I thoroughly enjoyed the Broadway musical “Memphis” when I saw it about five years ago, although I did not see it on Broadway – or on any other live stage, either.
Instead, at the end of a hard day’s work at our Atlanta office, I watched a big-screen film presentation of the Broadway cast’s performance at the AMC Fork & Screen theater next door. I munched my dinner while I watched the show and took in its music from an ultra-modern surround sound system. The first is impossible at an actual Broadway theater (granted, the musical “Waitress” makes an exception for Mason jar pies); the second, while not unheard of, is not typical either (though as in so many things, “Hamilton” is an exception). To top it off, the $20 ticket price was just a small fraction of what I would have had to pay to see the live production at the Shubert Theatre in Times Square.
I’m not saying a film version – even a well-produced film version, which “Memphis” was – is the same experience as an actual live performance. But I would never have considered spending five times as much, or more, to see a live production on the road without the company of my wife, who is also my lifelong theater companion.
As it happened, I never saw “Memphis” live during its three-year Broadway run. But I did get to see it in the movie theater, and so did untold thousands of other viewers who did not have a chance to do so in New York.
New York is the nation’s live theater capital, and it has a creditable presence in the TV business. But despite its involvement in the early days of film, New York has remained a distant also-ran to California since before “talkies” came on the scene. Like other states that want to boost their film profile, and thereby pick up a healthy slice of the spending that comes with many big-screen productions, New York offers a tax credit for film work done in New York. Like New York City’s “Made in NY” program, the state’s tax credit is designed to entice producers to create work in the Empire State.
The producers of the recording of “Memphis” I saw doubtless expected to pull in a good chunk of change from that credit. I suppose they did – but they probably did not get as much as they wanted.
Broadway Worldwide had digitally captured and distributed Broadway shows before, including “Smokey Joe’s Cafe” and “Jekyll & Hyde.” The filming of “Memphis,” however, represented a step forward, in that it would be beamed live to movie theaters – a practice that has proved successful for the Metropolitan Opera and the National Theater in London. The show was the then-reigning Tony Award winner for best musical, and previous filmed productions had often been held back until the show’s run was ending or over.
In addition, in order to create a filmed version worth watching but also recorded live, the complicated filmed version of “Memphis” was captured on five high-definition cameras and with 96 tracks of audio input. In other words, the production would not be cheap. (And this is not to mention potential negotiations with the cast, crew and the show’s various rights holders.)
Considering the complexity involved, it is unsurprising that relatively few Broadway shows are recorded for commercial release. Unless you are a student or theater professional who can visit the New York Public Library’s Theatre on Film and Tape Archive, opportunities to view Broadway shows other than from a seat in a Broadway theater remain rare.
The fact that Broadway Worldwide was doing something that few other people tried, however, likely contributed to the company’s subsequent problems with the state tax credit. The statute defines “qualified production costs,” which determine the size of the credit, to include technical and crew production costs, but not – crucially – intellectual property rights and wages for “writers, directors, including music directors, producers and performers.” This meant that determining what a particular payment was for became critical in applying for the credit.
This May, Broadway Worldwide lost an appeal in which the company argued that five contracts related to the production of “Memphis” should have qualified for the tax credit. The state had disallowed the contracts because the production company failed to establish the amounts paid to the designers that were for their services (that is, qualified expenses) rather than their creative ideas (that is, their intellectual property). Instead of separating the two, the contacts lumped them together, rendering the entire payment unqualified in the state’s view. The appellate court agreed with the administrative judge at the 2013 hearing who determined that Broadway Worldwide was unable to prove that the payments to these individuals constituted qualified expenses under the law.
The case is a reminder that contract drafting and accounting, which are surely among the least glamorous parts of show business, can also be some of the most important. Had the contracts spelled out exactly how much was being paid for qualified production and post-production services, rather than combining those activities with intellectual property rights that were not eligible for credits, the producers might well have been entitled to claim a larger reimbursement from Albany. And had that accounting accurately reflected exactly what work was performed inside the state, the filmmakers would have had a better chance of getting more of what they claimed.
If Broadway shows were routinely filmed the way “Memphis” was, perhaps drawing up contracts for those involved would be routine as well. Instead, the production company ended up with a smaller credit than it probably expected, largely because it didn’t create a sufficient paper trail to support its claims.
I am not criticizing the state here. The stage and motion picture industries are for-profit endeavors (even if they do not always achieve that goal), and using taxpayer money to subsidize any industry is a sensitive matter, to say the least. If the justification for those credits is to create incentives for spending and job creation in a state, the state has little choice but to try to verify that the spending and job creation actually happened.
“Memphis” was a great show and a fine film. While I don’t specifically recall, I probably stuck around to watch the end credits, as is my habit. It is too bad the producers ended up a little short of the credits they expected to get.
