Top Five Legal Issues When Producing a NYC Theatrical Performance

The production of plays and musicals involves a myriad of complex legal rights and obligations, ranging from copyrights to casting...

Once you have the idea for your next great show, it can be tempting to charge full speed ahead. However, the production of plays and musicals involves a myriad of complex legal rights and obligations, ranging from copyrights to casting. Failing to address these issues at the outset can spell doom for what would otherwise be a wildly successful production.  

Selecting the Proper Entity

When mounting a full-scale production, it is advisable to establish a separate entity to finance and produce the production. The primary reason to create a separate entity is to shield your assets from liability.

A production entity can take a variety of forms, including a corporation, limited partnership, general partnership, or a limited liability company (LLC). While each has its own advantages and disadvantages, LLCs are the most common choice because they shield producers from liability, but are still relatively easy to operate. LLCs also offer flexibility with respect to voting rights, taxation, and allocation of profits/losses.

Once you select the proper entity, you will also need to draft and execute the required legal documents, such as an operating agreement. Important issues to be addressed include the roles of the producers, capital contributions, voting rights, management responsibilities, and the obligations/rights of investors.

Obtaining All Required Legal Rights

Nearly all theatrical productions must obtain rights from third parties. For instance, a license from the author of a literary work is required if you seek to adapt it into a theatrical production. Similarly, if you want include a third party’s music, lyrics, choreography, set design, or logo into your play or musical, you will first need to obtain permission and agree to pay a royalty, flat fee, or both.

The type of license required is generally determined by how you plan to use the pre-existing work. For instance, a grand performing rights license is generally required for performances of a musical composition in a dramatic setting, such as a stage play or musical, where the compensation is part of the story, plot, or theme of the performance. Meanwhile, the use of a brand’s logo will require a trademark license. In either case, failing to obtain the necessary rights can lead to significant liability for infringement.

Securing Investors

Unless you are able to self-fund your production, you will need investors. Theatrical financing can come from a variety of sources, including angel investors, theater owners, road producers, agents, and others.

While theatrical financing can be structured in many different ways, the most common include joint ventures and syndication. In a joint venture, a group of individuals, generally co-producers or other industry professionals, agree to finance and manage the production together. In theatrical syndication financing, investors pool their investment funds for the chief purpose of participating in a theatrical production. In exchange for their investment, investors receive shares or units in the show.

Because the sale of shares in a commercial theater production entity constitutes the sale of securities, producers must also contend with state and federal securities laws. New York has specific securities regulations governing theatrical syndication financing, which (if applicable) require that offerings be pre-filed with the New York Department of Law. Registration with the Securities and Exchange Commission (SEC) may also be required if the offering does not qualify for one of several exemptions available under federal securities law.

Executing Enforceable Contracts

Producing a theatrical performance involves a significant number of legal agreements. For instance, others involved in the production of the show may seek co-production agreements. After selecting your general manager, director, costume designer, set designer, and other personnel, you will also need to negotiate and execute agreements with them as well. Other key agreements include theatrical venue agreements, talent agreements, vendor agreements, and touring agreements.

Protecting Your IP

Theatrical productions have their own intellectual property (IP) that warrants protection. Under U.S. copyright law, copyright protection for original works is automatic upon fixation. Nonetheless, copyright registration has several significant advantages. Registration establishes a claim to copyright with the U.S. Copyright Office and is a prerequisite to bringing an infringement suit in court. Registration also establishes prima facie evidence of the validity of the copyright and allows copyright owners to obtain statutory damages, attorneys’ fees, and costs.

How We Can Help

Whether you are producing a small workshop or a full Broadway show, the attorneys of Scarinci Hollenbeck’s Entertainment & Media Group are ready to assist. We understand the myriad of legal issues that can arise when producing theatrical performances and will work with you every step of the way to minimize risks and position your project for success.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Brian Spector, at 201-896-4100.