Compensation Negotiation Tips: Lessons from Broadway

Compensation negotiation tips need to go beyond negotiating salary, as illustrated by a profit-sharing deal reached by the original off-Broadway cast of the hit musical Hamilton illustrates.

By PON Staffon / Salary Negotiations

Compensation Negotiation Tips: Lessons from Broadway

Compensation negotiation tips often revolve around encouraging job candidates to ask for a higher salary and teaching them how to frame their salary requests. But negotiators who take a broader approach to evaluating a job offer may be able to set themselves up for much greater long-term earnings. A negotiation initiated by the original cast of the hit musical Hamilton that took this approach not only improved the performers’ compensation but also motivated industrywide change. Keep reading to get some compensation negotiation tips from their experience. 

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 to rehearse for about a month, reports Michael Paulson in the New York Times. If all goes well, the producers stage the show for potential investors.

Under the Actors’ Equity union’s standard agreement, workshop participants received 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. Workshop actors 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, which were intended to be shorter and more specialized (focusing, for example, on choreography alone). However, labs eventually became nearly indistinguishable from workshops, except in terms of compensation: Actors earned more up front—about $1,000 per week—but usually received no right of first refusal or royalty guarantee.

Smashing Every Expectation

When Hamilton was in development, Actors’ Equity tried to negotiate a workshop (rather than lab) contract that would include future profit sharing, 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.

The original cast helped craft the show alongside the show’s creative team, led by Lin-Manuel Miranda, during rehearsals and a long off-Broadway run. In the summer of 2015, Hamilton opened on Broadway and began raking in $500,000 per week. With a long run, awards, touring companies, and productions in other cities seeming likely, the original performers approached Jeffrey Seller, the show’s producer, individually to ask for profit sharing but were denied.

The Challenge: Demand Satisfaction

Then 22 of the original off-Broadway cast members decided to join forces. In a joint letter to Seller, they referenced The Book of Mormon’s profit-sharing agreement and asked for a stake in Hamilton’s future gross box-office receipts and royalties from other productions and film rights. Royalty payments, they wrote, 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

Seller offered to send each original cast member a lump-sum check, ranging from $29,000 to $36,000, to reconcile the low salaries they’d earned off-Broadway and the minimum Broadway wage, according to Bloomberg News. 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, emailed 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.

The cast unanimously rejected Seller’s offer.

How the Parties Get to Yes

A week later, just before showtime, Seller had checks delivered to the 22 cast members’ dressing rooms with a note reading, “This brings to an end this powerful issue that has been weighing on many of us.”

The actors huddled about how to proceed. Though some were tempted to cash the checks, they agreed to stand firm. Ultimately, they hired a lawyer to represent them jointly in private negotiations with the producers. Months passed.

On April 15, 2016, the news broke 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. The Hamilton franchise grew to encompass multiple productions and touring companies, likely giving them a healthy supplemental income.

Tomorrow There’ll Be More of Us

As news of the Hamilton deal broke, Actors’ Equity asked the Broadway League, the New York trade association of theaters and producers, for an industrywide profit-sharing clause for developmental lab participants.

In January 2019, with the two sides locked in impasse, the union called a strike, ordering its members to stop participating in labs, workshops, and staged readings. A month later, the two sides reached a deal: Actors and stage members who spend more than eight weeks developing a show will split 1% of a Broadway show’s profits, including from touring productions, for 10 years after 110% of production costs are recouped, according to Broadway News. The minimum salary for developmental work rose as well.

Francis Jue, a representative of Actors’ Equity, told Broadway News the agreement ushers in a “new business model” that would shake up the industry. Theatrical development dropped off during the Covid-19 pandemic. But with Broadway shows preparing to open at full capacity on September 14, 2021, new work—and, eventually, new hits—will be coming to life.

Compensation Negotiation Tips

The Hamilton and Actors’ Equity deals offer the following compensation and wage negotiation tactics:

  • Wait for it. In salary negotiations, we often prefer to be paid upfront, even if that means sacrificing money on the backend. Wise negotiators look beyond salary to find ways to maximize long-term earnings, such as negotiating for profit sharing in a new venture.

  • Don’t fracture into factions. When facing a powerful party, you can often gain significant leverage by teaming up with others. Build your coalition by thoroughly discussing each member’s underlying interests and agreeing on a negotiating strategy that will withstand attempts to divide you.

  • Make it a movement, not a moment. The other party may be wary of granting a concession that would potentially lead to systemic change. Appealing to their higher values, such as their sense of fairness, your shared history, or the need for industry-wide change, may win them over.

What compensation negotiation tips would you add to our list?