Shubert Organization Inc. History

Company History:

Shubert Organization Inc. is the successor to the firm, established by the Shubert brothers early in the 20th century, that grew to became the most successful business enterprise in the history of the American theater. In the late 1990s this enterprise owned and operated, as it had for at least 50 years, about half of the theaters on Broadway. It also was producing or co-producing some of Broadway's biggest hits, including the musical Cats, which in 1997 became Broadway's longest-running play ever. The Shubert Organization also owned valuable nontheatrical real estate in New York City and a few theaters in other cities.

Rise to Theatrical Dominance, 1894-1924

Levi (Lee), Samuel (Sam), and Jacob (J. J.) Shubert were born in eastern Europe, probably in East Prussia or Lithuania, and grew up in poverty, with a brother and four sisters, in Syracuse, New York. Sam, the natural leader of the three, became a theatrical producer in 1894, while still in his teens. By the turn of the century the three were leasing five theaters in upstate New York and managing several stock companies. The Shuberts leased their first New York City theater in 1900, at Broadway and 35th Street. Of their first production, a New York Times reviewer declared, "Nothing nearly as awful has been seen in 20 years."

At this time an enterprise called the Theatrical Syndicate owned, leased, or controlled the booking of more than 700 theaters across the United States, virtually excluding competition. Sensing a growing threat from the Shuberts, the Syndicate decided in 1903 to break them by denying them theaters and performers. Nevertheless, by the summer of 1904 they owned, leased, or booked the acts of some 50 theaters. In the fall of 1905 they presented Sarah Bernhardt in a tour that barnstormed the country. Barred from Syndicate-controlled theaters, they put on the show in rented circus tents, which held three times as many customers as the typical theater. Sam Shubert was killed in a train crash in 1905. J. J., who had been managing the firm's interests out of town, now came to Broadway. The junior partner, he was generally responsible for musicals and for the construction and maintenance of the theaters. Lee usually handled straight plays, finances, publicity and advertising, and nontheatrical real estate.

By the fall of 1910 the Shuberts owned 73 theaters outright, held booking contracts with many more, and possessed at least 50 dramatic and musical companies. They were fully as despotic as the Syndicate and banned a number of critics from their premises for less than enthusiastic reviews. The brothers favored musical material, such as revues similar in concept to (but much less lavish than) the Ziegfeld Follies, and operettas, especially those composed by Sigmund Romberg. Operettas were favored in particular because they required neither expensive stars nor, as "costumers," even shapely chorines. Sometimes as many as 20 Shubert operettas would be touring on the road. Of the straight plays, the brothers had a firm rule: "All plays have to have love interest. If you have no love interest, you have no play."

The brightest of Shubert stars was Al Jolson, who made millions for the brothers, as well as for himself. Between 1911 and 1918 six Jolson-starring shows played at the Shuberts' commodious Winter Garden Theater, a converted stable at Broadway and 50th Street--far uptown at this time. The brothers also organized an unprofitable vaudeville circuit in 1921 and backed a venture that made some 350 movies between 1914 and 1919, usually under the World Film Studio name.

The Shuberts also were major owners of nontheatrical real estate, including a number of office buildings, hotels, and shops in New York, Boston, and Chicago. Between 1913 and 1917 they leased four theaters between Broadway and Eighth Avenue and 44th and 45th Streets--still the heart of New York City's theater district. Shubert Alley was constructed west of Broadway as a private street to connect the Shubert Theatre on 44th Street to the Booth Theatre on 45th Street. The Shuberts bought the four theaters and the land under the alley in 1948 for between $3.5 million and $4 million, thereby taking full possession of the entire city block except for hotels at either end.

Zenith and Decline, 1924-72

The Shubert Theatrical Corp. was founded in 1924 as a public company taking over the business of earlier Shubert enterprises. At this time it was operating 86 theaters in 31 cities, including 30 in New York City alone, collecting 30 to 50 percent of the box office receipts as rental. The company's United Booking Office was placing shows for some 750 more theaters. In all, the Shuberts were producing one-fourth of the nation's plays and controlled three-fourths of all theatrical ticket sales. The company also claimed to hold the largest scenery, costume, and equipment inventories in the world. It even owned a shoe factory and compelled all of its dancers to buy their dancing shoes from the company.

The Shuberts were, in their heyday, heartily despised for their hammerlock on the American theater. Shrewd dealmakers, contentious litigators, tight-fisted producers, they raised intimidation to an art form and, despite acts of charity, kept their benevolent impulses as private as possible. Their wariness even extended to each other; although Lee lived above the Shubert Theatre and J. J. in a penthouse apartment facing the theater, they rarely met and conducted necessary business through separate staffs. (Only two photos exist showing the brothers together.) Besieged by thousands of women and girls seeking careers on stage, both Shuberts behaved like the proverbial kids locked in a candy store. According to their biographer, "Although they did not invent the casting couch, it is believed that the Shuberts developed its functions."

