On Broadway, a revolutionary negotiation fans a spark into a flame

In negotiating profit sharing for their creative contributions to the hit musical Hamilton, the show’s original off-Broadway cast set a history-making precedent.

By on / Salary Negotiations

In the summer of 2015, the cast of Hamilton was on top of the world. Their highly anticipated hip-hop musical about the life of Founding Father and U.S. treasury secretary Alexander Hamilton had opened to rave reviews and euphoric audiences at Broadway’s Richard Rodgers Theatre after a stint off-Broadway. A long run, Tony awards, touring companies, and productions in other cities were beginning to seem inevitable.

But as 22 of Hamilton’s original off- Broadway cast members wrote in a letter to the show’s producer just a few weeks after opening night, there was also “low-rumbling and permeating pain” over what they perceived as “this flawless work of art’s only lingering mistake.” That mistake? The cast members had crafted the show alongside Lin-Manuel Miranda, the show’s author, and his creative team during workshops and a long off-Broadway run, yet they were not contractually entitled to a share of the many millions in profits Hamilton was expected to earn.

In recent years, due in part to changes to their union-negotiated contracts, New York actors have grown increasingly dissatisfied with the way they’re financially compensated for helping to develop hit Broadway plays and musicals. The profit-sharing deal reached by the Hamilton cast in 2016 has been at the eye of the hurricane, prompting tense negotiations and, this past January, a strike.

Every experiment sets a precedent

For many decades, Broadway plays have been developed and refined in workshops. Performers, producers, stage managers, and the creative team meet for about a month in a rehearsal room to work on scripts, songs, and dances, reports Michael Paulson in the New York Times. If all goes well, the producers then stage the show for potential investors.

Under the Actors’ Equity union’s standard agreement, New York actors participating in workshops receive about $600 per week plus benefits, a right of first refusal to play their role on Broadway, and a share of 1% of any future royalty pool for 18 years. Actors who were part of the workshop for the hit musical The Book of Mormon, which opened in 2011, earned about $3 million total in profit sharing during the show’s first five years, or about several thousand dollars a month per actor, according to the blog Broadway Journal.

Around 2010, producers began replacing workshops with so-called development labs. Although labs were intended to be shorter and more specialized than workshops (focusing, for example, on choreography alone), today they have largely replaced workshops and are difficult to distinguish from them. The main difference lies in how actors are compensated: Actors earn higher up-front pay for labs—about $1,000 per week—but usually receive no right of first refusal and no royalty guarantee.

Lab contracts give producers more flexibility to shape material by cutting, reducing, or changing roles without having to pay a steep penalty (about $10,000 per actor) for violating a right of first refusal, writes Broadway producer Ken Davenport on his blog, The Producer’s Perspective. And because many workshopped shows don’t make it to Broadway, some actors prefer to be paid more up front than to gamble on profiting from a hit show. (Davenport writes that he is always delighted to share profits from a hit with the developmental cast; other producers say that doing so conflicts with their responsibility to compensate investors.)

Smashing every expectation

When Hamilton was in development, Actors’ Equity negotiated on behalf of its actors for a workshop (rather than lab) contract that would include profit sharing if the show made it to Broadway but couldn’t reach a deal with the show’s producers. The actors accepted a modified lab contract that would give them a right of first refusal but no royalties, according to the Times.

Once Hamilton opened on Broadway and began raking in $500,000 per week, the actors who had been with it from the start began to regret that concession. After all, they argued, they had helped shape the show, especially its second act, yet their salaries constituted a tiny fraction of profits. (The union-mandated minimum pay for Broadway actors is $1,900 per week, though most Hamilton actors likely earned more.) Some cast members approached Jeffrey Seller, the producer, individually to ask for a share of profits, but they were denied.

The challenge: Demand satisfaction

After discussing their shared frustration, 22 of the original 24 off-Broadway cast members signed off on a carefully worded letter to Seller. Referring to themselves as “your family members,” they wrote, “We love you. We love HAMILTON.” They said they “stood together . . . begging you to reconsider our request to share in the success of this magnificent work” based on their “extreme generosity” during Hamilton’s development.

In recent years, due in part to changes to their union-negotiated contracts, New York actors have grown increasingly dissatisfied with the way they’re financially compensated for helping to develop hit Broadway plays and musicals.

