Hamilton adored by scalpers too with $12.5-million windfall

THE BROADWAY HIT Hamilton is making millions. It could be making millions more if not for scalpers snapping up seats and hawking them for $2,000 a piece or more.

At least $30,000 from every show goes to ticket resellers instead of the musical’s investors, producers and cast, according to Matt Rousu, an economics professor at Susquehanna University. With eight shows a week, that comes out to $240,000 every seven days, or almost $12.5 million a year filling the pockets of brokers, he said.

It’s become such a problem that the show’s producers are considering almost doubling premium-priced Hamilton tickets to $995 to keep more of the profit for themselves, according to the New York Post. The move is one of several experiments playing out in the ongoing cat-and-mouse game on Broadway between show producers and brokers.

The producers “are having discussion after discussion about what they should do about this,” said Mitch Weiss, a Broadway manager and author of the book The Business of Broadway. “They don’t want to charge people that much to see a show. But if someone is going to make money, it ought to be the people who work on it.”

16 TONY NOMINATIONS
Broadway ticket brokers aren’t new, but they are cashing in on Hamilton like never before as its popularity reaches a fever pitch. The show, a hip-hop musical about the first US Treasury secretary, drew a record 16 Tony Award nominations Tuesday, including for Best Musical. Its creator, Lin-Manuel Miranda, won the Pulitzer Prize for Drama last month.

Demand is so high that the production in a tweet said more than 50,000 people tried to enter a lottery for $10 tickets in January and crashed the Web site. Tickets are now sold out through January 2017, according to Ticketmaster’s Web site.

Brokers buy tickets to live events in bulk using illegal software called “ticket bots,” according to a report in January by the New York Attorney General’s office. Ticketmaster, which has a deal with some Broadway theater owners, tries to thwart bots by requiring buyers to type characters into a box to prove that they’re human.

Yet sophisticated brokers get around this by employing armies of “typers” — or human workers in foreign countries where labor is cheap — to type the security phrases into the boxes in real time, the report found. Each year “tens of thousands” of tickets to live events like concerts are bought by ticket bots, crowding out human buyers and causing prices for good seats to soar, according to the report.

‘FIXED GAME’
“Ticketing, to put it bluntly, is a fixed game,” the Attorney General’s office said in the report.

Catherine Martin, a spokeswoman for Ticketmaster, said in a statement that the company uses “best-in-class bot-blocking technology.” Ticketmaster “welcomes additional efforts to help ensure tickets get into the hands of fans,” she said.

The producers of Hamilton declined to comment for this story. Jeffrey Seller, the lead producer, told the New York Times last month that a broker armed with a “bot” purchased 20,000 tickets to the show. Even when the brokers get caught, “they figure out a new way to hack the system. It’s frustrating, and it’s infuriating,” Seller said.

To be sure, many people involved in Hamilton are doing quite well. The show has made almost $67 million in revenue since it began in July, according to BroadwayWorld.com. It nets $500,000 in profit each week, according to the Times. Last month, the producers agreed to share some of the show’s profits with the original cast members.

ACTORS’ STAKE
Yet brokers are siphoning off some proceeds by taking advantage of the high demand and tight supply for tickets in the 1,300-seat Richard Rodgers Theatre, said Ronald Shechtman, a lawyer who represented Hamilton performers in the profit-sharing deal.

“Now that the actors have a stake in the profits, they are affected by this part of the market,” Shechtman said. “That’s money that’s not going to investors or the artists.”

Meanwhile, stage hands and musicians who don’t share in the gains typically get a minimum gross salary of $1,907 a week, said Weiss, the Broadway manager and author.

“The poor manager of the show who is working 12 to 14 hours a day because there’s so much business going on makes a flat salary,” Weiss said. “They don’t get any more.”

Some producers are trying to recover lost profits by adjusting ticket prices or capturing a slice of the secondary market. Broadway theaters are experimenting with variable ticket prices based on demand, similar to how the airline industry operates. And in 2014, StubHub, owned by EBay, Inc., struck a deal with the producers of Book of Mormon and the ticket service Telecharge to sell premium seats at face value on StubHub.

“As a marketplace, StubHub does not have the ability to regulate where and how sellers obtain the tickets they sell,” company spokeswoman Jessica Erskine said in an e-mail. “Importantly, a large number of tickets offered by a seller does not indicate in any way where or how tickets were obtained.”

For Hamilton’s producers, raising prices for premium seats may not solve the problem. If the face value goes up, “the brokers will just raise their prices even higher,” Weiss said. The brokers know that there will always be wealthy theater fans willing to pay any price to say they saw a popular show, he said.

“Hamilton is spectacular, but it’s just a show,” Weiss said. “Four thousand dollars for a ticket? Give me a break.” — Bloomberg