EXCLUSIVE: Investors normally buy into shows before they open. In an unusual deal, an intellectual-property investment company has acquired the rights to revenue from the Broadway production of the Alicia Keys musical Hell’s Kitchen, which closed in February at a loss.
The transaction concerns the Broadway company’s share of revenue beginning Aug. 1, 2026, from its cast album, merchandise, an ongoing North American tour, a production in Seoul, South Korea, and future productions. The original Broadway investors, who would normally share in subsidiary rights income over many years, will instead receive two lump-sum payments.
Following the deal with the IP company Ovation Rights, the original backers will in total recoup roughly 90% of their investment, the show’s executive producer, Aaron Lustbader, wrote in an email to investors that was reviewed by Broadway Journal. When the show — capitalized for $22 million — closed on Broadway, investors had been paid back 60% of their stakes, Keys told The New York Times. (One investor told me the figure was 55%.)
Lustbader’s email doesn’t specify the terms of the transaction, which makes it difficult to assess whether the price was a good one. Should Hell’s Kitchen become a lucrative long-term property, the original investors still won’t break even on their stakes or earn any profits. Keys told the Times’ Michael Paulson in January that she expected the touring productions to make the show profitable.
Lustbader defended the deal in the email, writing that it achieved “a very positive valuation on the future income streams” and that backers will get most of their money this year. “For Alicia and me, the priority in the deal was to provide you, the investors, with an immediate capital return, rather than waiting for future, uncertain distributions over the course of literally decades,” wrote Lustbader, a partner at the general management firm Foresight Theatrical. “An adjunct victory of the deal is that, as of the end of 2027, it will also eliminate future overhead expenses like annual accounting, as well as the need to wait for your [tax form] K-1 to be generated which would have diluted future revenue with accounting and other administrative costs.”
The deal comes as few musicals recoup their costs while on Broadway. “Producers often sell investors on a property based on the long-term revenue opportunities through licensing and other rights that can go as long as 40 years,” said a Broadway producer and co-producer who isn’t involved in the deal but likes the concept. “The average age of investors is around retirement age, so 40 years is not that attractive to them.”
But there’s also resentment among co-producers and investors over shows that yield generous fees for lead producers even when there’s minimal return of capital. Amid that tension, the deal could draw pushback. Lustbader didn’t respond to an email that Broadway Journal sent Monday afternoon.
Ovation Rights was founded by the producer Jamie Hendry and former Amazon executive Philip Green and is backed by funds managed by the asset manager BlackRock. The theater-focused company says its ambition is to build a catalog of entertainment rights “and help extraordinary work reach new audiences, create new value and live on for generations.”
In addition to being the lead producer of Hell’s Kitchen, Keys wrote the show’s music and lyrics, co-arranged the score and is the underlying rights holder, as it’s inspired by her life story. Lustbader wrote that as part of the deal, royalty holders will be paid a portion of royalties that were deferred during the run.
The operating agreement for the producing entity of Hell’s Kitchen on Broadway, HK Theatrical LLC, grants its lead producer and her representative, Lustbader, wide latitude in managing the business. That suggests the producers felt they had a legal basis to close the deal without an investor vote.
Hell’s Kitchen’s weekly box office grosses were as high as $1.8 million during the first year of its nearly two-year run. But like many other big musicals, Hell’s Kitchen saw its profits undermined by weekly running costs of close to $1.1 million, according to a financial statement filed with the office of New York Attorney General Letitia James. Weekly grosses in its second year were generally below $1 million.