The CTI Blog returns to arm you with the vocabulary terms you’ll need to understand as an aspiring producer. This week, we feature “Deductions from Gross.”
Deductions from Gross
Each week that a show performs, the box office treasurer, the theater manager, and the company manager reconcile gross income and the deductions from gross income for that week. Deductions are for specific items that the theater incurs on behalf of the show. The show also has its own expenses that it pays directly, such as salaries of actors and crew, royalties, and marketing costs.
Gross income before deductions is generally referred to as “gross gross.” Income after taking into account deductions is called “net gross.” When compensation is based on a percentage of gross income, such as the theater’s percentage rent or compensation to a star or to a royalty holder, net gross is used rather than gross gross.
The deductions include four categories:
- A contribution to the pension plans of several unions. The contribution amounts to 4.5% of gross gross for musicals and slightly less for plays. It is split between the unions that enjoy this benefit based on a long-standing formula.
- Credit card commissions. This is a charge to cover the fees of credit card companies when ticket buyers use credit cards.
- Group sales commissions paid to licensed group sales agents who work with group buyers. These transactions are often more complex than the purchase of individual seats and group agents work with the treasurer of the theater to manage each purchase. The commission is 10% of each sale.
- Commissions to third party sellers. These are ticket vendors like Broadway.com, TodayTix, Goldstar, Groupon and others. Each vendor has their own commission structure.
- A ticketing fee paid to the theater. This is a charge that the producer agrees to in the license agreement with the theater and covers the cost of printing tickets.