Broadway productions close abruptly, sometimes while still selling a respectable number of seats. The reason is a cost structure that separates the money raised to open from the money required each week to continue.
Two different pools of money
Capitalization is the sum raised before opening, covering sets, costumes, rehearsals, advertising and the theater's preparation. It is spent before a paying audience arrives.
Running costs are separate and recur every week: salaries for cast, musicians and crew, theater rent, royalties, insurance and continuing advertising.
A show can be a hit in the sense of covering its weekly costs for years and still never return the original investment, because recoupment requires a surplus above those weekly costs.
The weekly break-even sets the deadline
Producers calculate the gross receipts needed each week to cover running costs. That figure, not artistic reception, is the number that determines survival.
Falling below it for a few weeks drains reserves. Without additional investment, closing notices follow quickly, which is why announcements often come with only a fortnight's warning.
Musicals carry higher weekly costs than plays because of orchestras and larger casts, so they need fuller houses to continue even when tickets cost more.
Discounting protects the room, not the margin
Empty seats generate no revenue and also make a theater feel unsuccessful, which affects word of mouth. Productions release discounted inventory rather than play to visible gaps.
The tradeoff is that heavy discounting lowers average ticket price and can train an audience to wait. Managing the mix of full price, discount and group sales is a continuous task.
Premium pricing at the other end funds this. A limited number of high-priced seats can offset a large block sold cheaply.
Seasonality is severe
Attendance in New York follows tourism, rising sharply around the winter holidays and falling in the weeks that follow. January and early February are the hardest stretch.
Many closings cluster there, because a production that entered winter weakened cannot survive the slow weeks that follow the holiday peak.
Awards season produces its own pattern, with nominations lifting sales enough that some shows time their opening to remain eligible and visible.
Touring changes the model entirely
A national tour carries different economics, playing large houses for short engagements with costs shared under presenting agreements.
For many productions the tour, rather than the original run, is where the investment is returned, which is why the tour is planned long before the New York closing.