Variety (Jun 1927)

"Wednesday, Jvmtrnn E G l T IMA T E VARIETY N. Y.'S TICKET BROKERS WECOME INQUIRY AS TO DIVISION OF PREMIUM MONEYS B'WAY TICKET SOLUTION federal District Attorney Conmiencing to Dig in on Enliro Situation—More Inside Developments Looked For—No Ticket Man Intends to Attempt jPerjury—'Belief GoVt Imposition of 50% for In- come Tax of All Over Face of Ticket Unconstitu- tional After listening to » wltneM tell paying theatres or the managers ^ them pfomiums' of 25 cents to |2 each for tickets lat«r reyold in the tgencies. U. S. DietHct Attorney Tuttle, mwBtlgatlng allowed fraud- ulent tax returns by brokers upon complaint of inspectors from the intelligcnc© section of the Internal (Revenue Department, said that half of all those quarters and dollars rightfully belonged to the govern- jnent. Monday the heatring before U. S. Cunimissioner Cotter developed the first direct connection between the agencies and the theatres. From the brokers' viewpoint it was an Indication that they were not alone to be blnnied for the hi^h prices of tickets to Broadway's hits. Mr. Tuttle has been asking witnesses direct questions concerning the ©utstandinp hits, and it was patent be had been informed about those attractions in partletilar. John A. Sullivan, of the Tyson Operating Co., the agency beaded \ fey William L. Fallon, and head of the Sullivan Agency, testlfled to the direct payment of theatre pre- miums. It was then that the ex- ceptional premium put on "Scan- dals' " tickets went onto the records. A 22-week buy was arranged for the show early la.«t sum- mer. Some agencies refused to handle tickets on the basis outlined. One was Tyson & Co. (known as Tyson's Fifth Avenue, one of the leading agencies). When Mildred Prucht, bookkeeper of the latter firm, was interrogated she stated she did not know why her firm did not sell "Scandals" tickets. Sulli- van stated it cost moro to hand)e tickets for Shubert houses than othfr.'J, explaininjJT tli.it the brokers Were forced to take allottments of tickets as "buys" on ordinary at- tractions in order to secure tickets tor a hit Brokers Realize The bidkiTs realize that the in- vestigation might show that the legal percentage on excess premiums was not turned over to the povern- tnent. They expect to be fined and assessed on the japproximate amount Withheld, but they are will- ing to have the conditions which, force hiph prices exposed. Half a dozen managers are reputed to have collected from $1 to $2 on front lo- cation tickets and their identity will probably be broup:ht out through the prosecutor's questioning. The agency men have taken the clear position not to be entangled in iXTiury. They still maintain the 50 per eeht. tax law on premiums all over 60 cents is unconstitutional and l»t like the nullified New York state law, an attempt at price fixing by law. The government makes a queer claim under the 80 per cent, provision concernlnpr the resale of tickets for hit shows between agencies thcmselve.s. Not a little of that poes on, an agency paying Rnnthcp hitrli price in order to sat- isfy a rusti»ni« r. An example: Where one agency pays another $8.80 for a ticket that ^<'>^t.«^ $r,.CO at the box oflflce, the first agency is exporled to pay the fovernment half of the excess, the difference between $6 and $8.80, or 11.40. The second agency may sell the tiokot f(.r $9.90 and the pov^ rn- Jttent asks $1.35, contending that the law reads the percentage be gov- erned by the estAblished or box office priro of $5.50. Theref..re. if seller argued successfully in void- ing the New York State's ticket law. It Is said Tuttle expressed a willingness to drop the investiga- tion if the brokers went Into a Court of Equity and swore not to sell at more than 50 cents premium. Mr. Marshall refused, from the ac- count, and replied they would take the matter to Washington. The government does not si\y it is a crime to charge high prices for tickets but declares itself ifi on the gravy. Where there is a double re- sale between .iprn( ios tlie conten- tion of price lixing appears to be pretty well upheld. The law Is a provision of the wartime Income mrtisure, several times revised but not changed in this respect. Playwrights Concerned Two new claimants on a share of the premiums paid to the theatres cropped up Monday. Playwrights demanded a percentage under their baste minimum contriiot and the state tax conimis«:ion demanded nn examination of the agencies' books to see if they checked up with the state income tax returns. This has nothing to do with ticket taxes, but solely on the computa- tion of the tax paid the State. The State will probably have to wait, as the books of a number of agencies have been turned over to the fed- eral district attorney and the in- ternal revenue tnspectors. If the government p^ ts half of all money paid the managers and the playwrights