How do we get big $$?



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  • #16

    I checked the links you provided; kinda confusing stuff some people have written. And kinda frustrating.

    The term "backend" refers to money that comes in after the picture is released. A writer's backend is his share of profits, and/or bonuses based on box-office performance.
    Standard profit participation for most begining writers is 5% of the net. If another writer is involved, you each get 2 1/2%. (And due to the nature of studio accounting, on many pictures -- certainly on one with a major star who's got a percentage of the gross -- you really can't expect to see this money because the studio numbers will indicate that there is no net.)

    The purchase price must be exercised before the picture can be shot; thus, the first day of principal photography is the deadline used contractually. (Whether this is a WGA deadline or just custom, I don't know.)

    If a writer is entitled (via negotiation) to a production bonus, the first day of principal photography will usually be the trigger for that, too.

    Let's say I'm a studio. I option your script for 1 year for $150,000; I (typically) negotiate for an option extension (a 2nd option period) -- for another year -- for $100,000. The purchase price we agree on is $700,000. Your option agreement specifies these amounts.

    The deal is likely reported in the press as $150,000 against $700,000. Why? Because you're getting a minimum of $150,000 and the total you're going to get for the rights is $700,000.

    (Actually, if you've negotiated for a production bonus, sometimes that will be added to the $700,000 for the purpose of a press release. It's me saying "Hey, I'm paying really big bucks for this, because it's soooooo great, don't all of you other studios out there feel just awful that I've got it and you haven't?" And your rep might like it reported that way, too, to build your reputation. But, in fact, since the bonus will depend on production, and I may never actually shoot your script, it's kinda cheating to include it this way.)

    As soon as you sign your option agreement (and the accompanying paperwork; i.e., Simpson-Rodino, tax form, writer's certificate, etc.), you get a check for $150,000.

    A year goes by. I haven't yet greenlit the project, but I will as soon as I get a commitment from a director and star I want to go with. So I exercise the option extension, because I want to hold onto the option. The letter with which I formally exercise the option, includes a check for $100,000. That buys me another year to get this thing in front of the cameras.

    I get the actor/director pair I want; I greenlight. We go into pre-production. If the 2nd option period is about to be up, I will exercise the option to buy; otherwise, I loose your script. But if the end of that 2nd option period isn't nearing, I may wait until 1st day of principal photography, so I don't have to take that money out of my revolving credit fund just yet; this minimizes the interest I'll pay on that money.)

    When I exercise the option to purchase, I send you the $700,000 minus the $150,000 I've paid you for the 1st option period; i.e., you now get $550,000. I am deducting that 1st option amount because like most option agreements, yours deems that 1st option money "applicable against the purchase price." However, if I've exercise the extension, the amount for that (here, the $100,000) is, in your agreement as in most of them, deemed "not applicable," so I can't deduct that. Thus:

    If, at the end of the 1st option period I decide I no longer want your script, I drop the option (i.e., I neither purchase it nor exercise the extension); you have pocketed $150,000, and you still have all the rights.

    If I exercise the extension but then decide I no longer want your script, I drop the option (i.e. don't purchase); you have now pocketed $250,000 and still have all the rights.

    But if I want to go ahead and shoot it, I've got to pay you your production bonus by the commencement of principal photography.

    If I want you to re-write, your writing fee may or may not be included in the option amount. It depends on the numbers. To include the writing fee, an option amount would have to be large enough to include both WGA minimum for the option (which used to be 10% of the purchase price, don't know if that's changed) plus your at-least-WGA-minimum writing fee. Enormous option amounts almost always include the writing fee -- unless, of course, the spec writer is not being engaged to re-write, but was able to get that huge sum up front just because his script is that hot. Sometimes when figures are released to the press, the "option" money will include the writing fee. So, you can't necessarily tell from the "x against y" quoted in the trades what exactly has been included in that "x."

