As the New York Public Library website explains, what's typically thought of as the first musical, according to modern standards, was performed in 1866 at a venue called Niblo's Garden, which no longer exists. (Niblo's Garden had a 3,200 person capacity, according to Musicals101.com.) Mixing music and live performance was nothing new. It dated back to Ancient Greek theater and continued in one form or another all throughout European history, spanning high and low art, from opera to European music hall performances.
According to Britannica, the modern musical uses song and dance to further the plot rather than as a kind of sideshow to the narrative. The long run of performances beginning in 1866 most closely fits that definition. And it all happened because the Academy of Music had burned down, leaving a visiting European ballet troupe no place to perform.
Blending ballet with a melodramatic storyline, producers developed a new show from preexisting bits and pieces and found a spot to perform at Niblo's Garden. With that, the first Broadway show (by modern standards) was born. It was a smashing success, according to 1902's "A History of the New York Stage from the First Performance in 1732 to 1901" by Thomas Allston Brown.
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