When a producer decides to put on a show, he makes sure he does the one thing that marks him out as a professional - he doesn't use his own money. Having found the property and bought the rights of say: Satanic Verses - The Musical, the producer starts by putting together a Production Budget - the cost of finding and rehearsing the creative team, cast and orchestra; designing and making the scenery costumes and props, installing them all in a theatre; and marketing the results.
He will then decide on the Capitalisation of the project - that is the Production Budget plus a Contingency Fund to sustain the show until it is on its feet. Next he will work out the Weekly Running Costs - the cost of hiring the theatre and equipment; paying the cast, orchestra and crew wages; the creative team royalties; and continuing marketing.
Based on this information he will produce a Recoupment Schedule showing how many weeks it will take to recover the Production Costs at varying levels of business. Producers aim to put together a package which can recover its costs at 75% business in 39 weeks.