The Vocabulary of Producing

“Vigorish” (or “the vig”) – derived from the Russian word for “winning” – has a colorful etymology rooted in the world of gambling.  In betting parlance, the vig is the percentage of the gambler’s winnings retained by the organizers of a game.  The term “vigorish” also has been tied to money lenders to refer to the interest on a loan (or the “juice”).  In the vocabulary of theater producing, the vig (sometimes referred to as the “premium,”  “kicker” or “bonus share”) is the extra “taste” of profits offered to certain investors coming in early in the fundraising process or contributing a large share of the capitalization, or to “introducers” who are bringing in third party investors to fund a production.   In fundraising for commercial theatrical productions, investors typically will receive all of the distributable net operating profits (i.e., receipts minus expenses) until they have recouped their original contributions, at which time adjusted net profits (or “ANP” – which are post-recoupment net operating profits less certain “off-the-top” deductions contractually promised to certain net profits participants) are allocated 50% to the producers and 50% to the investors (in the UK, this split might be 60/40 in favor of the investors).  So an investor contributing 10% of the capitalization will be entitled to 10% of the 50% of ANP allocated to all of the investors, or 5% of 100% of the total ANP derived from the production.   The fortunate investors or introducers to whom a “vig” is offered also will share in a piece of the producer’s ANP.  The most favorable vig producers are likely to offer is what is known as a “1-for-1” deal:  For every 1% of ANP an investor is entitled to receive from the investors’ 50% share of ANP, that investor also will receive 1% of the ANP from the producers’ 50% share of ANP.  A 1-for-1 deal sometimes is referred to as a deal on “100% terms” because the investor will receive a share of ANP equal to her percentage investment:  If she contributes 10% of the capitalization, she will receive 10% of the ANP.  A less favorable arrangement from the investor’s perspective would be a “1-for-2” deal in which the investor will receive a 50% premium from the producers’ share, or 1% of the producer’s ANP for each 2% of ANP to which the investor is entitled from the investors’ share of ANP by virtue of the contribution (sometimes referred to as “75% terms”).  Still less favorable from the investors’ perspective would be a “1-for-3” vig ( “66.67 terms”), a “1-for-4” vig (or a ( “62.5% terms”), a “1-for-5” vig (“60% terms”), and so on.   Of course, just as “vigorish” means “winning”, the vig won’t matter much if the production fails to recoup – as is the case with the majority of productions – and there are no “winnings” to spread around.