Referencing The Book of Mormon’s profit- sharing agreement, they asked for a shared stake in Hamilton’s future gross box-office receipts (starting at 1%) and subsidiary-rights income (about 1.5%), including royalties from other productions and the sale of film rights. Royalty payments, they wrote, wouldn’t make them rich but would allow them to “take care of our bodies and voices in the way that this work demands” and lessen the stress of career transitions as they aged.

Cognizant of the precedent such a deal would set, the cast members called it an investment in “the future of the American Theater” and, in a nod to one of Hamilton’s key themes, told Seller, “That can be your legacy.”

The situation is fraught

The next day, Seller responded by offering to send each of the original cast members a lump-sum check ranging from $29,000 to $36,000, according to Bloomberg News. The checks were intended to make up the difference between the low salaries they’d earned in the extended off- Broadway production and the minimum Broadway wage. The gesture focused on the past, not the future.

“There is NO counter offer that we should accept under ANY circumstances,” Leslie Odom Jr., who played Hamilton’s rival and assassin, Aaron Burr, wrote in an email to his castmates. Odom Jr. said he’d been back in touch with members of The Book of Mormon cast and reiterated that “this is ground worth standing,” Bloomberg reports. In an email, understudy Sasha Hutchings compared the fight to that of the revolutionaries the cast portrayed onstage: “They forged a way where there was no precedent, just as we are striving to do now. It’s messy, and scary, but possible.”

The cast unanimously rejected Seller’s offer.

How the parties get to yes

A week later, half an hour before showtime, Seller had checks delivered to the 22 cast members’ dressing rooms with a note that read, “This brings to an end this powerful issue that has been weighing on many of us.” Upset and confused, cast members huddled about how to proceed. Some who were financially struggling were tempted to cash the checks; others urged everyone to stand firm.

The cast debated boycotting the free—and unpaid—preshow sidewalk performances they’d been doing to entertain fans but backed down when the show’s creator, Miranda, begged them not to bring negative publicity to Hamilton. The cast hired a lawyer to represent them as a group in private negotiations with producers. Months passed.

On April 15, 2016, the cast’s lawyer announced that Hamilton’s producers had agreed to share 1% of the musical’s net (rather than gross) profits for the Broadway production with the original off-Broadway cast retroactive to the start of its run, as well as 0.33% of net profits from most future Hamilton productions. The deal expanded to include 38 early Hamilton participants, including Miranda.

Though compromising somewhat on the numbers, the cast got more than they gave in the negotiation. With the Hamilton franchise now encompassing Chicago, London, and New York productions and three touring companies, we can assume Hamilton’s originators—most of whom have since moved on from the musical—are earning a healthy supplemental income due to the deal.

Tomorrow there’ll be more of us

As news of the Hamilton deal ricocheted across Broadway in 2016, Actors’ Equity asked the Broadway League, the New York trade association of theaters and producers, for a profit-sharing clause for all participants in developmental labs.

This past January, with the two sides at impasse, the union called a strike, ordering its members to stop participating in all developmental stage work with commercial producers, including labs, workshops, and staged readings. The League said negotiations were ongoing and that producers should decide for themselves whether to share profits with performers.

What comes next? We’ll have to wait for the finale to find out. But by rewriting the game, the original cast of Hamilton gave their compatriots a strong shot at emerging victorious.

Get more than anyone bargained for

In contentious negotiations, the following tips can help you master the art of the trade:

  • If you had to choose . . . To keep long-term conflict at bay, try making two or three offers that you value similarly rather than just one. On his blog, Broadway producer Ken Davenport writes that he favors giving individual actors a choice between either profit sharing and a low salary or no future profit and a high salary. “I love giving employees a choice,” he writes, “because the decision is theirs, so there can be no bad feelings no matter which way it ends up.”
  • Wait for it. In negotiation and beyond, we tend to give our short-term desires more weight than our long-term interests, to our detriment. That’s why most people undersave for retirement and prefer to be paid up front, even if that means sacrificing money on the backend. To overcome this bias, take a long, hard look at your future needs; estimate the potential risks and rewards of a long-term contract; and choose rationally.
  • Don’t fracture into factions. When facing off with what appears to be a more powerful party, try teaming up with others to gain leverage. Then thoroughly discuss each member’s underlying interests to craft a winning coalition and negotiating strategy that will withstand the other party’s attempts to divide you.
  • Make it a movement, not a moment. Even if the party across the table thinks your grievance is legitimate, he may be wary of granting a concession that would disrupt precedent. If so, appeal to higher values, such as his sense of fairness, your shared history, or the need for industrywide change.

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