    Lots of times writers will say they've "sold" a script when they've really sold just the option. They're thinking positively. Similarly, studios or producers will say they've "bought" a novel or script but they really have just optioned it. That's one of the reasons why it's hard to pin down actual fact from press releases, stories in the trades, etc. And in fact, occasionally you'll find a piece in one of the trades written by someone who's got his numbers screwy -- someone who apparently doesn't understand how this works, or who has gotten the numbers switched around. And you know that when he interviewed the producer his notes must have been a mess.

    That's one of the problems of trying to figure out how much other people are making,and why when a producer/studio does a deal with a writer, someone in Business Affairs gets "quotes" for him -- they don't rely on what's been reported, or on his agent. They call the other companies he's worked for recently and get the actual contractual terms; i.e., not just the option amount, but whether that included writing; triggers for bonuses, if any, etc.

    Sorry to be so long-winded. I've gotta get out more.


    • #17
      Lulu, wow... Thanks, greatly appreciated. You've certainly cleared up my confusion about precisely how these deals are structured. Sounds like studio options are not so unusual afterall, and can be a little more than 5 to 20 percent of the upfront amount, which was my original (but far more limited!) understanding. I've got a lot out of these threads. Thanks everyone.


      • #18
        "How do I get my book published, find an agent, write for television, etc.? I am often asked for advice and I must tell you frankly that I have none to give. There's a reason. If you want to become a lawyer, there is a path you follow and it is definable. And that is true for many sorts of jobs. But the entertainment business is different. There is no defined path.

        Everybody comes to it a different way. And the truth is that everybody has to find their own way. This is a business that demands aggressiveness and individual get-up-and-go. So in the end you'll have to do what I did, and eveybody else you can think of did. Figure it out for yourself and make it happen.

        However, I will say this: the first step is to stop asking for advice. "

        Michael Crichton


        • #19
          I just want to add one thing. I should have edited to correct this earlier, but I wasn't thinking quickly enough.

          I think that strictly speaking, "backend" money doesn't have to come in only after the picture opens or is made. Ancillary income is considered backend -- free and cable tv, dvd/home video, etc. So if I'm producing and I pre-sell dvd/home video before we shoot, I may use that money to help meet my budget, but I think it's still considered "backend." Doesn't affect what or when the writer is paid, but I wanted to clarify just in case someone wants to beat me up later for the slip.


          • #20
            I'm someone who has both optioned and sold to studios.

            In the previous discussion on this topic, I think I was answering someone who said that spec script acquisitions are almost never outright sales, but almost always options.

            And that has not been my experience.
            Not that there aren't a lot of options, because there are.

            And options are not always a good deal for the studio. When the option period runs out and the studio has to negotiate a new option, the writer can choose instead to walk away. I have a good friend who just recently did that because he didn't like the direction the rewrites were taking.

            So the studio is out the money it paid him, and two sets of expensive rewriters, because it no longer controls the underlying rights and cannot move forward on the project.

            But as to the basic question -- how do you get big money for a project? My method was to have a project that was wanted by more than one buyer. Getting into that position required both a certain kind of project, and careful work by a good agent. Sometimes you don't actually have to have multiple buyers -- just one buyer who feels strongly that if the script goes out to the open market, others will bid on it. To stop that, the first buyer makes a preemptive offer, which has to be high enough to make it worth the writer's while to sell it without further shopping.

            If a producer shows serious interest in purchasing your project, you need to get hooked up with a reputable agent and a good entertainment attorney.

            By the way, "serious interest" from a producer often translates to the producer taking your project to his or her studio, and at that point it goes through another layer of readings and approval. A producer can love a project and it will still get shot down by the studio.


            • #21
              I didn't mean to imply that outright sales "almost never" happen. My original response to the topic of 'six-figure options??' began, "Someone may need to clarify, but I think the majority of sales, such as those on are, as you put it, 'non-sales'. The upfront cash is actually option money, not purchase money". The question that clarification spurned began "I was under the impression that the typical script deal with a studio commences with a purchase option..." The implication of all this is that I'm suggesting outright sales are atypical and make up the minority of script deals.

