The lullaby of Broadway has become a battle-cry, as a bitter dispute between big-time producers and all-powerful unions threatens to kill off America's wounded theatre capital. Daniel Jeffreys reports from New York

It's 7pm on a Thursday night at the corner of Broadway and 45th Street. The streets are moderately crowded but they should be packed. There are eight theatres in immediate view and four are dark. A party of six scuttles from a tourist hotel. They head for the Minskoff Theatre where Sunset Boulevard will convey the comfort of acclaimed success. Middle-aged and well-off, they seem ill at ease with big city traffic. That's because they are not New Yorkers. In the last year, three out of four Broadway tickets were purchased by people who live outside the city. Broadway has become little more than a tourist attraction, a land of big musicals. Broadway playhouses are shuttered while playwrights take their work to warehouses in obscure parts of town.

"Broadway is dying," says Frederick Zoller who produces playwright David Mamet. "The only production that works there is an insipid revival, a British import or a star vehicle."

Mamet is even more acerbic. "Broadway landlords are like bad gangsters. They come into your house and steal everything, including the toilet. Finally they die as well because there's nothing left to steal." Both of Mamet's last two plays have been off-Broadway productions. He says the serious theatre has deserted Broadway.

"When it comes to original material, Broadway is a joke," says Cameron Mackintosh. His production company is a hit machine, churning out successful musicals like Phantom of the Opera, Les Miserables and Miss Saigon. "Nobody can bring a new play to Broadway unless it has an international reputation or a big star," he says. "It's impossible to do anything artistically risky."

Broadway is facing it's worst crisis in a generation. Not since a strike made "the stem" dark in 1974 has there been so much panic. On the surface, there's good news. The 1994-95 season had the best attendance record for 12 years. But there were only nine new plays, 11 revivals and three musical revivals. Nine of the play revivals began off-Broadway, in smaller theatres.

In the last 20 years, the cost of mounting a Broadway production has risen by over 500 per cent. Ticket prices, by contrast, have just kept pace with inflation. This summer Broadway could go dark and stay that way for months. Broadway producers want big concessions from the unions and theatre landlords. "It's going to be a blood bath," one landlord says. "I'm not sure who will be left standing."

On Tuesday of next week the theatre producers will present the unions and landlords with a list of demands. They want nothing short of a revolution. The landlords accept there must be change. The Nederlander Organisation owns 11 Broadway theatres. "Every industry in America has made adjustments," says James Nederlander Sr. "Now it's Broadway's turn. The current working practices do not make sense, Broadway has become a dinosaur."

One of this year's musical revivals is How to Succeed in Business without Really Trying!, starring Matthew Broderick. The play was last on Broadway in 1961 when it cost $310,000 to mount. This time around the initial outlay has been $5.2m. Just to keep the show running each week will cost $410,000.

How to Succeed was produced by Michael David of Dodger Productions which brought Guys and Dolls to Broadway. "There's nothing sensible about this business," he says. "You are here because you've caught the bug. It requires a certain amount of mental illness."

"I don't go along with that." says Andrew Lloyd Webber. His Really Useful Group dominates Broadway with productions like Sunset Boulevard and Cats. "This is a business like any other," he says. "We must have change." That won't be easy. Broadway is littered with arcane practices that send production costs sky high.

Stewart Lane is a producer with a long list of credits. His latest play is Fortune's Fools by Frederick Stoppel. It received great reviews and now plays to a full house at the Cherry Lane, an off-Broadway Theatre. "I could not have produced this play on Broadway," he says. "It would have cost at least three times as much to mount." Lane owns the Biltmore, a famous theatre on 47th street which is now almost derelict. "I would like to turn it back into a playhouse," he says, "but I won't re-open until I get more co-operation from the unions."

Off-Broadway theatres are usually non-union. All of the Broadway theatres are closed shops. There are 17 Broadway unions for everybody from ticket sellers to theatrical agents, actors to stage hands. The International Alliance of Theatrical Stage Employees is the most powerful. The IA is the union for the carpenters, stage shifters, electricians, and set loaders. If they down tools, the show stops. These guys make good money. Glenn Close is dating a carpenter who works on Sunset Boulevard. The rumour is, he picks up the bills.

The new president of the Broadway branch of the IA is Dennis Larkin. "My members do not earn fantastic sums of money. The producers earn fantastic sums. This is an insecure business and we need to be paid a fair wage."

"That's nonsense," says Robert Franz, a producer who is managing director of the Theatre Guild. The guild has been producing plays on Broadway since 1919. But now they are moving their productions off-Broadway or into regional theatres. "Broadway's costs are out of control," says Franz.

