🔒Theater execs hope new tax credit will lure more pre- and post-Broadway productions to CT

Can Connecticut theaters become a destination for pre- and post-Broadway productions?

That’s what local theater executives are hoping as they begin to market a new tax credit that aims to make their venues more attractive to traveling production companies.

The recently passed two-year, $51.1 billion state budget includes a new tax credit for theater production companies that hold their technical rehearsals at a qualified Connecticut theater.

Such rehearsals, also known as “teching,” are an extensive process where a show sets up residence at a theater, typically for a few weeks or longer, to run through all aspects of a production — from lighting and sound, to stage directions and costumes — before officially launching a tour.

In recent years, Connecticut’s major theaters have lost out on that business to neighboring states like New York and Rhode Island that offer incentives and tax credits.

Connecticut’s new credit, which takes effect in 2024, is open to companies that create pre- and post-Broadway and live theatrical tours. They must station their rehearsals at a Connecticut theater with at least 1,000 seats.

The credit is capped at $2.5 million annually and equals 30% of a production’s eligible expenditures, which include spending on stage design, lighting, costumes, transportation, hotels, food and up to $250,000 of weekly payroll.

The state’s six largest performance houses — the Shubert Theatre (New Haven); The Bushnell (Hartford); The Palace Stamford; Palace Theater (Waterbury); Warner Theater (Torrington); and Garde Theater (New London) — formed the Connecticut Performing Arts Centers Coalition a few years ago, in part, to lobby for the tax credit.

Teching provides an economic boost to theaters, which are still recovering from the pandemic, and their host communities, said Anthony McDonald, executive director of the Shubert Theatre.

When tech rehearsals occur, touring companies pay rent, utilities, stagehands and cleaning costs to theaters, and also have dozens of employees staying in local hotels, eating at restaurants and visiting merchants and other tourist attractions — sometimes up to five weeks at a time, McDonald said.

“And so, … the ecosystem grows, … our restaurants and hotels are benefiting from seeing this kind of influx,” he said.

Over the past decade or more, the Shubert has hosted numerous rehearsals for shows like “Matilda,” “Jersey Boys,” and “Dream Girls.” But as other states, including New York and Rhode Island, began offering tax credits to production companies, Connecticut theaters began losing out on that potential revenue stream, McDonald said.

“It became harder for us to attract those kinds of opportunities, because we didn’t have as many incentives to be able to offer the shows that wanted to come here,” McDonald said. “This was an opportunity for us, and if we could get this legislation passed, it would have a really big impact on our community, but also on the financial picture for the Shubert.”

Calculating costs

McDonald said he expects theater production companies to quickly meet the $2.5 million tax credit threshold. He actually lobbied for a higher $10 million cap, but lawmakers were unwilling to go that far.

The Shubert last March hosted tech productions of “Six the Musical.” It was a 20-day rehearsal, and in the first week alone, 77 Shubert stagehands accrued 2,286 hours of work that yielded roughly $140,000 in wages paid by the show producer, McDonald said.

Under the new law, production companies would apply to the state, through the Department of Economic and Community Development, for the tax credit to offset some of those costs.

Connecticut theaters were always attractive to production companies because of their proximity to New York City, but this credit boosts their appeal, said Michael E. Moran Jr., president and CEO of The Palace in Stamford.

“If producers know that they can get a 30% tax credit for their rooms and their meals and other ancillaries that they buy here in the state of Connecticut, it could be more attractive than going somewhere else,” Moran said.

John Lanza, a partner at accounting and consulting firm CohnReznick, said he thinks the new tax credit will help lure more productions to Connecticut, which also has a strong theater talent pool.

“You’ll see someone apply for this incentive almost immediately,” said Lanza, who leads CohnReznick’s business tax credits and incentives group.

But he also acknowledged it’s a small program, at least to start, given the $2.5 million cap, which will limit its overall economic impact.

State policymakers will have to look at the tax credit’s impact about a year after it goes into effect, Lanza said, to determine the return on investment, which is typically measured by direct spend as well as any multiplier effects, like increased activity at local restaurants and hotels.

Shining the spotlight

Theater executives work in close-knit circles, often doing much of their own promotions and bookings with the same agents, and many venue directors have already started spreading the word about Connecticut’s new tax credit.

“We’ve started those one-on-one conversations with booking agents,” said Frank Tavera, CEO of Waterbury’s Palace Theater.

Agents, in turn, inform show producers that Connecticut theaters now have this incentive.

Production companies then work with venue directors to analyze theater size, availability and costs for things like rent, utilities and unionized stagehands, before deciding where to hold their rehearsals.

Theater directors said the new tax credit should especially benefit venues in New Haven and Stamford, because they’re closer to New York City and the Broadway theater district than Rhode Island. Costs for lodging, food and entertainment are also lower in Connecticut than in New York.

Moran said he will spread the word about Connecticut’s tax credit when he attends upcoming conferences in New York City and Nashville, Tennessee.

He also will depend on the relatively small theater world, where word-of-mouth is an effective tool.

“It’s a pretty tight-knit business, so once the news gets out, it kind of spreads quickly,” Moran said.