Long Run On Broadway Productions Case Summary
Critical Issues
In order to rank within the top 10 highest grossing Broadway productions and to sell the show as a “fun night”, Hanson Productions (HP) must:
1. Captivate the audience with the performance (atmosphere, production, etc.) and market effectively so that a long run on Broadway will be achievable.
2. Determine a pricing strategy that will capture the largest volume of theater goers or they will not be able to recoup their investment.
3. Determine a venue that will be able to house all theatergoers so potential revenues aren’t foregone.
Situation Analysis:
Joanne Shen, President of Hanson Productions is currently considering which venue, what ticket pricing structure, and how to market their new production – The Detroit 1967. …show more content…
Weekly costs of $616,765 would be incurred yielding a net profit margin, excluding tax, of $108,883, or 15% of revenues (Exhibit 7). Breakeven levels of seating are 3001,655, and 1960 for Tuesday to Thursdays, Fridays, and Weekend respectively. Based on the analysis, this theatre does not meet the decision criteria of achieving $1.2 million in weekly sales revenue. In addition, if demand were greater than the number of seats available, H.P. would risk the opportunity to capitalize on the additional income, which adversely affects the company’s plan on investment recoupment. Recoupment would take over 120 weeks, at the likely scenario, as just over $100,000 will be recouped every week towards the initial investment of $13 million (Exhibit 7). Longacre also doesn't allow for HP to meet their target revenues of $1.2 million even at the most optimistic …show more content…
Assuming that no investment by Hilton was made and a likely scenario of 75% sell out ratio; gross revenues of $1.2 million can be achieved. In addition a net profit margin of 40% ($500,000) can be achieved while weekly costs would be approximately $700,000 or 60% of revenue. The seats required to break even are 3742, 740 2021 for Tuesday-Thursday, Friday and Weekend respectively (Exhibit 9). This option fits the decision criteria will in terms of weekly revenue and gross profit margin (i.e., $1.2 Million at 40% profit margin). In addition, recoupment at the likely scenario would take approximately 26 weeks, as over $500,000 would be recouped each week. However due to the high seating capacity of this venue, recoupment could be longer if the Detroit Riots did not sell enough
In order to rank within the top 10 highest grossing Broadway productions and to sell the show as a “fun night”, Hanson Productions (HP) must:
1. Captivate the audience with the performance (atmosphere, production, etc.) and market effectively so that a long run on Broadway will be achievable.
2. Determine a pricing strategy that will capture the largest volume of theater goers or they will not be able to recoup their investment.
3. Determine a venue that will be able to house all theatergoers so potential revenues aren’t foregone.
Situation Analysis:
Joanne Shen, President of Hanson Productions is currently considering which venue, what ticket pricing structure, and how to market their new production – The Detroit 1967. …show more content…
Weekly costs of $616,765 would be incurred yielding a net profit margin, excluding tax, of $108,883, or 15% of revenues (Exhibit 7). Breakeven levels of seating are 3001,655, and 1960 for Tuesday to Thursdays, Fridays, and Weekend respectively. Based on the analysis, this theatre does not meet the decision criteria of achieving $1.2 million in weekly sales revenue. In addition, if demand were greater than the number of seats available, H.P. would risk the opportunity to capitalize on the additional income, which adversely affects the company’s plan on investment recoupment. Recoupment would take over 120 weeks, at the likely scenario, as just over $100,000 will be recouped every week towards the initial investment of $13 million (Exhibit 7). Longacre also doesn't allow for HP to meet their target revenues of $1.2 million even at the most optimistic …show more content…
Assuming that no investment by Hilton was made and a likely scenario of 75% sell out ratio; gross revenues of $1.2 million can be achieved. In addition a net profit margin of 40% ($500,000) can be achieved while weekly costs would be approximately $700,000 or 60% of revenue. The seats required to break even are 3742, 740 2021 for Tuesday-Thursday, Friday and Weekend respectively (Exhibit 9). This option fits the decision criteria will in terms of weekly revenue and gross profit margin (i.e., $1.2 Million at 40% profit margin). In addition, recoupment at the likely scenario would take approximately 26 weeks, as over $500,000 would be recouped each week. However due to the high seating capacity of this venue, recoupment could be longer if the Detroit Riots did not sell enough