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Calculate the profits of a broadway show in a given year

Anonymous A

Hello,

I was wondering if anyone could help me to come up with an answer to the following business case (I have been struggling with it over some time now).

- Calculate the profits of a broadway show in a given year. -

Thank you!

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Vlad replied on 07/10/2018
McKinsey / Accenture / Got all BIG3 offers / More than 300 real MBB cases / Harvard Business School

Hi,

You have to look at the revenues:

  • The number of tickets sold (Days it is shown * capacity of the show * avg. occupancy of the show). You should also take into account that the occupancy of the average show may be declining over time (unless it's a blockbuster)
  • Price per ticket (average price or you can segment the seats according to their value)

and costs:

  • Fixed costs (Salaries, Marketing, Rentals, Equipment, Utilities, Royalties)
  • Variable costs (Discounts and price promotions)

Without additional information, it's not possible to provide any further recommendation

Best,

Benjamin
Expert
replied on 07/12/2018
Manager - Get you MBB offers - Pragmatic and result oriented coaching - Fair price

Hi,

First we need to evaluate all types of revenues : # visitors x avg spend / visitor

- # visitors : we could calculte it based on the number of seats available X consider the number of show / year (evaluate the # show / week x the # of weeks planned) X the avg occupancy of show over the year

- Avg spend : we need to consider the different type of revenues > ticket sale + goodies + food

Second we should look at the cost side

- we need first list all the potential costs and then understand weither its fixed or variable (depending on the business model). Salaries (actors, technical staff), distributiion fees (intermediairies, promotion) , Rent (theatre), Royalties (if the show is a franchise)

- for the cost of goodies and food, it would be easier to assume a growth margin on this type of product and apply it to the revenue calculated