Broadway union rules are reminiscent of the US car industry in the Seventies. There is strict demarcation. A painter cannot hammer nails, a carpenter cannot change a fuse. Only the curtain man can raise and lower the curtain. That's all he does. On Broadway, a play that doesn't use a curtain must still have a curtain man. Then there are the "minimums". The musicians union has a contract that specifies at least 20 musicians for a musical show. When Tommy came to Broadway it only needed 13. The producers of Tommy are still paying those seven superfluous musicians.

"The main problem is the take-in and take-out costs," says Stewart Lane. "They are huge and nothing gets done until overtime hours kick in. That's corrupt. That's what's wrong with Broadway - in order to get fairer working conditions I'm prepared to weather a strike."

He's not the only one. "We have established a huge war chest to see this dispute through," says Cameron Mackintosh. "We hope it won't happen but every one of our Broadway productions is prepared to meet a strike. It's in everybody's interest to strip away unnecessary practices. We have to do away with overmanning."

"Only a pygmy brain would blame all of this on the unions," says Alan Eisenberg, the executive secretary of Actors Equity. "We need to replenish the stream of plays moving through Broadway and there has to be a cheaper way of putting on plays. But there has to be mutual sacrifice. The producers blame the unions and the landlords but whenever I try to reach a producer they're at a beach house in the Hamptons or the Beverly Hills Hotel."

Robert Franz agrees. "There's no justification to put all the blame with the unions," he says. "The producers agree to pay outrageous fees to get a particular director or designer. Once a producer breaks the industry standard then he's responsible if costs run out of control." But even Franz with his deep Broadway roots is turning his back. "We are producing a new Rogers and Hammerstein musical, State Fair. But we won't launch it on Broadway, that would be far too expensive."

But they could, if there was change. At least that's what Edgar Dobie thinks. He runs Andrew Lloyd Webber's operation in the US. The Really Useful Group will be part of the seven-member negotiating committee that will face the unions - and they are ready for battle.

Dobie says the talks will be tough. "Andrew was very concerned when ticket prices for some of our shows hit $70 a seat. You can only pass costs on to the consumer for so long and we've hit the ceiling."

So far the unions look ready to resist. "We are only prepared to negotiate on a narrow range of issues," says IA president Dennis Larkin. "This will not be a wholesale renegotiation." Dobie thinks differently and he has the muscle to back his claims. "There are strong production companies devoted to the long haul." Cameron Mackintosh echoes that point. "I have never know so much co-operation in this industry."

That's ominous news for the theatre owners. In the past, the landlords have led the negotiations with the unions. The Shubert and Nederlander organisations with 28 Broadway theatres between them have led the way but Cameron Mackintosh and Andrew Lloyd-Webber are elbowing them to one side, although the owners won't accept that. "We are not being forced to the side by anyone," says Gerald Schoenfeld, chairman of the Shubert Organisation.

At the League of American Theatres and Producers, acting president Harvey Sabinson tries to take all sides at the same time. "Broadway isn't dying, it's still the greatest showcase in the world," he says. "I think talk of a strike is ridiculous."

Others say a strike and a period of darkness are inevitable and will purge Broadway of its sickness. "Broadway has to return creativity to the top of its agenda," says Cameron Mackintosh.

The producer Liz McCann agrees, although she's anxious. She plans to bring the Royal Shakespeare's Midsummer Night's Dream here later this year. "The production couldn't work off-Broadway, but this is a good time to try and make changes," she says. "The drift off-Broadway is changing the shape of American theatre. Plays in small spaces tend to be much less theatrical. British plays can afford to develop much more theatricality on the West End stage and that's why almost all the plays that remain on Broadway are English imports."

The US car industry was almost destroyed by Japanese imports because it would not control its costs. Now Broadway and the American theatre run the same risk. In terms of dramatic creativity it's already become irrelevant. Now it risks extinction. It looks like this summer all the best drama will be off-stage.

DAVID MAMET playwright

"The Broadway landlords are like bad gangsters. They steal everything"

CAMERON MACKINTOSH producer

"We've got a huge war chest to see a strike through. We'll do away with overmanning"

ANDREW

LLOYD WEBBER composer

"This is a business like any other. We must have change"

HARVEY SABINSON league of american theatres and producers

"Broadway isn't dying. It's still the greatest showcase in the world"

ALAN EISENBERG actors equity

"Only a pygmy brain would blame all of this on the unions"

GERARD SCHOENFELD theatre landlord

"We will not be forced to one side by anybody"