Early in that year, while meeting for lunch at the Holland House, six distinguished theatrical managers and booking agents lamented the state of the theater business in America. Problems included run-down and unsafe venues, disorganized booking processes, weak box office receipts, and irregular production financing. The theater men—Charles Frohman, Al Hayman, A. L. Erlanger, Marc Klaw, Samuel Nirdlinger, and Frederick Zimmerman—determined over lunch to form the “Theatrical Syndicate.”

In those days, chaos prevailed in almost every aspect of the theater business. Traveling companies required a centralized booking system, which did not exit. Company and theater managers both often double-booked in order to ensure at least one show on a particular date. Actors could not guarantee they’d be paid. Working conditions were poor. The object of the Syndicate then was to control the booking business. Rather than their taking direct ownership of all theaters, the Syndicate aimed to monopolize key touring routes between major cities—for unless productions could play stops between large cities, touring was financially impossible. The Syndicate played tough with its opponents in business; at the same time, the Syndicate brought organization and prosperity to the theater.

The Theatrical Syndicate ended in 1916, but in two decades while it held sway, the American theater business went from being a fragmented, often foolhardy undertaking to become a professionalized, commercial industry. All aspects of the business became oriented toward improving box office revenue: Plays were chosen based on their popularity with the public; producers became attuned to what audiences wanted to see; theaters were spruced up and made safer; and the making of stars became big business.

Many have heard that the term “angel investor” originated in those days of the Theatrical Syndicate, which is probably true. Wealthy individuals saw the opportunity to make outsized returns by investing in an industry that quickly was becoming standardized—more efficient and profit-oriented. Still, investing in shows was a high-risk affair. “Angels” may have been perceived as lovers of the stage who could “rescue” a failing production with a delivery of cash, but the most successful angel investors were never foolish with their money. “Rescuing” an unprofitable production was not what they were about; rather, savvy angels (then, as now) put their money on only the opportunities with a real chance at becoming “hits.”

This industry is not new and hard-won lessons are forgotten. But, it need not be that way! Learn the hard lessons the easy way. For more information, please read the attached eBook, Investing 101.

This is published under the Appalachian Regional Commission POWER Grant, PW-1835-M

Copyright Appalachian Investors Alliance, Inc. 2018
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