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Taxes Thu Dec 29 2011

Tax Break Bill Gives Incentives for Broadway Shows

Part of the recently passed "Tax Break Bill," or SB 397, includes the Live Theater Production Tax Credit Act. This act will give any for-profit production that does a long run or a pre-Broadway run in Illinois up to $2 million in tax credits for one fiscal year.

The only other state that has a similar tax credit for theatrical productions is Louisiana, although New York City also has a tax exemptions for theatrical productions.

The bill says that "The Illinois economy depends heavily on the commercial for-profit live theater industry and the pre-Broadway and long run shows that are presented in Illinois." For-profit productions tend to have a higher ticket price than a not-for-profit theater production. Furthermore, some shows that run in for-profit venues such as theaters owned by Broadway in Chicago can attract large groups of tourists who might come in on buses and then stay in hotels and do their shopping here.

According to the Reader, Broadway in Chicago has been trying to get an incentive in an attempt to have a business edge when attracting shows to Chicago.

Broadway in Chicago was not available for comment.

A pre-Broadway run is a way for producers and the creative team of a show to figure out what works and what doesn't work. A show is created and often rehearses in a large city before doing previews and opening. Producers and a creative team then look at the reviews and audience response to determine what to change prior to opening on Broadway.

Long run shows come to a city after opening on Broadway. In the past ten years, Broadway in Chicago has had open-ended runs of such as Wicked and Jersey Boys. Prior to the signing of the bill, Broadway in Chicago announced that a 12-week run of the musical The Book of Mormon will happen next year.

In a statement, Actors' Equity Association, the union for professional actors and stage managers, said "Actors' Equity Association believes that this new tax incentive will result in more jobs for everyone in the theater industry as well as ancillary businesses. When a show runs for a long time, the result is a growing interest in theater whether it's commercial or non-profit. That adds up to a win for everyone, especially the audiences who see our members bring the shows to life."

Recently Chicago's non-for-profit theaters have produced several plays that have gone on to be performed in New York both on Broadway and off-Broadway. Currently a play that originated at the Goodman Theatre, Chinglish, is running on Broadway. But unlike pre-Broadway or long runs done by a for-profit theater, shows created at non-for-profit theaters are not created with New York in mind.

"Any time a theatrical production can extend its limited five-week Goodman Theatre run beyond Chicago--to venues abroad, in New York or in other major resident markets--and gain a larger audience, it's a good thing. But Goodman Theatre's productions are developed with a Chicago audience in mind," Goodman Theatre publicity director Denise Schneider said in an email.

Schneider explained that for Chinglish the playwright wanted to make it "in and for Chicago." For a 1998 production of Death of a Salesman, the same situation occurred with the production being created for Chicago audiences.

"The Chicago reviews drew national press which was also wildly positive, and helped facilitate a Broadway transfer the following year. Successful runs in Los Angeles and London followed," Schneider said.

The presentation of a world premiere can draw audiences due to a status as an event, regardless of if's being performed at a non-for-profit or for-profit venue.

"I think that, as an audience member, it's incredibly fulfilling to be the first to witness something special," Schneider said. "Also, you get bragging rights to friends in other cities who may be laboring under the misapprehension that they're more cultured than you."

This could also be the case with premieres at for-profit theaters, since one of the most recent shows to premiere at a Broadway in Chicago venue, The Addams Family, broke box office records during its pre-Broadway run in Chicago. The sale of tickets could have also been the result of celebrities playing the two lead roles. (Read Gapers Block's review in A/C.)

Subsequent to the passage of the bill, there has been news of the CME ceasing charitable giving and Sears Holdings deciding to close between 100 to 120 stores. However, neither Broadway in Chicago nor any venues in other Illinois cities have announced shows that would be eligible for the tax break.

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