get their percentage, there Is going to be little left. While heavy premiuins have been admit- tedly paid to theatres for hit tickets, the great majority of tickets are handled by agencies at a premium of from 7'2 to 25 cents. A provision on grosses in the authors' agreement reads: *'Qross weekly box otllce receipts from nil sources whatsoever . . . and shall be construed to include any sum over and above regular box ofHce prices of tickets received by the manager or any one in his employ, from speculators, ticket agencies or other persons and any other additional sums whatsoever received by the manager on arciHint of said play." B. O. Men Left Out So ttit box ofUce men have not been involved in the investigation. It is conrcMlfd that they receive what are termed as gratuities from the agencies, the sums not being large so far as Is known. Most box office men have declared the gratui- ties on their income tax returns and cannot be implicated. It has been commonly understood that treasur- ers In Shubert theatres are sup- posed to turn in half of such gratui- ties to some one or more persons in the Shubert offices. The matter of paying concession money for tax the privilege of han- dling tickets for Shubert theatres was touched on in the investigation Monday. The concession Idea has been reported in operation for sev- eral years and Is in addition to whatever money is paid per ticket by the agencies. That may explain the claim that it costs certain agen- cies more money to handle tickets for Shubert hfMises. Attrarti"ns have never .shared in the concession money nor the premiums. Last week w^hen Mr. Tuttle warn- ed witnesses to be careful In th^'ir answers the appearance of Assist- ant V. S. District Attorney Owen M. S. Tierney aroused Interest, since he is handling prrjury cisos. Clubs Declared In During last week's sessions it was hroucrlit out that some of the ehibs he law were strictly enforced the | ^^.^j^.y^ y,,^,.,. ^ rh:n--<A hitrh i.ri. es ■«con<l agency would be compelled 1 f^um ai-'f ncies. are declared In on o pay a tax of more than it actu- the agency sab s for from two to 'ly niade on the resale, nnd the | ty,ree per cent, of tho club sales, government in doubly taxing the ; one instnnre of a sale to a club xwo polc.B w ould lec Hvp 1*:*^ participated in premiums from agencies, stated that not moro than halt a dosen In New Torfc have not done so. Another manager stated that a friend had paid $15 per ticket over the box office price of a eertain hit and on i«|p«stIgation found the tickets had i^sstd through the hands of five different brokers. Still another manager is reputed to have said that he was offered a bonus of |r».000 from a box ofiAce man for the job of treasurer of his theatre. With a success on hand the treasurer might make from $1,000 upward a week, he thoupbt. The bookkeeper for Tyson & Co, said the firm paid an income tajt of $197.93 for the four years ending with 1925, explaining tlie agency lost money the three preceding years. This had nothing to do With the monthly admissions tax returns. She also testified that during the month of January last fd,4d2.55 was paid to 89 theatres in New York for commissions in excess of the l>ox office price of tickets purchased. Among the theatres which re- ceived commission during tbat month, the peak period of the sea- son were the Vanderbilt, $199; Ambassador, $191; Knickerbocker, $1»0.64: liyrle, $177.26; Broadhitrst. $280; Imperial, $314.14; Empire, $636.60; Selwyn, $256.38; Miller, $239.20; Amsterdam, $57S; Music Box, |i27.45 and FultOh/U«6.Sa. Madison Square Qarden's share of the commissions paid by Tyson & Co. in January was $214.75, the rec- ords showed. TAX EVASION MAY NEXT HIT CHICAGO Dept. Justice Directing Moves from U. S. AH'f-' General's Office Washington, Jun<* 7. The Department of Justice is di- recting the action against - tiifO tels, clubs and ticket agencies In New York for alleged violations on the Income tax laws on premiunis above the SO cents ad1^hc^» Obi. William J. Donovan, assistant to the Attorney General, Is directing the entire proceedings from his of- fice here. Learning of this mCset SOntact in contrast to the usual method of turning a case over to a federal In- vestigator on the ground, Variety questioned Colonel Donovan the latest Nathan D. Perlman, counsel for the 11 agencies, contention that the law was unconstitutional. ^ Other than to rem ark that Mr. Perlman was evidently arguing from the recent U. S. Supreme Court decision voiding the New York state scalpers' law, Col. Dono- van declined to comment. He did, however, state that Distrirt Attor- ney Tuttle would be ready for an interview on that ^tlssjUoh shortly. Chicago may expect a like move in the near future if reports brought back here by officials attendini? the recent eonference on flood relief have the same effect an the r» port* d gouging of just such olTicials wiii< li resulted in the New York case. One official back from Chicago has given the department two tick- ets with the name of the ag^nry only stamped on the back. The amount charged for the tickets is omitted. This violates the pro- visions of the federal income tax laws. Tuttle's Reported Proposal i-it< t (> r tl rke t .