Getting Paid (Part 3 of 4)

Interchangable Terms:  When negotiating a profit provision in a contract, the definition of profits must be well worded, clearly defined and negotiated very carefully.  Net profits, gross profits, gross revenue, gross points, adjusted gross profits, adjusted net profits, producer net profits—these terms can necessitate extremely different calculations or very similar accountings, depending how they’re worded, when they are calculated (i.e., before or after certain other profit participants) and what deductions are or are not acceptable.

Percentages: Many indie films will offer their actors a percentage of the producer’s net profits, and usually that is defined as 50% of 100% of the total profits.  This isn’t always stated clearly, and it obviously makes a big difference if you’re getting 2% of 50% or 2% of 100%.  These nuances become significant when and if the film earns a profit, and that is why a considerable amount of time is spent negotiating these definitions.

MFN in Profit Definition: If there isn’t time to come to an agreement on the definition before a client agrees to take the role and signs a deal memo, I will push to have the deal memo add a phrase that obligates the producers to give Most Favored Nations (MFN, further discussed in a previous posting) on the definition, i.e., “2% of Producer’s Net Profits, to be defined no less favorably than any other profit participant, including all cast members and producers.”  This way, no matter how they define ‘Producer’s Net Profits,’ as in this example, I know that the actor will be participating in the same pool as all the participants, including the producers. There is no doubt the producer’s will negotiate the most favorable definition they can draft for themselves.

Please note: The information contained herein does not constitute legal advice and is intended for educational and information purposes only.

Related posts:

  1. Getting Paid (Part 2 of 4)
  2. Getting Paid (Part 1 of 4)
  3. Most Favored Nations (PART 1 of 2)
  4. Most Favored Nations (PART 2 OF 2)
This entry was posted in Actor Contracts and tagged , , , , , by Lynn Elliot.
Lynn Elliot

About Lynn Elliot

As a former member of The Actor’s Network, Lynn Elliot knows firsthand there is no better organization for supporting and encouraging actors in building their acting careers. Lynn currently practices as an entertainment attorney in Los Angeles and New York City. She concentrates on representing talent in film, television and music, and performs production legal work on independent films. Her areas of expertise are film and television production agreements, talent and development agreements, music licensing and recording agreements. Her clients include actors, production companies, producers, directors, screenwriters, musicians, music managers and producers and record labels. In a former life, Lynn was a filmmaker, actress, model and film producer. Lynn strongly believes the law should be accessible to everyone and encourages her clients to understand the business aspects of their creative profession.