Act locally, think Broadway: Tax credits for big commercial shows

Act locally, think Broadway: Tax credits for big commercial shows

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Listen to Jonathan Abarbanel and Kelly Kleiman discuss tax breaks for theaters on Eight Forty-Eight, and Chicago Fusion Theatre’s ‘Las Hermanas Padillas’

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Late last year, the Illinois General Assembly passed legislation granting extensive tax breaks to a pair of super-wealthy corporate entities (Sears and the Chicago Mercantile Exchange) in response to their threats that they would take their business elsewhere. This legislation, which turned even reformist governor Pat Quinn into a political whore, was widely reported and debated in the media.

What was not debated and little-reported was that the bill included additional provisions providing tax “incentives” (to use the politic word) for other businesses as well, one of them being Broadway producers of live theater, who now may be granted tax credits similar to those offered movie producers who bring feature film and TV production to Illinois.

The wording of the theater-related provisions is significantly odd. The preamble states, “It shall be the policy of this State to promote and encourage the  training and hiring of Illinois residents who represent the diversity of the Illinois population through the creation and implementation of training, education, and recruitment programs organized in cooperation with Illinois colleges and universities, labor organizations, and the commercial for-profit live theater industry.” It reminds me of my high school intelligence tests: “Which of these words does not belong in the group?”

(Flickr/Steve Minor)

The bill goes on to state that tax credits for Illinois labor and production expenditures will be granted only to producers holding an “accredited theater production certificate,” and that said certificates will be issued only to shows spending $100,000 or more which are performed in theaters of 1,200 seats or more, and either are scheduled for Broadway within 12 months of playing Chicago or are scheduled for a “long-run” here, which is defined as more than eight weeks and at least six shows a week.

Whether benefiting Sears, the CME or a Broadway show, this bill is an egregious example of special interest legislation, and special interest legislation always is sleazy, sneaky, skanky, shady, greasy, garbanzo and Doc. One thing it definitely is not is Bashful. Each and every piece of it has its defenders and apologists, but the essence of it—literally by definition—is a denial of government of the people, by the people and for the people. Whether in Congress, state legislature, county board or city council, such laws rarely are debated, often  are passed in the dark of night (such as being tacked on to some unrelated piece of legislation) and virtually never are transparent. Whenever a piece of special interest legislation is enacted, you can smell the political fat sizzling in the pan.

Yeah, but this one is my special interest legislation: it serves the industry I cover as a critic and arts business reporter and, if successful, it will make my work and Chicago theater-going a lot more exciting. Whenever our Downtown theaters are doing business, a helluva lot of others also do business: hotels, restaurants, parking garages, taxi cabs, etc. as well as stage hands, electricians, musicians, ushers, concessionaires, actors, etc. All of these service-providers, both individuals and companies, in turn pay their taxes to the city, county and state. The performing arts (and other arts) are a proven economic engine that returns far, far more to the city/county/state than any public dollars invested.

Maybe this thing actually is good for everyone, even though it directly benefits only a very narrow range of entitites. Who does it benefit? The voting and tax-paying public, in whose name this law was enacted and signed, has every right to ask.

The bill’s set of parameters could provide tax credits on the one hand for a pre-Broadway show playing here for three or four weeks (as did The Adams Family and The Producers for example) or, on the other hand, for the umpteenth repeat visit by Cats or Mamma Mia, providing they stayed here for at least eight weeks and a day. On that basis, the number of possible producers and production companies is open-ended.

Far more limiting is the bill’s requirement that an “accredited theater production” must be staged in a venue with 1,200 or more seats. In theory, this could benefit shows coming to the Rosemont Theatre, the Chicago Theatre, the Civic Opera House or Aurora’s Paramount Theatre, for example. However, the current professional theater landscape strongly suggests that the most likely candidates are shows coming to theaters under the Broadway In Chicago brand name.

Broadway In Chicago (BIC) is the local outpost of the New York-based Nederlander Organization, which owns a huge amount of theater real estate across the country and also invests money in Broadway shows. In Chicago, the Nederlander Organization owns the Oriental, Cadillac Palace and Bank of America theaters, leases the Broadway Playhouse (former Drury Lane Theatre in Water Tower Place) and also programs occasional theater attractions into the Auditorium Theatre, all under the Broadway In Chicago name. With the exception of the 500-seat Broadway Playhouse, all the BIC houses can host “accredited theater productions.”

BIC makes it money by renting out its properties, and by providing management and marketing services, so the more shows presented in its properties, the merrier all around. It should come as no surprise that BIC executives were among the movers and shakers who moved this bill along. They don’t like their theaters to sit dark and empty for weeks or even months at a time, as the Cadillac Palace and Oriental have been sitting recently (and will through most of the summer).

The BIC folks, and their bosses at the Nederlander Organization in New York, are nothing if not savvy and smart players. BIC theaters already have played host to numerous long-run attractions and pre-Broadway try-outs. Jersey Boys was here for over 18 months and Wicked for over two years. And pre-Broadway try-outs over the last decade include The Producers, Jekyll and Hyde, Pirate Queen, The Adams Family and Sweet Smell of Success. Now they want more such shows to come more often, hence the tax credit.

They want the market value of a blockbuster Broadway hit sitting down here for months or years, and they want the glamor of big-name stars trying out a brand-new show. Frankly, I want them, too. Both of these things would make Chicago even more important than it already is as a national theater center, and that would make Chicago’s theater critics—hey, that’s me—more powerful and prominent nationally.

However, it plays out, this new legislation already has greased the skids: a Broadway In Chicago executive has told me that Chicago will see a half-dozen shows in the next year that will take advantage of the tax credits, the first of them being the pre-Broadway Kinky Boots (with Cindy Lauper) coming in the fall, followed in December by The Book of Mormon, which will sit-down here for a multiple-month run.

But is there any direct benefit to audiences, to the folks who slap down the debit card to buy the tickets? Will the thousands of dollars in weekly/monthly savings be passed along in the form of lower ticket prices? Will the $100 dollar orchestra seat fall to $80? The $65 balcony seat to $50? The $40 second balcony seat to $25? Now, that would have direct and meaningful value to the Good People of Illinois in whose name this legislation was signed and sealed.