Nonprofit Show, but Money’s Riding On It - New York Times:
What they’re doing is making enhancement deals.
An enhancement deal, conventionally, is when a commercial producer pays money to a nonprofit theater to help subsidize a production. If a theater decides to stage a big musical, for example, a commercial producer may throw in a few hundred thousand dollars — or a couple million in some cases — to raise the show’s production values and get a sense of how it would look in a bigger theater.
For most participants the deal is a no-brainer. In exchange for the money (which can be tax deductible) the commercial producer gets a research and development lab for the show and the rights to transfer it elsewhere. The theater gets a bigger show and a better chance that it will transfer to a commercial run — and, if everyone is lucky and the show hits, a steady flow of royalties.
“We don’t have out-of-town tryouts anymore,” said Susan Dietz, a producer who enhanced the recent Primary Stages production of “Adrift in Macao.” “This is the way we do it.”
This kind of deal is decades old, though for years it was looked upon as a dirty secret in the nonprofit theater world. Some theaters still fear that widespread knowledge of enhancement could jeopardize their reputations, their donations or even their nonprofit status.
But as money has become increasingly scarce, the enhancement system has become accepted. In fact it is all but essential, even in Off Broadway’s small and midsize theaters.