the production to lay off workers. A TikTok video spooked some investors, causing them to bail, by calling into question the show’s ability to open at all.

Why? The producers couldn’t find a viable space until the Belasco became available. 

Broadway producer Hal Luftig, whose Broadway credits include “Legally Blonde,” “Evita” and “Kinky Boots,” told Dubner that in the old days, producers paid theater owners rent, and that was that. Now, the theater owners are profit participants, even if the show makes no profit. 

“First, they get all of their expenses,” said Luftig, noting that this could include everything “from payroll to toilet paper.”

Then, the landlords get a weekly royalty, which could be anywhere from 3 to 6 percent of ticket sales. These payments happen regardless of whether the show itself has turned a profit.

With the real estate thriving and actual tourist numbers in the area not that far off from expectations, one would think at least that local retail businesses must be prospering. 

But that’s not entirely the case, either.

“Times Square has as many people walking the streets as it did prior to COVID. But they absolutely do not spend money on the same kinds of things that they did in 2019 or 2020,” said Steven Soutendijk, vice chairman of the retail services group at Cushman & Wakefield. “If you walk around Times Square, you’re going to find that the busiest thing is the Raising Cane’s flagship at the corner of 43rd Street. There’s a line out the door for chicken tenders. There’s also a lot more souvenir stores — people selling New York T-shirts and snow globes — than there were in 2018 or 2019.”

Andrew Goldberg, vice chairman at CBRE, also sees the shift in Times Square retail.

“We are seeing that it’s the heavily promotional and the fast food. Every quick-serve operation is opening there,” said Goldberg. “There was a time when people were trying to get luxury brands to look there also, but that’s not where it’s headed. It’s really more for touristy brands.”

Goldberg noted that the most recently announced retail lease in Times Square, just last month, was the 7,000 square feet taken by Pop Mart, owner of the trendy Labubu dolls, at Vornado Realty’s 1540 Broadway.   

“It’s all tourism shopping there,” Goldberg said. “That, and food and beverage.”

Soutendijk said he believes the change in tourists’ spending habits derives from a post-COVID desire on their part to have an authentic New York experience.

“I see way more hot dog carts and vendors than I used to,” said Soutendijk. “As a New Yorker, I would not eat a hot dog off a hot dog cart, but it feels like tourists do. All the guys that sell stuff on the street are jamming. Those guys aren’t down.”

From a retail leasing perspective, Soutendijk sees a pronounced change in the brands that take space in the area.  

“The retail real estate market in Times Square is robust, although certainly a different kind of tenant than was leasing space 10 years ago,” Soutendijk said. “Back then, the Gap was doing deals, and Express, American Eagle, Old Navy. Those tenants don’t seem to be as active in Times Square anymore.”

Richard Hodos, vice chairman at JLL, notes that while retail in the area is largely thriving, there is some price sensitivity on the retail leasing front, particularly for luxury brands.

“A lot of retailers these days are not opening stores just for the branding. They can do branding with Instagram,” said Hodos. “There are other ways that they can spend money for marketing and branding than to open a flagship store in Times Square or on Fifth Avenue or on the Champs-Élysées. Most of those big deals in the past for these large flagship stores were done for marketing purposes, and the rent almost didn’t matter. But, now, retailers in general are being much more cautious. They want value for their money.”

On the other hand, experiential retail, which provides consumers with immersive physical experiences and has become a preference for Gen Z, is a fast-growing market segment increasing its presence in Times Square.

According to market research firm Metatech Insights, experiential retail grew from a $114.6 billion global market in 2024 to $132 billion in 2025, and is projected to grow to $543.45 billion by 2035. 

“The next batch of deals you’re going to see are going to be big deals with big-name tenants, and a lot of experiential blocks of space,” said Goldberg. “Experiential companies want to be where the tourists are. They want to be in Times Square.” 

