EXCLUSIVE: When Hamilton began Broadway previews on July 13 at the Nederlander-owned Richard Rodgers Theatre, it already was a smash hit, arriving with advance ticket sales of $32 million, sold-out houses for months and a list of celebrity endorsements that included President Obama and grows with each week while legal scalpers offer day-of-performance tickets for $3,000 the pair.

Screen Shot 2015-09-18 at 3.16.51 PMHamilton also arrived at the Rodgers with one considerable advantage over some other new shows: a low-cost tryout at the Public Theater that was wholly financed by the Broadway producers. Such arrangements, called enhancements in the odd lingo of commercial shows initiated in publicly subsidized theaters, are more the norm these days than the exception. And the benefits run both ways: For a fraction of the cost of a Broadway production, commercial producers get a show on its feet and in front of an audience before raising the entire $10 million to $20 million and more required to mount a show on Broadway, while the nonprofit theaters get a steady stream of  income if the show transfers and is a hit.

Lin-Manuel Miranda’s musical about America’s first Treasury secretary offers a perfect illustration of this symbiosis. Although the producers of HamiltonJeffrey Seller, Sander Jacobs and Jill Furman —  declined to speak with Deadline for this story or to provide figures, documents obtained under New York State’s Freedom Of Information Law (FOIL) reveal how the show was developed and mounted at the Public Theater under an enhancement deal for $1.7 million and then transferred to Broadway as a $12.5 million hit that had unprecedented rave reviews and promotion before a single preview had gotten underway.

Seller, a veteran who with sometime partner Kevin McCollum first identified and developed Rent some two decades ago, formed a limited liability corporation, Hamilton Downtown LLC, to raise the money for the Public Theater production. His partners, Jacobs and Furman, are also producers with long experience working the Broadway bazaar. The original offering, according to an October 2, 2014 filing with the state Department of Law Inspector Protection Bureau, calls for $1.9 million, with a minimum of $1.7 million for the purpose of “developing the Play, providing the Public Theater Contribution; paying expenses relating to the development and exploitation of the rights in and to the Play” for the  Public Theater production of Hamilton set to begin in February 2015. The amount to be given to the Public Theater is stated as $1.7 million.

Here’s where it gets interesting. The enhancement agreement stipulates that the commercial partners will have no control, artistic or financial, over the Public Theater presentation of Hamilton, nor can they benefit financially from the tryout. This protects the Public Theater’s nonprofit status as a developmental theater; it also protects the creative team led by Miranda from commercial considerations during the Public Theater run. The Public, under artistic director Oskar Eustis and executive director Patrick Willingham, provides its best theater, the Newman; its membership and, most important, a safe space for doing the work.

But that $1.9 million enhancement  fund also is protected.

The disbursements made by Hamilton Downtown LLC for the Public Theater production included $10,000 to Ron Chernow, whose biography of Alexander Hamilton inspired Miranda and formed the basis of the musical; $30,000 for the physical production, and a $175,000 advance to Miranda for writing the show (smaller amounts were paid to other members of the creative team). Any money made from the run, which was extended several times and was completely sold out, returned to the Public Theater coffers, a good thing. The Public would also have a stake in the Broadway transfer, which was all but inevitable.

Hamilton Lin-Manuel MirandaOn April 13, 2015, documents were filed for Hamilton Uptown LLC detailing the Broadway move, which was delayed several weeks at Miranda’s insistence to allow the creative team time to do further work on the show after the Public run closed. Uptown Hamilton budgeted the Broadway production at $12.5 million. The offering states, however, that “the Downtown Company Capitalization, which equals $1.9 million in the aggregate, will be deemed to be part of the the capitalization” of Uptown Hamilton. The actual cost of the transfer will be $10.6 million.

Uptown Hamilton agreed to pay the Public 5 percent of net profits initially, rising to 6 percent at 200 percent of recoupment. The Public also gets a weekly royalty of 1 percent of the gross weekly box office receipts, rising to1.5 percent after 110 percent of recoupment.

Neither the producers nor the Public responded to a request to comment on these figures, but here’s a translation and analysis: “Gross receipts” is what the box office takes in, minus deductions for credit cards and other expenses that can add up to about 8 percent of the total. “Net profits” is essentially what’s left after the bills are paid: recoupment, rent, fixed theater costs, salaries, management and certain royalties.

What’s the bottom line? Very good for the Public Theater (not to mention the producers and the creative team, who share in various iterations of the net and gross figures). Last week, Hamilton took in $1.7 million at the Richard Rodgers, an extraordinary 17 percent over its gross potential, during a slow week on Broadway. Subtract 8 percent for the actual gross, and you still have receipts of  about $1.5 million. It’s a big show with a large cast, so let’s estimate weekly running costs of $650,ooo, leaving profit of about $900,000 in a very good week. (The producers declined a request to say how much Hamilton costs to run on a weekly basis.)

For the Public Theater, $17,000 (1 percent of $1.7 million) before recoupment, which will likely come within six months. After that, its earnings from the show could hit $3.2 million. Even if the running expenses are as high as $750K per week, the Public would still receive the equivalent of $57,000 per week, just shy of $3 million per year, to continue its good work, which includes Free Shakespeare In The Park and all those shows down at the Public in the East Village. All these numbers will adjust up or down and pay out on a quarterly basis, but the numbers should be close to these.

In a time of diminishing public support of the arts, these deals have been a lifeline for nonprofit theaters including the American Repertory Theatre in Cambridge, MA (Finding Neverland), Hartford Stage (A Gentleman’s Guide To Love And Murder) and New York Theatre Workshop (Rent, Once) among many others.

Fun HomePublic Theater/Newman TheaterAt the same time, the producers enjoyed the benefits of a tryout for a fraction of the cost of mounting a show in a a commercial venue. (The Public is also receiving income from the commercial transfer of the Tony winning musical Fun Home, although that show is running in a much smaller theater and is not expected to generate income on the same level as Hamilton.) A spokeswoman for the Public said that Eustis would not comment on income from the theater’s commercial transfers.

Through a spokesman, Seller also declined to comment on a report in today’s New York Post that cast members from Hamilton are looking for greater remuneration for their contributions to the workshops and enhanced run. That demand eerily echoes the protest by actor/dancers who participated in the original workshops that resulted in A Chorus Line — a show that began at the Newman Theater and eventually filled the Public’s coffers to the tune of $25 million while running 6,137 performances on Broadway.