Jeff Chelesvig may have had a little trouble deciding how to cast his votes on this year’s Tony Awards ballot.

Chelesvig, president and CEO of Des Moines Performing Arts and Iowa’s only Tony Awards voter, has understandable and competing interests. His organization has invested in four of the musicals nominated for various awards, and the shows are competing against each other.

2016 is a banner year for Chelesvig and DMPA’s 15-year history of investing in Broadway shows — a financially risky venture that nevertheless has paid off for the venue in different several ways, including getting first crack at many shows when they go on tour, said Chelesvig.

This year, the nominated shows Des Moines Performing Arts has invested in are:

• “On Your Feet! The Story of Emilio & Gloria Estefan”
• “Shuffle Along, or the Making of the Musical Sensation of 1921 and All That Followed”
• “The Color Purple”
• “Waitress”

Those four shows garnered 19 nominations, including those for Best Musical, Best Book, Best Score and Best Actress in a Musical. And then there’s “Hamilton,” the hottest ticket on Broadway for nearly a year. DMPA didn’t invest, but it’s coming to Des Moines in 2017, and it scored a record 16 nominations.

To celebrate, Des Moines Performing Arts is sponsoring a free public party on Cowles Commons on the evening of June 12 to watch the Tony Awards, complete with food and drink for sale. 

If you see Chelesvig there, we’re not sure he’ll tell you for whom he voted, but he was willing to talk to the Business Record recently about how Des Moines got into the business of investing in Broadway shows. 

“Investing in a Broadway show is not a slam-dunk to making money,” Chelesvig told us. “It’s a very risky investment. Most shows do not recoup their initial investment.”

How they got started

The first show DMPA and IPN invested in was “Thoroughly Modern Millie” in 2001, but the history goes back to the mid-1990s, when a group of theaters across the country came together and eventually formed the Independent Presenters Network. In this case, “presenter” refers to venues that present Broadway shows. 

Broadway Across America, the largest such theater group, had existed for about 30 years, but many smaller and other independent venues were not members. BAA, which represented 35 to 40 markets, had a “very sound business strategy” to invest in Broadway shows; in return, when the shows went on tour, they would play many of those markets, said Chelesvig.

“In the mid-’90s, all of us who were not affiliated with Broadway Across America said, ‘Gee, could we do the same thing?’ ” he said. So those markets formed IPN, and in 1999 Fox Theater, a privately owned venue in St. Louis that was trying to stage “Thoroughly Modern Millie” as a musical approached IPN to invest. The group raised a total of a million dollars — $25,000 from each of its 40 members.

If that sounds like a lot of money, consider this:

Chelesvig says to stage a weeklong run of a Broadway show in Des Moines usually costs more than half a million dollars. “To break even, we have to do north of $600,000 in ticket sales,” he said.

“Millie” eventually toured many IPN venues, including Des Moines.

Very early on, the Des Moines Performing Arts board was on board with the idea of investing in Broadway plays.

“This was really thinking outside the box when we started,” said Chelesvig, who was worried that some supporters would think it frivolous.

But “the board was really eager to do this. They got it.” he said. “Business people understand investing in research and development, and that’s what I call this. I call it our R&D.” 

How it’s done

Des Moines isn’t by any means the largest venue in IPN (members include performance centers in Los Angeles, Seattle, Chicago, Cleveland, Dallas, Denver, Houston and Philadelphia). In fact, IPN members include eight of the 10 largest markets in the country. Still, Chelesvig has been a leader in the group’s effort to invest in Broadway shows.

He’s been on the investment committee of IPN for the past 10 years, a job he describes as “kind of heavy lifting.”

Separately, he’s also on the executive committee of the Broadway League, an organization of 700-plus members including theater owners and operators, producers, presenters, and general managers in North American cities that is dedicated to fostering increased interest in Broadway theater and supporting the creation of profitable theatrical productions.

What that means is that Chelesvig travels to New York City one to three times a month. 

Broadway fans would definitely find what Chelesvig does there fascinating, even glamorous in a behind-the-theater-scenes way, but he says he’s so busy meeting with people that “I don’t ever seem to have any time to go shopping or go to museums.”

“We really focus on working with producers with whom we have a relationship,” he said. “Typically we are not investing with rookie producers; we’re investing in people with a track record.”

For example, Chelesvig and IPN have an extended relationship with Barry and Fran Weissler — Broadway producers with more than 25 Tony award nominations over the past 30-plus years. Think: “Pippin,” “Chicago,” “La Cage aux Folles.”

“Ninety-nine percent of it is about the people. It’s about working with people who have a good track record. Great producers are going to find great creative people,” he said.

His connection with the Weisslers led to IPN’s investment in “Waitress” a Tony-nominated musical starring Jessie Mueller, the actress who won a 2014 Tony playing Carole King in “Beautiful,” and featuring music by Sara Bareilles, a singer-songwriter with a platinum record, “Little Voice,” and song, “Love Song.”  

Chelesvig was invited to the first reading of “Waitress” with writers reading from scripts, sitting in chairs and then to a staged reading for which the cast rehearsed for three to four days.

“We typically do not get that involved,” he said. But “we felt really good about the creative team and the actors.”

Calculating ROI

IPN invests between $250,000 and $1 million a show — an investment shared by its members.

“Waitress” is a success story, but Chelesvig said that’s not always the case. In fact, in terms of cash return, DMPA has invested about a million dollars over the years and gotten back $750,000. 

The board created a fund for the investments, and Chelesvig has the authority to invest up to $50,000 per show. Profits from previous shows go back into the fund, he said. 

“It is not as easy as it looks sometimes,” said Chelesvig.

As DMPA board member Jim Krambeck told Chelesvig: “This is the dues to play with the big boys.”

Chelesvig can tick off some of the worst losses: “Ragtime” in 2009 lost money. “Leap of Faith,” a 2012 musical based on the 1992 movie of the same name starring Steve Martin as a con man posing as a main of faith, tanked sensationally. And the Sting musical “The Last Ship” closed early in 2015, after a run of only a few months.

On the other hand, “Kinky Boots,” which toured Des Moines in 2015, was enormously profitable. So was “Spamalot,” in Des Moines in 2007, and “The Color Purple,” in which DMPA invested heavily 10 years ago and which came to in Des Moines in 2009. The revival version of Purple on Broadway this year has been nominated for several Tonys. 

The benefit to Des Moines Performing Arts isn’t just the cash return on the shows it invests in, said Chelesvig.

“For all of us (venue managers), we’re really reliant on New York to be healthy and to have quality shows available to us,” he said.

Investing in shows stokes the pipeline of quality and successful Broadway touring shows. It also give IPN members a better chance to get those popular shows when they first go on tour across the country.

An investment doesn’t guarantee DMPA will get the show when it begins its tour, said Chelesvig, but it certainly helps. And it doesn’t mean the venue will get the show for less money than others — the tour is priced the same for every venue. 

But getting the rights to the show or getting it earlier in the tour is very common for investor venues, said Chelesvig. “The relationship we have with the producers is very different when you’re an investor than when you’re a buyer.”

For Des Moines, the better and more current the touring Broadway shows, the more attractive the Willis Broadway Series is to season ticketholders. And that is Chelesvig’s strategy to profitability. 

“For us, it’s all about season ticket buyers,” he said, noting that 12,000 to 14,000 season tickets will allow DMPA to break even without selling any single tickets.

Last year, 11,500 people bought season tickets for the Willis Broadway Series. So far this year, 11,000 tickets have been sold so far.