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To Invest in Your Child's Theater Dreams, First Invest in the Theater – New York Times

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Wealth Matters
By LIZ MOYER

Dean Roth, the owner and president of a New Jersey company that makes parts for the tool-and-die industry, admits he has utterly failed to talk his teenage daughter out of pursuing a career in musical theater.

Instead of watching helplessly as she bounded down an uncertain career path, he became a Broadway investor to get an inside track: He said his initial $1,000 outlay, in the 2011 revival of “Godspell,” was “tuition for me to find out what the business was like.”

Since then, he has invested in 22 other shows, with six returning profits so far. And he and his daughter, Kim, now a musical theater student at Syracuse University, have come to an understanding about where to draw the line between meddling parent and struggling artist.

Like so many parents juggling feelings of pride and concern as their children step into adulthood, Mr. Roth said he wanted his daughter to understand the risks — as well as the rewards — associated with a career in the arts, and the only way he could see doing that was for both of them to get closer to the business.

“I wanted her to go into this with open eyes and know what she was getting into,” Mr. Roth said.

As with practically everything in New York, especially the insular world of Broadway, connections mean everything. Being a child of an investor in a show doesn’t secure a part or even an audition, but it can create opportunities that open doors.

“Getting to know a director and having the opportunity to observe a rehearsal or a script reading to get a deeper understanding of the business, that is a definite advantage,” said Pippin Parker, a playwright and the dean of the drama school at the New School in New York City.

Ken Davenport, a Broadway producer and blogger who raises money for shows and has worked with Mr. Roth and other investors, said he has seen more parents invest in shows to encourage a passion they share with one of their children or to bolster the child’s career prospects.

“The parents don’t have the friends or relationships, so they do it the old-fashioned way by writing a check,” he said. “All that check does is get you in the door. It’s up to the kids to prove themselves.”

Of course there’s no substitute for talent, Mr. Parker and others said.

“Investing is a wonderful and glorious activity, but unless you know what you are doing as an investor, the best you can hope for is a glass of Champagne with Bette Midler,” said Peter Cooke, the head of the drama school at Carnegie Mellon University, which sends many graduates on to Broadway careers.

The only career path he can see, he said, “is being well trained.”

There are different ways productions raise money, but for many shows, affluent individuals play a key role. Typically, these are people with at least $1 million of investable assets — what the finance industry calls an accredited investor, who is presumably able to swallow the considerable risks associated with this type of investing.

Producers raise the money by putting together pools of investors, who tend to give an average of $25,000 to finance a production in a Broadway theater. Sometimes there are different investing tiers, and those who give more can get perks like having their names printed above the show’s title on posters and Playbills, or getting an invitation to a dress rehearsal.

The investor pools are usually organized as a limited partnership, like a private equity investment fund. Very often these investors are people who know the show’s insiders, including the actors, writers, directors and others bringing it to the stage.

Tim Speiss, a former board chairman of the Abingdon Theatre Company, a Broadway production group, said he once auctioned an item for a production in which the winning bidder could get his or her child a small speaking part in one performance. “There are some very clever ways to raise money,” said Mr. Speiss, who is a wealth adviser at EisnerAmper, an accounting and advisory firm based in New York.

Once a show gets up and running, the investors might get their money back, proportionate to what they put in, plus any profit after the show’s expenses are covered.

Many shows are money losers: Just one in five will end up being profitable, and even fewer are runaway successes. But Mr. Davenport points out that those odds aren’t much different than those of any other alternative investment in which a high-net-worth investor might dabble. As far as privately held start-ups — a favorite of private equity investors — some 50 percent of new companies fail after the first four years, according to labor statistics.

Linda Huber, an executive at a financial services company in New York, began investing in Broadway a few years ago when her daughter, now a high school senior, showed an interest. Her daughter, Claudia Lopez-Balboa, gives her advice on which shows to bankroll. So far she has invested in four, including “On Your Feet,” a musical about the lives of Gloria and Emilio Estefan, a story that resonated with her daughter’s part-Cuban heritage.

“For art that’s worth making, it’s the responsible thing to support these endeavors — it’s a thing to do together,” Ms. Huber said.

Her daughter is about to graduate from St. Paul’s School, a New Hampshire boarding school, and plans to go to the University of Michigan in the fall to major in finance and minor in arts management.

Ms. Lopez-Balboa said that Broadway had captured her imagination since she saw the show, “Bring It On,” as a middle-school student — she recalled skipping all the way home afterward.

“I wanted to produce a show that would make you leap in the air,” she said.

She reached out to Daryl Roth, a 10-time Tony-winning producer (and no relation to Mr. Roth, the tool-and-die executive) to seek out an informational meeting about the business.

Ms. Roth recalled that initial meeting and said she was impressed by Ms. Lopez-Balboa’s energy and interest — enough to hire her as an intern for two summers.

Ms. Roth, the lead producer of the show “Kinky Boots,” said she understood where Ms. Lopez-Balboa was coming from because her son Jordan had also dived into the theater world. “I wanted to help Claudia learn and be excited about working in theater,” Ms. Roth said.

For Dean Roth, the industrial company executive from New Jersey, the first $1,000 investment got him and his daughter invited to a cocktail party at Sardi’s, where they mingled with other investors and met the show’s director, Danny Goldstein.

Some of those contacts advised Kim Roth on whether she should pick college or an acting conservatory (she chose college), gave her tips for getting started in the business, and helped answer other novice-level questions.

Ms. Roth, who interned for Ken Davenport one summer, has one year of study left at Syracuse before setting out for what she hopes will be a career as an actress, singer and dancer on Broadway.

“Living so close to the city just getting to make those networking connections is definitely helpful,” Ms. Roth said. “Knowing someone doesn’t necessarily help, but it doesn’t hurt.”