‘Spider-Man’ Investors Shaken by Projected $60 Million Loss

Sara Krulwich/The New York Times

“Spider-Man: Turn Off the Dark” suffered from vast expenses and discord.

By PATRICK HEALY

Investors and executives with the Broadway musical “Spider-Man: Turn Off the Dark” said on Tuesday that the show will have historic losses of up to $60 million when it closes on Jan. 4. The closing follows a sharp decline in ticket sales because of competition from hotter musicals and a lack of star attractions in the cast.

Sara Krulwich/The New York Times

T. V. Carpio as Arachne at the Foxwoods Theater in 2011. Three months ago, “Spider-Man” fell below $1 million in weekly grosses and never recovered.

Several investors said they were reeling from the closing announcement, made on Monday night. Three said they have not been paid back anything during the three-year run of “Spider-Man,” which cost twice as much as any other Broadway show, and said they planned to write off their investments. While Broadway flops usually lose $5 million to $15 million, “Spider-Man” will lose far more, given the show’s record-setting $75 million capitalization; the enormous weekly costs of running this special effects-laden production; and its operating losses of hundreds of thousands of dollars a week this fall, as the box office faltered.

The investors said they did not blame mismanagement by the lead producers for the show’s demise, but rather complained about its unsustainable budget and the shortcomings in the music, by Bono and the Edge of U2 — a score by famous artists that was supposed to be a selling point with audiences but ended up being dismissed by critics.

“We will see nothing back, not a cent,” said Terry Allen Kramer, a veteran Broadway producer who put about $1 million into “Spider-Man.” “A lot of us feel that it’s an extraordinary show with lousy music, but the main problem is that the budget numbers were a disaster — just a disaster.”

While “Spider-Man” has grossed a strong $203 million since performances began in November 2010, most of that money has been drained away by two huge expenses. The bigger was the production’s running costs of between $1 million and $1.3 million a week, which sometimes exceeded ticket revenue. And the show was also saddled with payments on multimillion-dollar priority loans from a crucial investor, Norton Herrick, and from the show’s lead producers, Michael Cohl and Jeremiah J. Harris. (Priority loans made by lead producers and others, and repayment schedules that favor them over regular investors, are standard on Broadway shows that need quick capital to deal with cost overruns.)

Mr. Cohl, in an interview on Tuesday, acknowledged that he and Mr. Harris have been paid back portions of their loans, while many investors will lose all their money unless “Spider-Man” proves profitable in future productions. A sleeker version of the show is being planned for Las Vegas in 2015, and a run in Germany is envisioned at some point.

“I think the investors will eventually see something, but look, this is showbiz,” Mr. Cohl said. “I hope the show will be a huge hit in Vegas and Germany and on an arena tour, and then I expect them to see some money back. But it will be a long road and take a long time.” (Mr. Herrick did not respond to a phone message seeking comment.)

With its unparalleled flying sequences and midair fight scenes, “Spider-Man” has always depended on being spectacular, but, in the end, its ticket sales were simply “middling,” in the words of Mr. Harris. The show drew 15,000 people a week in its early months of performances, partly because of spectacularly bad publicity over cast injuries and clashes between the producers and their original director, Julie Taymor. (She declined to comment on Tuesday.) If the show’s quality wasn’t generating buzz among theatergoers (the reviews were terrible), its calamities were — and people came. During the week between Christmas 2011 and New Year’s Day, “Spider-Man” set a record of $2.94 million for a weekly gross on Broadway.

While ticket sales softened noticeably last year during the usually lucrative Thanksgiving week, down 17 percent from the previous year, Mr. Cohl said it wasn’t until two months ago that he knew in his gut that the Broadway run would end. While audience feedback surveys were largely positive, and the show was still drawing a sizable crowd of about 10,000 people a week, “Spider-Man” fell below $1 million in the weekly grosses in late August and never recovered. By the end of September, the musical was heavily discounting tickets and its weekly gross had fallen to $621,960.

Like many producers on struggling shows, Mr. Cohl made attempts through the summer and fall to recruit star names in hopes of reviving ticket sales — in the case of “Spider-Man,” talking to the rock musicians Alice Cooper and Gene Simmons about playing the villainous Green Goblin.

“We got fairly far along with Gene, but there just wasn’t time to get him into the show quickly enough to make a difference,” said Mr. Cohl, who knew both musicians from his years as a rock concert promoter.

“The reality is that there are some new, really good, fun shows out there now, like ‘Kinky Boots’ and ‘Motown,’ and we settled into what we are,” he said.

The show’s investors, as well as other Broadway producers, did not dispute his analysis on Tuesday, though they said that the quality of “Spider-Man” was always a problem in generating word-of-mouth endorsements among theatergoers. While two investors spoke on condition of anonymity because the show’s finances are confidential, Ms. Kramer also echoed them in saying that the scale of the show and its budget made it unsustainable for a long run without blockbuster popularity with audiences.

“I don’t know if it will work in Vegas, either, or if I’d want to be a part of it there,” she said. “I don’t want to be stupid again.”

Once “Spider-Man” clears out of the Foxwoods Theater, months of renovations are expected before the next tenant can move in. One possible candidate is “King Kong,” a $30 million Australian musical featuring a 20-foot-tall puppet as the title character and a technically ambitious production that requires an enormous theater, like the 1,900-seat Foxwoods. But the producers of “King Kong” are also eyeing the 1,750-seat Broadway Theater, a prime house.

Adrian Bryan-Brown, a spokesman for the “King Kong” producers, said on Tuesday that a deal to bring the show to Broadway is expected to be finalized soon but that no timetable has been confirmed.