The number of Shubert theaters reached 101 in 1928, but the corporation's net profit peaked at $3 million in 1926. Partly because of the advent of talking pictures and the growing popularity of radio programs, the American theater was beginning to pass its prime about this time. After the 1929 Wall Street crash, the value of the Shubert properties fell drastically. The brothers found it necessary to sell some of their theaters--including their half-interest in five London ones acquired in 1925--and to reduce substantially the number of shows they produced. In 1931 the Shubert Theatrical Corp. and eight other Shubert companies in one way or another affiliated with the parent--including script, music publishing, scenery, and costume companies--fell into bankruptcy.

Lee Shubert, however, was named co-receiver, and in 1933 he bought back the company's assets for $400,000--some ten cents on the dollar--renaming it Select Theatres Corp. After paying off bondholders, stockholders, and creditors of the old corporation, the Shuberts held more than 60 percent of the successor company, which included scenery, equipment, and 27 theaters. The brothers also retained many of their theaters and other real estate independent of this corporation, through their Trebuhs (Shubert spelled backwards) Realty Co.

Although the Shuberts' career as producers virtually came to an end in the 1940s, they remained active as ticket brokers, bookers, investors in shows, and operators of theatrical real estate. Tired scripts and worn sets and costumes were resurrected and recycled for touring shows and summer stock. In 1950 the Shuberts moved some 9,000 pieces of furniture, 40,000 square feet of draperies and flats, and numberless theatrical odd lots--all from the more than 1,000 shows produced, controlled, or purchased since 1900&mdashross the Hudson River to Fort Lee, New Jersey.

In 1948 the Shuberts still owned 16 theaters in New York City and 21 elsewhere&mdashout half of all the legitimate theaters in the United States--including all the Philadelphia theaters and all the Boston theaters but one. Through their United Booking Office, they were able to make producers book their shows exclusively in Shubert theaters around the country as a condition for renting a Shubert theater on Broadway. In a 1955 U.S. Supreme Court decision, however, the Shubert interests were found to be in violation of antitrust laws. As a result, in a 1956 consent agreement Select Theatres agreed to halt its booking activities for 25 years. It also was required to sell about a dozen theaters in six cities, including four in New York. United Booking Office was dissolved and Select Theatres ceased to exist, at least as a public company.

Lee Shubert died in 1953 and J. J. in 1963. The latter's son, John, had in 1956 taken over day-to-day operation of the business, assisted by Lawrence Shubert Lawrence, Jr., a grandnephew of the brothers who assumed management of the Shubert interests on John's death in 1962. The worth of the brothers' holdings was estimated in 1963 at $50 million and included 17 theaters in New York, two each in Chicago, Cincinnati, and Philadelphia, and one in Boston.

The Shubert Resurgence, 1972-97

The Shubert Organization was a cluster of 23 corporations when its board fired Lawrence in 1972 and hired company executives Gerald Schoenfeld and Bernard Jacobs--who were serving on the board&mdashø run the enterprise. The two later said they found the Shubert operations in more disarray than they had suspected, and Jacobs claimed the business was losing about $2 million a year. The Broadway houses--half of them vacant--were run-down. To fill these theaters they returned the enterprise to producing plays in 1974. They met with instant success in the form of the hits Pippin, Grease, and Equus. The most successful was A Chorus Line, which debuted in 1975 and ran at the Shubert Theatre for 15 years. The Shubert Organization, which had been the first theatrical business to accept personal checks, telephone reservations, and credit cards, launched its own computerized system for selling theater tickets in 1979. The company also linked its box offices to Ticketron outlets.

Lee and J. J. Shubert had established the Shubert Foundation in 1945 to lighten their income tax load and, eventually, their estate taxes. The bulk of both men's estates passed to the Foundation, which in 1972 became owner of the for-profit companies that the Shuberts had controlled. Most of the real estate continued to be held by the Shubert Organization, but certain key properties were deeded to the foundation so that rent and lease income on which the organization was paying taxes could become tax-exempt. Some of that property was sold later at substantial profit and was likewise exempt from capital gains taxes. In 1974 the state of New York charged the executors of J. J.'s estate--Lawrence, Schoenfeld, and Jacobs--with conflicts of interest depriving the foundation of millions of dollars due to "grossly excessive, unjustified and unreasonable" claims. The suit was withdrawn later when the charged parties agreed to reduce their claims on the foundation by $2 million.

