What Goes Into An Actor’s Salary Contract Negotiation?

by on May 7, 2013

in Entertainment

Robert Downey Jr in Contract Negotiations with MarvelWith Iron Man 3 in theaters and Avengers 2 coming up, there’s news and notes and such floating around about the cast and crew needing to, or already having reupped their contracts.

Of the cast, Robert Downey Jr. has yet to enter into negotiations with Marvel.  And in those negotiations, are various factors that actors have to consider or ask for.

This piece is a very basic piece about the basics of how an actor looks to make their income from the roles they play.  This does not even take into account things like likeness licensing (For toys), publicity appearances and such.

How An Actor’s Contract Might Look Like

As with any new contract negotiation, especially with a known and very popular movie franchise or known talent, it can be a tricky proposition for both parties, the actors and the studios.

At stake in contract actor negotiations are issues such as a Guild Minimum, upfront pay, back end compensation, break even points and box office bonuses.

A super basic compensation package includes what’s called a Guild Minimum.  The guild minimum is a provision in the Screen Actor’s Guild contracts that state an actor will receive, at minimum, $65k for work in a feature film.

This is something you’d see in low-budget movies like District 9, A Serious Man and others.

But that doesn’t quite apply with the established Marvel Universe of characters.

Upfront Pay is like a signing fee to come on board with a studio.

{Hey, come be in our movie, here’s a million for just saying yes.}

Net Points

Break Even Points, simply put, are what percentage of profits the actor could make once the studio breaks even with their production costs.

{This is something that’s attached to the back end monies.  So hey, once our production costs are met, we’ll give you another 1% of our profits.}

But as it’s been joked about, these seem or are referenced as useless “points” because somehow, studios never seem to see break even points in their “bookkeeping.”

Gross Points

Back end compensation (AKA “participation” or “contingency” payments) is what the more popular actors receive.  It’s a percentage of the box office proceeds and sometimes called “first-dollar.”

This could also include monies from beyond the box office proceeds (after they get their split from the theater chains), and could also include small percentages of VOD, DVD, broadcast rights and other various market sales.

{Hey, listen, we’ve already given you a million, but we’ll also give you 1% of all the box office profits, dependent on certain milestones.}

Box Office Bonuses or bumps are monies that an actor could ask for once box office receipts hit a certain agreed upon threshold.

{Hey, if we (the studio) make $50 million from the box office, we’ll include another $100k.  If it hits $100 million, we will give you another $100k.}

In the big boys world, (Huge name actors) there’s something referred to as something like “10 against 10.”  This means that the studio might advance $10 million in advance of any income, and this is gambled against 10% of the gross points.  Studios shiver at these kinds of deals because they could be giving out money they don’t make.

The “cash break” or “cash-break zero” is what’s called a bit of a hybrid of the two different points deals.  The actor might give up his upfront fee, is then considered an investor in the movie because that fee is “recouped” into the budget and the talent gets a good-sized chunk of the revenue after the studio makes most of its costs back.

These deals also apply to the movie makers.

= = =

Channing Tatum at the 'G.I.Joe: Retaliation' - UK Premiere - Red Carpet Arrivals

As you can see, it’s a complicated mix of bells and whistles that are balanced against things such as the status of the talent.  Folks like Jennifer Lawrence and Channing Tatum are up and coming.  Heck, the G.I. Joe sequel release date was postponed and redone to put Tatum back in the movie because of his growing popularity.  So one can only imagine his leverage.

Much like Robert Downey Jr.’s  amount of leverage he pulls, because the movies he’s a part of have much larger incomes than the other Marvel movies the other folk are a part of.

And then there is the talent that fears not working.  It’s a crazy mix of business and art.  Very crazy.

And to think, after all this fairly ugly contractual agreements are made, these great actors still muster up the talent to make incredible movies for the movie (or TV) fan.

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