              As has already been pointed out, I was under that impression having absorbed a number of posts on the mws newsgroup that dissect the typical script deal in detail, written by a writer/producer who also had several sales/options to studios under his belt at the time he was posting (back in '96). Such specifics on the business side of things are hard to come by and these are the most thorough explanations I've ever come across on the subject:


              Considering Lulu's contribution, there are obviously a number of experienced and well informed people with diametric perspectives on the question of whether the majority of deals that are announced as 'script sales' are options or outright purchases...


              • #22

                This is really an exceptionally interesting thread -- I knew a lot of this, but not all -- I'll have to copy this stuff down for reference when it matters......

                Thanks to everyone who spent so much time typing the details out ......


                • #23
                  This is all quite educational, and I've enjoyed reading the informed opinions. My suggestion to the original poster, though? Put it out of your mind and worry about something you can control, like writing an even better script.

                  I've seen SO SO SO many writers, including yours truly, get so worked up when a player asks to read something, that they sit around in a state of utter paralysis, daydreaming and fretting over something that will probably never happen. It's easy to waste weeks or months in this state, during which you lose all manner of writing momentum that could've been put to good use.

                  If they call and want your script, you'll figure out what to do in a great big hurry. Until then, focus on becoming a great writer. When something's ready, intelligently put it into the submission pipeline, then move on.


                  • #24
                    Just to toss in another opinion.

                    You're not going to get offered really big bucks as a first time writer, unless A your spec gets involved in a bidding war, B your spec is soo good that the company that has read it will pay a large amount to get it before others companies can read it and start a bidding war.

                    Anyhow, I wouldn't worry about it, because if this becomes a problem, it's a really good problem to have.


                    • #25

                      I was just able to pull myself out of my paralyzed daydreaming to respond to CHOP. I was just asking a question, not going into paralysis, but thanks for the concern and for the overwhelming positivety;

                      "daydreaming and fretting over something that will probably never happen."

                      That's always a help.


                      • #26
                        Re: $

                        Hi, Billy & Brough...

                        I just wrote a lengthy post (all mine tend to be, don't they?) and then I got tossed offline and it's now gone into the ether. So I don't have much more time, but...

                        I do want to thank you, Brough, for that link. Interesting and also frustrating.

                        The guy who posted the first few responses... he's using "backend" in a way in which most business affairs people don't. He's really using it to kind of mean "middle." He makes himself clear, but just so you know, I've never heard a b/a person use it this way. And that purchase price is considered by the studio/producer an upfront expense.

                        Bonuses are negotiated, unless there's been a recent WGA change I'm not aware of. It's not unusual for a 1st time writer not to get one.

                        When someone on that link posted that he'd once received a bonus that included the purchase price? Baloney. I suspect he received a single check -- triggered by the 1st day of principal photography -- that covered both amounts, and apparently the stub didn't break down the total into the two amounts. There's no such thing as an option agreement that doesn't specify the purchase price.

                        The usual deal for rewrites is for 2 sets of revisions and a polish. And the WGA specifies how much of the writing fee is to be paid for each step.

                        Oh, yeah... the length of time a writer has for the rewrite? This guy is... well, nuts. 18 months?! The Guild specifies the length of the writing period -- I'm recalling 6 weeks, but that may be television. Anyway, it's going to be a long, long time only if the project is in 2nd position to other work the writer is doing (and the studio knows that). The WGA specifies also the length of time the studio has to read the rewrites and get back to the writer.

                        I'll post more eventually, when I finish reading that link, but I must here and now declare to the world that I go absolutely crazy when someone -- that guy posting info on the link, for example -- misuses the word "comprise." Really crazy. If the link weren't so old, I'd make myself really obnoxious and post to him to explain that A is composed of B and C; B and C comprise A.

                        The fact is, Billy, that -- as some of the posters have already mentioned -- most of this stuff you don't need to know, and when you need it you'll have someone there to deal with it. As someone here sagely posted, it's not something you can control. The marketplace, the ever-changing creative input and business models... none of us can. All we can control is the words we put on the paper and how we act on our responses when we read them.