A: Cue the confident “yes” nods of producer heads everywhere when you ask them “do you know what Amortisation is?” Chances are you might understand a bit but to understand it fully you’ve probably worked in accounting or law in the past! Whenever we run our three day workshop we are amazed at how much you’re expected to know as a producer, so there’s absolutely no shame in not knowing everything straight away. In fact most West End producers will tell you they are still learning on every show they take on.

Amortisation is probably one of the trickiest areas of producing to explain, so my aim is to break it down simply so you can understand why it’s useful. The only time you’ll hear of Amortisation is when you’re making profit on a show and you haven’t recouped your costs yet. This will typically be in the first weeks of a show either on the West End, Touring or a really successful fringe show. The show will have a royalty pool set up already with let’s say a typical split of 65% for the investor/s and 35% for the profit pool (everyone else). However, before you split the above pool you will take out typically 1-2% of the profit and give that straight to your investor/s but only up until you recoup your costs of the capitalisation – this is essentially Amortisation. Once recoupment hits, Amortisation ends and it’s down to what you’ve arranged in your agreements previously as to who gets what in the profit pool. It’s an incentive for Investors to invest in a show when the success of the show is unknown, they get a little extra when recouping but after everyone gets a better share.

I hope this explains things a little better, there’s a really helpful article I found HERE describing A Chorus Line’s royalty pool on Broadway if you fancy any further reading. If you liked my article why not let me know via social media? Thanks! @StageOneNewprod