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Investing In Theatre

Read Moneyweek on Investing In Theatre or listen to a podcast on the same subject.

This is not an invitation to invest. We cannot publish an invitation to invest on the web due to FSA regulation. This page is for information purposes only. For an invitation to invest you need to contact us and be a suitably qualified investor.

Investing in theatrical productions and musicals can be hazardous and investors may not get back the amount they have invested. However, there is also the potential for significant gain.

The capitalisation will be £2,500,000, including contingency. Investments will be in units of £10,000, with half units also available. Investors will not have a liability for anything in excess of their initial contributions. Investment is non-transferable: once units are purchased their value cannot be realised other than through returns from the production. That return comes from box office income over and above the costs of the production. Costs come in three forms: production costs, running costs and closing costs.

Based on a capitalisation of £2,500,000:

o £10,000 of investment receives 0.24% of the Production net profits

o £20,000 of investment receives 0.48% of the Production net profits

o £50,00 of investment receives 1.2% of the Production net profits

o £100,000 of investment receives 2.4% of the Production net profits

o £250,000 of investment receives 6% of the Production net profits

o £2,500,000 receives 60% of the Production net profits.

Profits do not come from box office receipts alone. There are potential, major, subsequent sources of revenue. For example:

o Subsequent stage productions (tours, repertory, amateur, foreign and – especially, in this case – schools)

o Film and TV rights

o Performing rights on the music

o Commercial exploitation (e.g. CDs, DVDs, t-shirts etc).

The same share of profit applies here too, ie investors will take 60% of any future earnings Vackies Ltd make on the show.

These subsequent sources of revenue could be anything or nothing and are impossible to responsibly estimate. The story is that Gone With The Wind earned more from DVD sales than it did box office receipts, when DVD technology had not even been conceived when the film was made. At the other extreme, it is possible, though unlikely, to have zero subsequent revenue from the show.

Your investment will be fully ring-fenced, utterly protected, until a West-End production is confirmed and we actually spend your money. Should we be unable to launch a production, your money will be returned in full plus interest. Please see the investors’ contract for full details. Should we consider an out-of-town production or an arrangement with another producer to be our best way forward, you will have the option of staying in or having your investment refunded.

50% of the seed money has come from the Vackies Ltd team.

TAXATION:

The following information on the taxation of income from theatrical investments is based on an Inland Revenue press release and extra statutory concession published on 8th February 1996. The salient points of the treatment are as follows:

o Profits arising to backers of theatrical productions will be taxed under Schedule D Case III. By concession, losses arising on any theatrical production can be offset against profits from other shows or can be carried forward to set against income from future productions.

o An Investor can opt for losses to be treated as capital and offset against capital gains if they so prefer.

o In certain circumstances investors who have a trade or profession within the theatre may, depending upon the facts, have their income from a show treated as being part of the earnings of that trade or profession.

o This does not apply to individuals who are non-UK residents.

The above is only a brief outline of the current tax position and investors are advised to consult their professional advisors on how this may affect their taxation affairs.

For more information, download our brochure