BLUE FOX FINANCING THEATER TAX CREDIT PROGRAM HELPS BROADWAY

New York’s tax credit program, offering up to $3 million for new Broadway productions, aims to support the struggling theater industry. However, as Marc Hershberg highlights in his Forbes article, the significant delays in disbursement—ranging from 18 to 24 months—pose financial challenges for producers and investors. These delays often result in financial purgatory where productions appear profitable on paper but lack actual funds.

The Challenges of Tax Credit Disbursement

The program’s delay has forced many productions to file amended tax returns to access their credits, adding complexity and costs. For those operating under corporate subsidiaries, federal corporation tax payments further complicate the process, delaying the monetization of tax credits and causing confusion among investors who are left asking, “Where is the cash?”

Innovative Solutions: Loans Against Tax Credits

To address these delays, Runyonland Productions has partnered with Blue Fox Financing to offer loans against theater tax credits, similar to practices in film financing. As Blue Fox’s founder, Patrick Rizzotti, explains, these loans enable investors to recoup a significant portion of their investments more quickly, benefiting the entire theatrical ecosystem.

Cost-Benefit Analysis of Tax Credit Financing

Loans against theater tax credits come with finance fees, which vary based on the risk involved. However, securing a loan can be strategic. For instance, if a show has returned 90% of its initial costs and expects an additional 30% from tax credits, taking a loan could provide immediate liquidity, which is crucial in a rising interest rate environment.

A New Financial Model for Broadway

Thomas Laub of Runyonland Productions believes this model will become a template for Broadway financing. As the industry moves into the awards season, there is optimism that many deals will convert tax credits into immediate funds for investors, demonstrating the potential of this innovative approach.

Conclusion

The partnership between Runyonland Productions and Blue Fox Financing marks a significant shift in Broadway production financing. By providing a mechanism to expedite returns, this model not only addresses immediate financial needs but also strengthens the industry’s economic foundation. As Hershberg’s article illustrates, this approach could serve as a blueprint for similar financial solutions in the theatrical and broader entertainment industries.