Debts And ‘Domination’ – Power Broker Lawsuit Shakes Up Broadway

As the coronavirus pandemic continues to cripple live entertainment, another seismic rift has opened under Broadway.

SpotCo, one of the industry’s major advertising firms, is suing prolific producer Scott Rudin, alleging he owes $6.3 million in unpaid bills. The two parties are among the Rialto’s most powerful, and have collaborated on dozens of shows, resulting in a bevvy of Tony Awards and box office hits including Hello, Dolly! and To Kill a Mockingbird.

The debts pertain to eight Broadway productions, all of which opened before the pandemic. The largest are for the plays King Lear ($1m) and Gary ($1.1m), and the musical West Side Story ($2.8m).

Lear and Gary both flopped last summer, while West Side was in the middle of a sold-out run when the theaters closed in March.

The lawsuit describes an unusual relationship, even for the topsy-turvy world of Broadway, and underscores economic pain inflicted by the coronavirus on the billion-dollar industry, which supported over 96,000 jobs.

Typically, producers enlist ad firms on a show-by-show basis. But Rudin mounts as many as six shows per year, and as such manages them as a portfolio over which he exercises, according to the lawsuit, “complete control and domination.”

Since 2014, SpotCo and Rudin have had no formal written contract, operating under good faith and oral agreements. Rudin would instruct the firm to buy ad space in bulk (in the New York Times, for example), and the firm would submit monthly invoices, which Rudin was then obligated to pay.

But despite up to 50 email correspondences per day, a pattern of delinquency emerged, wherein Rudin functionally leveraged his debts, paying off old ones to avoid new ones, such that “the totality of the debt was never paid in full.”

Still, the arrangement worked for five years, until the standing debts became unwieldy last fall. And since the pandemic has closed off all revenue for the industry, the agency seems to have felt it had no choice but to force a legal reckoning.

Rudin’s lawyer, Jonathan Zavin, said in a statement: “The case has no merit and the defendants intend to contest it vigorously.” Representatives for SpotCo did not return a request for comment.

Rudin is no stranger to litigation. Most recently, his megahit adaptation of To Kill a Mockingbird was subject to multiple court battles with Harper Lee’s estate before arriving on the Rialto. Then Rudin’s own lawyers began a campaign of cease & desist letters to shut down regional productions of a different, already-licensed Mockingbird adaptation.

The campaign backfired. While the play ended up being a massive hit in New York, it was pointedly snubbed for Best Play at the Tonys, a move industry vets saw as retribution for unnecessary big-footing.

“It was impossible to see that as anything but a personal rebuke,” said one of Rudin’s co-producers, who asked not to be named.

But while litigious showmanship may be a double-edged sword, the SpotCo lawsuit is not terribly ambiguous.

“Contracts do not need to be in writing in order to be valid,” said one attorney familiar with the case, who spoke on condition of anonymity. “I doubt that there will be a factual debate that Scott Rudin’s companies were enriched at the expense of SpotCo.”

However, that doesn’t mean Rudin will be taken to the cleaners. In fact, this behavior is reminiscent of a different industry legend, one whom Rudin himself has held up as a personal inspiration.

“David Merrick used to do it all of the time,” the attorney pointed out, referring to the impresario’s famous contempt for contracts. “The case will not go to trial. It will probably settle out of court for less than the total amount owed – as I suspect Rudin always planned.”