FAQs

Detailed analysis and justifications for the following are found in the TIF Business Plan.

Questions and Answers here may be used for quick reference and does not constitute a financial offering.

Fundraising

  • TIF is raising $30 million to serve as its financing capital for Broadway shows.

    Year 1 will consist of $5 million of equity investment and $25 million of debt offered to Broadway shows for various kinds of collateral.

    The largest piece of TIF collateral will be the New York Empire State Broadway Tax Rebate, currently supporting up to $300 million in rebates to Broadway shows, and secured by the State of New York.

  • TIF’s operating expenses are paid out of proceeds from equity investments (detailed in the business plan) as well as startup costs ($2.4 million) which are repaid to the TIF investor by the end of Year 2.

  • TIF expects to go public or be sold in Year 5. Projections at Year 5 are understated and do not include multiples.

    At the end of Year 5 - TIF expects $54 million on its $30 million starting capital, having invested in a minimum of 50 shows, and gained access to every show on Broadway as a potential investment and for data analysis. The return is a 14% IRR.

    Though modest, these returns are higher and more stable than a Blue Chip Stock in the same time period, with significant boosts to cultural and industry cachet.

Hybrid Investor-Lender?

  • Broadway has operated exclusively using equity investment since its inception. To enter Broadway, a lender must “speak the language” of Broadway.

    In this case, TIF will enter the Broadway market as an investor or “Co-Producer.” Co-Producers have many ancillary benefits other than equity returns, such as awards consideration, right of refusal to future investments, and other investment opportunities that are not afforded to strictly-lending institutions. Broadway producers are also far more likely to take out loans from their investors than a bank.

    TIF will begin its operations as both an investor and a lender in order to more smoothly enter the market, and will receive many significant benefits to its equity investment due to the scale of its overall financing.

    These benefits include “profit kickers” which are given to Co-Producers out of the Producer’s portion of profits. TIF’s scale of financing will provide outsized profit returns on its equity due to these kickers, as well as the potential to “hit” the potentially mega-hits of shows when one comes along.

    The result is that TIF’s comparatively small equity investment (17% of total portfolio) makes its loan terms more likely to be accepted, pays for G&A and repays startup costs, and provides TIF with the added industry cachet of an award-winning producer, not just a lender.

  • TIF’s equity investment is repaid from ticket sales. TIF may choose to invest a small amount of equity in a show’s initial capitalization but then invest more in future opportunities from the same project, such as tours, cast music recordings, or merchandising. Many of these secondary opportunities have outsized returns compared to a show’s initial capitalization, but are not accessible unless TIF is first an equity investor.

    TIF’s debt is repaid using the collateral from loans. This collateral includes tax rebates, bonds, deposits, future rights or touring rights, and more. TIF’s first goal in securing collateral is that the collateral is unaffected by ticket sales, meaning TIF loans are secure regardless of how a show performs at the box office.

Debt

  • Any Broadway producer may secure private, priority, non-recourse loans as part of their business dealings. The most common way this happens is Producers receive loans from their equity investors (also called Co-Producers) to cover emergencies or to cover unforeseen expenses.

    TIF operates as a Co-Producer in all deals and offers loans to shows, and secures any collateral it needs to ensure TIF’s debt is repaid in a timely, secure fashion.

  • In entertainment debt financing, collateral serves as the primary source of repayment (as opposed to the secondary source in the case of default, like in other industries).

    TIF offers loans to Broadway and secures a diverse array of collateral to protect its principal + interest. Nearly all of these collateral options are independent from ticket sales, meaning TIF is secure regardless of how a show performs at the box office.

  • At the end of each year TIF will sell its outstanding loan portfolio to a bank or other institution, most likely at Prime Rate.

    This sale provides TIF with a replenished source of capital for the next year’s shows.

    TIF will also receive a “leveraged” benefit from the sale of these loans, meaning the interest TIF charges to Broadway will be 3-5% above the going Prime Rate, meaning TIF will be able to deploy $30 million every year, but also receive a portion of the “remainder” interest from loans given out the previous year.