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Giving Original Cast Members Credit – And Cash

Barack Obama, shot from behind, interacting with the original cast and crew of the Broadway musical 'Hamilton' on the show's set.
Then-President Barack Obama visiting the original cast and crew of "Hamilton" in July 2015.
Photo by Pete Souza, courtesy the White House.

In the second season of NBC comedy “The Good Place,” a character begs for a reprieve from death through a series of desperate and escalating lies, culminating with: “I have tickets to ‘Hamilton’ next week and there’s a rumor Daveed Diggs is coming back!”

Diggs, who won a Tony Award for his dual role as the Marquis de Lafayette and Thomas Jefferson, gained wide enough acclaim for this joke to play to a nationwide network TV audience, which indicates the level of fame he and the other members of the original Broadway cast of “Hamilton” managed to achieve. Yet while “Hamilton” was the rare theatrical event that truly became a cultural phenomenon beyond New York, the contributions of performers like Diggs are crucial for nearly any new play or musical.

Until recently, however, original Broadway cast members often saw no more rewards for a wildly popular show than they did for a moderately popular one.

Most actors in Broadway shows are members of the Actors’ Equity Association, and the union sets a minimum weekly salary for members. On top of that base pay, actors may receive more if the role is particularly demanding, requires “extraordinary risk” – playing a character who swings through the air, for instance – or includes understudying multiple parts. Actors also often receive a higher rate of base pay if they commit to stay with the production for an entire year; this one-year rider usually also involves a lump-sum bonus at the end of the year.

Performers obviously benefit if the show is successful enough to remain open, because when the show closes, they are out of work. But for performers other than major stars, it is relatively rare to get any portion of the show’s profits. When producers bring in a celebrity to boost public interest in a show, they sometimes offer profit participation through “overscale” agreements added to the baseline contract, but this option is seldom offered to regular working actors, even if the actors have been with a show since long before it reached Broadway.

Some performers, especially in musicals, have benefited from a standard royalty arrangement used for workshop productions, in which actors earn a relatively low salary but are due a share of the show’s weekly operating profit and an option to continue in the role if and when the show is mounted as a full production. These rules, negotiated by Actors’ Equity, have been in place since 1974, and many successful shows, including “The Book of Mormon,” have used them to compensate performers who contribute to a show in its earliest days. But the rules do not apply to “developmental labs,” a process similar to a workshop that pays actors more upfront but does not include potential royalties or a right of first refusal on their role in a future production. Labs have become more popular in the past decade or so, leaving actors who participate without an easy way to negotiate a stake in the production they helped create.

A landmark deal recently represented a major step toward changing this status quo. In early January, Actors’ Equity and the Broadway League – the major trade association for Broadway producers and theater owners – reached a standoff in contract negotiations. Actors’ Equity staged its first strike in decades, citing “nearly two years of unsuccessful attempts to negotiate a new contract” governing the development of new productions, especially musicals, in labs.

Part of this push goes back to “Hamilton.” In 2015, 22 members of the show’s original cast wrote a letter to the show’s lead producer making a case for sharing the show’s profits with the cast members who originated soon-to-be iconic roles. None of the cast, with the possible exception of creator and star Lin-Manuel Miranda, were well-known before the show catapulted them to fame, but most of them had been with it since the earliest days of its development. The actors in the early stages of “Hamilton” had worked under a modified lab contract, which granted right of first refusal but not royalty participation. In April 2016, the “Hamilton” producers announced that they had reached an agreement; members of the cast would earn 1 percent of the Broadway show’s net profits, and 0.33 percent of profits from future U.S. productions.

“Hamilton” is an outlier in many ways – it would go on to win 11 Tony Awards, a Grammy Award and a Pulitzer Prize, and it continues to earn profits in productions across the country at a rate most shows could never expect. But the pleas of the “Hamilton” cast represent a long-standing truth that theater is a collaborative art form, whether developed in a workshop, a staged reading or a lab. A new Broadway show includes the artistic vision of not only a writer, composer, choreographer and director, but also the performers who interpret and shape roles for the first time.

After a five-week strike (which did not affect shows that were already running), Actors’ Equity came to an agreement with the Broadway League to update the contract governing developmental labs. Under the new rules, actors who take part in a Broadway show’s early development will split 1 percent of the show’s profits – after the original investment is recouped – for the first 10 years of the run, including money generated by touring productions of the show. The agreement also included an increase to base salary for actors participating in developmental labs.

Many Broadway shows are never profitable, but those that are can play for years, or even decades. These productions benefit from the time, effort and creativity of its original cast members, who shape their roles in unique ways. The new arrangement represents a fairer way to reward those who contributed to a runaway success, and gives actors a more direct stake in their art. That’s a win for audiences and artists alike.

Vice President Eric Meeermann, who is based in our Stamford, Connecticut office, is the author of several chapters in our firm’s recently updated book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 11, "Social Security And Medicare"; Chapter 18, "Philanthropy"; and Chapter 19, "A Second Act: Starting A New Venture." He was also among the authors of the firm’s book The High Achiever’s Guide To Wealth.

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