*J, the c«^st wn s twie e the _ box office price and the excess price last wei k MV. Tuttle in sur- ! entere d on the mrr-nr y br.'l:s hf n ^'.''ini: the situation is report* d to .«ervi« e eljarge. It is the claim that "*ve niiide a proposal to Louis Mar- 1 the government cannot tax service ^hnli. retained as special counsel | charges under the law but the mat- ;.gencles. with the Ide.i "^uii-vm^r a test case to the W of Court. The s.ame conn- in th.it re. spjct opr ns tlif- T!i ttter wider. (»iie rii.ina^-r'r known not U> have L. A. PLAYHOUSE LEASED Los Angeles, June 7. The l*layhouse, on Figueroa St reft, hfls been leased by L. C. Wiswell and Horrjer Ttirran, S.'in Franclwro thf-ntrt u wntrXur a y< ar befflnning June 19. No definite pollry has be'-n derided VtiK>T\ as yet, though It is probable that Cur- ran may play some of the attrac- tions slated for his Frisco house at the new one. The new lesstes «re «lsr, f(.rif'rri- platiMg several new piodu' tionn. **.'ontinu«d from page mence operations by Nov. 1, next. Ttie ol\j« «.tivo of the rclcntu*n ot iiik« ts in the Centr.il A^'H' V and return«d to tlie theatre Hlu>rily be- fore tho time of the performance, for di<t!ihution, Is to prevent a<'- tual coupons from falling into other hands than those pui *. liasing. The holder will be identified by the num- bereil sliji i.^sin d by the Crniral Agem y, either lor current or ad- vance perfornuinces, with an edu- cational publicity plan through the dailies to api>iise the publi(> of the system in all particulars. The num- bered slip will carry no informa- tion biyond the name of theatre and date of porforinaiui'. It i.s not known the nature of the final agreement Leblang expects to enter into with the managers. Some smprise has been expressed .at tiie 10 per cent, only premium. Leblai^g Is reported to have Informed the managers the 10 per cent premium idea is the only one to gain the comideto contidenco of the public, since it would be uniform in per- centage and allow the purc ha.s* r to know exa«'ily what should be paid. In the Central Agency all box office prices will be made plain, with the 10 per cont U) be comput«'d and added by the purchaser. Tickets may continue to be bought through the box ofUce, also to be looked upon as a branch of the C<'ntral. but with the exception that a box office buyer will save the 10 per cent premium charge. Box offices will also deliver a redemption slip. From accounts yesterday nearly all of the New Tork managers had acceded to the Central Agency plan, with the excei)tlon of A. Jj. lOr- langer. Erianger, it was said, has delegated Flo Ziegfeld. owing to ill- ness, as his representative. The Central Agency system is about the same skeleton outline now as was broached by Leblang a year ago. It simmered then and out. Presently with the expose of the ticket selling on Broadway by the authorities, It eame up again with tho managers greatly favoring it as the only solution of the legit ticket problem. It Is conceded that the gouging for tickets has harmed the lepit business in New York. Uniformity of the Central Agency as outlined to expected to offset the stigma the legit has been unable to bear up un- der and restore confidence. Not Entirely Approved The Leblang plan does not meet with entire approval along l?road- way. There are a number of rea- sons why, some ticket experts sny, the plan will not work out. In some points they agree that the idea has some points that might be an im- provement upon the present system, but. on the whole. It Is considered a theory that Will not fully work out in practice. One terse criticism is that patrons who pay top box office prices could not be expected to st.and in lino in a theatre lobby to redeem the slips issued by the central office. It would entail a double operation, that of the first buying the slip .it the central office or box office and later "cashing in the slip." Patrons of the orchestra floors want possession of tickets and are counted on to shy at mingling with crowds at the last minute. Critics of the Leblang idea believe the cen- tralized system wouM < bavc p^'ople away from the theatre inst«»ad of drawing them in. Among the theatre element tlw samo obj«etion, vrd^fd when the original central tiek«t office plan was mentioned still goes. Cei*talft managers have declared th« y would never band over control of their tickets in th<- manner outlined. The suspicion still exists that it Is a case of the Shuberts and their affilia- tions versus the Krlnti'Tr rrouft. In- dirations are that the latter are wary of the plan because of possible control which may be switched later on. Issuing Stock It is understood that Leblang pro- poses to Issue preferred and com- mon stor k for the central ag<'n< y, and that common Kt*)ck will be is- sued to theatres, such stock to pass with the lease should there be eharu"' in ov^nership or leayrvliijt. The (juestion arises whether v(>ting power goes with the common stock. If so it is figured that the Shuberts would li.ave morr Kl>.ar« s th.