Posted by Larry M. Elkin, CPA, CFP®
photo by Brad Coy
I thoroughly enjoyed the Broadway musical “Memphis” when I saw it about five years ago, although I did not see it on Broadway – or on any other live stage, either.
Instead, at the end of a hard day’s work at our Atlanta office, I watched a big-screen film presentation of the Broadway cast’s performance at the AMC Fork & Screen theater next door. I munched my dinner while I watched the show and took in its music from an ultra-modern surround sound system. The first is impossible at an actual Broadway theater (granted, the musical “Waitress” makes an exception for Mason jar pies); the second, while not unheard of, is not typical either (though as in so many things, “Hamilton” is an exception). To top it off, the $20 ticket price was just a small fraction of what I would have had to pay to see the live production at the Shubert Theatre in Times Square.
I’m not saying a film version – even a well-produced film version, which “Memphis” was – is the same experience as an actual live performance. But I would never have considered spending five times as much, or more, to see a live production on the road without the company of my wife, who is also my lifelong theater companion.
As it happened, I never saw “Memphis” live during its three-year Broadway run. But I did get to see it in the movie theater, and so did untold thousands of other viewers who did not have a chance to do so in New York.
New York is the nation’s live theater capital, and it has a creditable presence in the TV business. But despite its involvement in the early days of film, New York has remained a distant also-ran to California since before “talkies” came on the scene. Like other states that want to boost their film profile, and thereby pick up a healthy slice of the spending that comes with many big-screen productions, New York offers a tax credit for film work done in New York. Like New York City’s “Made in NY” program, the state’s tax credit is designed to entice producers to create work in the Empire State.
The producers of the recording of “Memphis” I saw doubtless expected to pull in a good chunk of change from that credit. I suppose they did – but they probably did not get as much as they wanted.
Broadway Worldwide had digitally captured and distributed Broadway shows before, including “Smokey Joe’s Cafe” and “Jekyll & Hyde.” The filming of “Memphis,” however, represented a step forward, in that it would be beamed live to movie theaters – a practice that has proved successful for the Metropolitan Opera and the National Theater in London. The show was the then-reigning Tony Award winner for best musical, and previous filmed productions had often been held back until the show’s run was ending or over.
In addition, in order to create a filmed version worth watching but also recorded live, the complicated filmed version of “Memphis” was captured on five high-definition cameras and with 96 tracks of audio input. In other words, the production would not be cheap. (And this is not to mention potential negotiations with the cast, crew and the show’s various rights holders.)
Considering the complexity involved, it is unsurprising that relatively few Broadway shows are recorded for commercial release. Unless you are a student or theater professional who can visit the New York Public Library’s Theatre on Film and Tape Archive, opportunities to view Broadway shows other than from a seat in a Broadway theater remain rare.
The fact that Broadway Worldwide was doing something that few other people tried, however, likely contributed to the company’s subsequent problems with the state tax credit. The statute defines “qualified production costs,” which determine the size of the credit, to include technical and crew production costs, but not – crucially – intellectual property rights and wages for “writers, directors, including music directors, producers and performers.” This meant that determining what a particular payment was for became critical in applying for the credit.
This May, Broadway Worldwide lost an appeal in which the company argued that five contracts related to the production of “Memphis” should have qualified for the tax credit. The state had disallowed the contracts because the production company failed to establish the amounts paid to the designers that were for their services (that is, qualified expenses) rather than their creative ideas (that is, their intellectual property). Instead of separating the two, the contacts lumped them together, rendering the entire payment unqualified in the state’s view. The appellate court agreed with the administrative judge at the 2013 hearing who determined that Broadway Worldwide was unable to prove that the payments to these individuals constituted qualified expenses under the law.
The case is a reminder that contract drafting and accounting, which are surely among the least glamorous parts of show business, can also be some of the most important. Had the contracts spelled out exactly how much was being paid for qualified production and post-production services, rather than combining those activities with intellectual property rights that were not eligible for credits, the producers might well have been entitled to claim a larger reimbursement from Albany. And had that accounting accurately reflected exactly what work was performed inside the state, the filmmakers would have had a better chance of getting more of what they claimed.
If Broadway shows were routinely filmed the way “Memphis” was, perhaps drawing up contracts for those involved would be routine as well. Instead, the production company ended up with a smaller credit than it probably expected, largely because it didn’t create a sufficient paper trail to support its claims.
I am not criticizing the state here. The stage and motion picture industries are for-profit endeavors (even if they do not always achieve that goal), and using taxpayer money to subsidize any industry is a sensitive matter, to say the least. If the justification for those credits is to create incentives for spending and job creation in a state, the state has little choice but to try to verify that the spending and job creation actually happened.
“Memphis” was a great show and a fine film. While I don’t specifically recall, I probably stuck around to watch the end credits, as is my habit. It is too bad the producers ended up a little short of the credits they expected to get.
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