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Editor’s View: Billionaire’s £45m Haymarket purchase pushes theatre into realm of modern art

Damien Hirst's Gone but Not Forgotten, which features the gilded skeleton of a woolly mammoth, was bought by Leonard Blavatnik for $15 million. Photo: Michael Gordon / Shutterstock.com Damien Hirst's Gone but Not Forgotten, which features the gilded skeleton of a woolly mammoth, was bought by Leonard Blavatnik for $15 million. Photo: Michael Gordon / Shutterstock.com
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If you thought West End tickets were getting expensive, spare a thought for all the private equity firms, multimillionaires and billionaires out there looking to buy a West End theatre.

As predicted in May, businessman Leonard Blavatnik has bought the Theatre Royal Haymarket. The purchase has officially gone through for “an undisclosed sum”, but the word on the street is that it was in the region of £45 million. Gulp. 

Leonard Blavatnik completes £45m purchase of Theatre Royal Haymarket

When you’re buying a house, estate agents often talk about price per square foot (or metre). In theatre, the important thing is the number of tickets you have to sell, so it can be enlightening to look at theatre purchases in price per seat. 

Obviously – just as with a house – there are other factors that affect the value of the property (location, state of the building, length of lease and so on) but price per seat gives a rough measure of whether the price is in line with market valuations.

Cameron Mackintosh bought the 1,550-seat Victoria Palace in 2014 for £26 million. That works out as nearly £17,000 per seat. Nimax Theatres bought the 1,400-seat Palace Theatre in 2012 for £20 million. That’s about £14,000 a seat. Back in 1983, Lloyd Webber bought the same theatre for £1.3 million (a snip at less than £1,000 per seat). 

But both of those are musical houses and therefore more valuable than playhouses such as the Haymarket. When Nimax bought four playhouses from Andrew Lloyd Webber in 2005, the purchase price worked out at about £3,000 per seat.

When Ambassador Theatre Group bought Live Nation’s UK theatres (a mixture of playhouses and musical houses across the UK) with funding from a private equity firm in 2009, it valued its nearly 50,000 seats at 37 theatres at £130 million (about £2,600 per seat). 

By the time it sold those theatres (plus a few more in the US) on to current owner Providence in 2013 the price had gone up to about £6,000 per seat. There are rumours that when ATG’s current owners sell again, they will be looking for around £900 million. Those of you with GCSE maths will have worked out that’s about £18,000 per seat.

But even that ambitious valuation dwarfs in comparison to the Haymarket purchase. Presuming the rumoured price is correct, Blavatnik’s purchase of the 878-seat Haymarket comes in at more than £50,000 per seat. Using this method of valuation, ATG should be looking to up its asking price to around £2.5 billion.

What does it all mean? Lord only knows. We’re in the territory of modern art or Premier League football, where value is meaningless.

The upper echelons of commercial theatre are now operating on a financial plane that is so divorced from the rest of the industry as to become almost incomprehensible.

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