In 1979 the Shubert Foundation won a ruling from the Internal Revenue Service allowing revenue from the Shubert Organization, after taxes, to flow to the foundation and be invested to produce tax-free income for the foundation. This was an exemption to federal tax laws that generally bar private charities from owning a controlling interest in a profit-making business. Otherwise, the foundation argued, it would have to sell the Broadway theaters, and as a result "the legitimate theater will be destroyed" and the new owners, most likely, would exploit the theaters for such purposes as "the showing of pornographic films" or would raze them for parking lots. (The Shubert brothers had used the same or similar arguments over the years in combating the threat of antitrust litigation.)

The rival Nederlander and Jujamycn theater chains were most unhappy about this ruling, pointing out that the foundation gave some of the tax-exempt money to performing arts groups that used it to generate plays that then appeared in Shubert theaters. The argument that New York's theater district might cease to exist unless the Shubert Organization received favorable tax treatment seemed to lose its force when all but one of the enterprise's Broadway theaters were declared landmarks by the city in the 1980s, making them difficult to convert to any alternative use.

The Shubert Organization continued to score a number of big successes on Broadway with its own productions, including Ain't Misbehavin' and Dancin' in 1978, Amadeus and Children of a Lesser God in 1980, and Dreamgirls in 1981. Its biggest hit of the decade was Cats, which made its U.S. debut in 1982. Co-produced with Andrew Lloyd Webber's company, Cats, which played at the Winter Garden, broke the record previously set by A Chorus Line when it gave its 6,138th consecutive performance on Broadway in 1997. Shubert's drama productions of the 1980s included Pulitzer Prize winners Glengarry Glen Ross and The Heidi Chronicles.

The Shubert Organization, in 1994, had recorded a profit in every year since 1976. That year it owned 16 Broadway theaters and the land beneath them. It also owned another one (the Music Box) jointly with the estate of Irving Berlin. In addition, it owned the Sardi Building (1501 Broadway) and the land beneath it, the land beneath the office building at 1675 Broadway, and air rights leased to the Tower 45 (120 West 45th Street) and Bertelsmann (1540 Broadway) buildings. Outside of New York City, the Shubert Organization owned Boston's Shubert Theater (which it leased to the Wang Center for the Performing Arts in 1996) and Philadelphia's Forrest Theater. It also was leasing the Shubert Theater in Los Angeles and managing the National Theatre in Washington, D.C. The Shubert Theater in Chicago was sold to the Nederlander Organization in 1991. The Shubert Organization's real estate holdings were free and clear, with no remaining mortgages.

Jacobs, president of the Shubert Organization, died in 1996 and was succeeded by Philip J. Smith, who had been executive vice-president. Schoenfeld continued to serve as chairman.

Further Reading:

• "The Boys from Syracuse," Time, November 22, 1948, pp. 89-90.
• Gussow, Mel, "Bernard E. Jacobs, a Pillar of American Theater As Shubert Executive, Dies at 80," New York Times, August 28, 1996, p. D18.
• Hector, Robert, "Tyrants of Thespis," Saturday Review, December 14, 1968, pp. 29-31.
• "J. J. Shubert Dies; Last of 3 Brothers," New York Times, December 27, 1963, pp. 1, 23.
• Kleinfield, N. R., "How Shubert Fund Produces and Directs," New York Times, July 10, 1994, pp. A1, A22.
• ------, "I.R.S. Ruling Wrote Script for the Shubert Tax Break," New York Times, July 11, 1994, pp. A1, B6.
• Liebling, A. J., "The Boys from Syracuse," New Yorker, November 18, 1939, pp. 26-30; November 25, 1939, pp. 23-27; December 2, 1939, pp. 33-37.
• Marks, Peter, "2 Presidents at Shubert, But Just One Chairman," New York Times, September 18, 1996, pp. C13, C19.
• ------, "Who Will Fill the Void on Shubert Alley?," New York Times, August 30, 1996, p. C3.
• McNamara, Brooks, The Shuberts of Broadway, New York: Oxford University Press, 1990.
• Nadel, Norman, "When the Shuberts Fit," Horizon, October 1981, pp. 54, 56-58.
• Richards, David, "The Shuberts, Kingpins of Broadway," Washington Post, September 22, 1985, pp. H1, H9-H10.
• Schumach, Murray, "Shubert No Longer a Family Affair," New York Times, July 11, 1972, p. 24.
• Stagg, Jerry, The Brothers Shubert, New York: Random House, 1968.
• Taylor, Markland, "Shubert Domain Cut; Wang Takes Over Hub," Variety, March 18, 1996, pp. 55, 58.

Source: International Directory of Company Histories, Vol. 24. St. James Press, 1999.