American Idiot: The Value of Billie Joe Armstrong
(3 pages of text)
Case (Pub Mat)
In October 2010, Ira Pittelman, lead producer of the Broadway musical American Idiot, had to evaluate one week's grosses from when star musician, Billie Joe Armstrong, was put into the show in New York City. The rock star had been enthusiastic about filling in for an actor in the musical based on an album by his band, Green Day. Audiences had also been enthusiastic, and revenues for the play were up. The producer had to determine whether Armstrong was the source of the increased revenue and, if so, how much his performance had contributed. He needed to determine how to respond should Armstrong offer to act in the musical again. Should he accept such an offer? How much compensation should he offer the star?
This case is intended for use in an advanced undergraduate business course or in an MBA course. The case provides students with an opportunity to examine a common scenario in entertainment: the decision regarding whether to hire a star and how much the star’s performance is worth. After working through the case students will be able to do the following:
- Explain simple methods to control for seasonality, and describe how these can be used in an entertainment environment.
- Create a difference-in-difference analysis.
- Evaluate the risks of paying higher upfront cost rather than participating in revenue sharing.
- Indicate how stars are used in the entertainment businesses.
Arts, Entertainment, Sports and Recreation
United States, Small, 2010
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