Some recent lease deals bear this out. In October 2024, Path Entertainment Group took 49,982 square feet at 11 Times Square for the company’s immersive, life-size Monopoly experience, as Commercial Observer reported at the time. In July 2025, it was announced that Tm:rw, a three-level, 20,000-square-foot space at 220 West 42nd Street, will feature roughly 120 brands displaying next-generation technology, including racing car simulators and a room for listening to cutting-edge audio. 

These will be joined by Central Perk, a real-life version of the coffee shop from the classic sitcom “Friends,” which signed a lease for just under 3,000 square feet at 701 Seventh Avenue in September.   

As for the more conventional retail, Hodos sees the current retail/spending situation as an instance of “glass half full.”

“International tourists are higher spenders because they tend to eat in better places and stay in better hotels,” said Hodos. “Their spending is almost 4 to 1 [over domestic tourists]. So we think that dollar volume will be down by about $4 billion. But we’re still going to have 64 million or 65 million tourists visiting New York City.”

Hodos also notes that some of the more high-volume spending lost at retail will come New York’s way through hospitality, which is having the kind of profitable year Broadway shows yearn for. 

According to a midyear report from PwC, Manhattan hotels overall were enjoying revenue per available room (RevPAR) that was up 7.1 percent over the midpoint of 2024. The average daily rate for Manhattan hotel rooms was up 5.7 percent, and was “supported by a 1.4 percent increase in occupancy,” according to the report.

In a July 2025 article headlined “New York City’s Hotel Market Is the Envy of the Country,” the Wall Street Journal noted that while hotel owners across the U.S. are “reeling from a decline in foreign visitors and domestic tourists scaling back their plans,” New York City has been a glaring exception. The article noted that in June 2025, over 7 million people passed through Times Square, “up 6 percent from that month last year.”

“Hotel rooms are full,” said Hodos. “Our hotel occupancy is up over last year and the year before, and hotel room rates are through the roof. If you want to try and get a hotel room at a decent hotel during key weeks in Manhattan, it’s almost impossible.”

Soutendijk mentioned that he experiences the cost of this success firsthand when family comes to visit.

“I have a lot of family that come to visit me, and what I hear from them every time is, ‘Holy shit. It is so expensive. Everything is so expensive,’ ” said Soutendijk. “To stay at a Holiday Inn in a 200-square-foot room in the Garment District between Ninth and 10th avenues is going to cost about $600 a night, and that’s not peak season.”

Soutendijk said this fact perfectly illustrates New York’s resilience in the face of rising costs that increasingly defy logic.

“[Those costs are] wild to me, but they speak volumes, because people still want to come to New York,” Soutendijk said. “There were 14.6 million people that bought tickets to Broadway in the 2024-2025 season. That’s 14.6 million people that didn’t mind spending $150 a ticket to sit in the very back row of the mezzanine to see ‘Mamma Mia,’ and then drop $600 a night to stay in a crappy Holiday Inn, and spend God knows what on dinner and like it. That’s how incredible a draw New York City is. It makes me kick myself when I think about how, back in 2020 and 2021, there was a whisper of doubt that we’d ever come back from this. I look at where we are now and I’m like, ‘How could I have ever questioned that?’ ”

And that leads us to the fascinating and yet wholly unscientific answer as to why Broadway and Times Square are thriving in spite of so many seemingly contrary indicators, including a drastic drop in tourists from almost everywhere else in the U.S. 

“Unlike other industries in which investors incur high risk, the value of Broadway’s artistic and cultural impact is immeasurable, which is also an incentive for many investors to finance productions,” said the Emory Economics Review. “Broadway will continue to survive economic hardship as long as people enjoy live theater.”

Times Square Alliance’s Tim Harris would agree. 

“You could go throughout the world and go to beaches and see attractions. And we have all of that here,” he said. “But we also have Broadway. That’s what makes us unique.”

Larry Getlen can be reached at lgetlen@commercialobserver.com.