-tn .any oth^r single Arm In New York and that thev could w ith the aid of a 6 ACTIONS PENDING THROUGH im. SPIDER' To date arr «5ix lav\ suits aimed at "Tlie Spid. r. ' the outstanding dramativ' success of the spring. The general basis of the actions Is that of plagiarism, other writers claim- ing originality. (>no of tht sutfs Wa& autoruatJcaJ- ly dispos«tl of l.ist w»>ek, whon Albert Ixnyis ami S.im II. ilarns, "The Spider's" prt»ducers, bought "Triple Crossed." They are con- tiiniinu the show in New York for .1 time, but will kcop it I'tf ilie road to protect "The Spider." Both plays have tlie same Idea of audience par- tiii|Kati<.>n. Another suit wa.s dropped. Bd- gar Allan Woolf claimed Infringe- ment on his on«^-act pla\Kt "The .Merton Mystery. ' but later discov- ered no similarity. l»ending are the actions by the authors of **The H.idlo Murdor," "Tlio Cray Phan- tom," "The Eye Wumsss ' and "The Kvil Hour," the latter having en- tered the field last week as a com- plainant. Upon iuve.^iiguuon, l-<>wis traced the idea of contact between the stage and the audience back to the 17th century in th<^ writings oH Ikaumont and Fletcher. "The Spider" moved to the Muslc Tlox last wiek ami in nine per- formances bettered $L'i:,000. ''Blondes" for Stock Many shows that have and still playing Broadway and the road have been released for stock, bvt under restrictions. *'GerUe»" still current at tha Hayes, Is BOW a release with pro- visions. "Gentlemen Prefer Blondes," which will take to the roadHSl^ season. Is another of the late re- leases. "The Little .Spitllre, ' formerly on Broadway and which Just closed ei^'ht werks at the Cort, Chicago; •The (Jreen Hat," ".Set a Thief.* "I'igs," "That Dont)van Affair" and "The Butter and Kgg Man" are also bf ing offered stock producers. "Cradle Snatchers," just released as a picture and also with a road season ahead, is marked for all territory except the western coast* few allied managers #'ventually vote the confr*<l as tluy wish. Tli.it is with the proviso that I.eblang will not so arrange his eonlrac t.'- to pre- vent tho business being taken awav from him. TM k» t m« n do< laie tl.i _\ (bi tn.t thirik it U(>uid pos.>-ible to <)p< r- STOCK ENGAGEMENTS American Theatrieal Agency, Chi- cago, made tho following place- ments last week ; Tom Sargent and Kdwin Hailey, .M. T. Jones. Kokomo, Ind.; \V'alla(re Norman, Ralph Men- zing, .less Hall, Arthur (Jale Stock Company, Galesburg, III.: Robert HIackerby and Kermit Rowe, Al Jackson, Madison, Wis.; LuclUo Charles, Bob Burton, Flacine, Wis.; Jay Collins* li^. G. Gifford. Dulutii. Minn. Milt Schuster in.'idf the following placements last week: Lynton Brant, Allan and Betty Walters, Martin Sisters, June Hose, Orpha .Schildts, Danny Galloway, with lial C. Worth, Aztec, San Antonio, Texas; Violet F.aust, Billy Ireland, .<=>tar. Bockford, III.; Fred Wilson and wife. Harvey Orr*s Million Dollar Baby Company Waterloo, Iowa; J. C. Murphy ana wife, Billy Wilson Company, Water- loo, Iowa; Jessie Franciii and Miek«-y Wiley, Tbrt Wils*>n and wife, Ed. F. Galligan, Lincoln Square. Indianapolis, Ind.; Charles r.arr, McCnll-Bridge Players. Miller, Milwauk<:e, Wis.; Stanley Montfort, .McCall-Bridge Players. Lyric, Du- luth, Minn. ate on a 10 per cent basis to profit, especially If chnrre accounts .ire to be cm jefi. If the central office be- comes an actuality there Is no doubt that a number of the smaller ar'neies will dlsapfx-ar. The more r<;presentative brokers seem con- fident that a certain group of well known producers will not subscribe to the Lebl.in?: plan and It the central office does start oQ'rating, these brokers intend curtailing their - offices, handling only the successes f>resent« d by the group exp^Oted to rc-maln oiitsid* (he central office. Cut Rates Remsin The central office is not designed to do away with cut rates and it Is to be exp<'Cte(i that just ns many bargain shows will b' «jn saK there as heretofore. There Is no qmstion ubrtut Le- bl,'in^;'v sinf<rify or liis willingness to niake u laij^o Investnient. He owns the Kal.ser Kellar building on 42d street and has bf.i\ offered a high rental for it H<Ave\er, he hiuj h« Id olf, waiting for the central ticket of flee plan to materialize. An ;iirndr \y to lie built thr«»u>;b into tiie rf h.ifi tli«:i'M whieh. Itself eX-^ t« lids into Kid St t • • t.