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July 2008 e-EntertainmentLawArticle Negotiating The Actor Agreement There are a myriad of deal points to consider when negotiating an actors agreement. Since actors can be demanding, the actor agreement often is the most challenging deal to negotiate. The following article provides a brief overview of some of the major deal points negotiated in these agreements. When negotiating the actor agreement the producer must determine whether the deal is governed by the rules of the Screen Actor's Guild (SAG). An actor's services are governed by SAG if the production company (or studio) is a SAG signatory or if the actor is a member of the SAG. The SAG Agreement detail provisions that establish minimum fee requirements for filmed pictures and regulate actors' working conditions (see www.sag.org). Compensation Actors are compensated according to three types of pay structures: guaranteed compensation, contingent compensation and deferred compensation. Guaranteed Compensation Actor agreements often are negotiated on a guaranteed flat fee basis. However, for well-established actors, the producer will consider the actor's quote (i.e. the fees the actor has recently earned for similar work) when negotiating the guaranteed compensation. Although established actors can command higher fees than the SAG minimum fee, most actors receive the SAG minimum (plus a 10 percent agent's fee). The minimum fee is dictated by the budget of the film (see www.sag.org) Contingent Compensation Most actors receive a guaranteed flat fee only. On the other hand, established actors usually receive some form of contingent compensation especially when working on a low budget film. That is, if the actor believes in the project he may be willing to take the risk of receiving back-end fees if the project is successful. Contingent compensation is usually based on gross receipts or net profits. Theoretically, gross participants share in profits from the first dollar (i.e. a percentage of revenue received by the production company without deductions). Actually, most A-list actors receive profits only after certain deductions such as taxes, trade dues, guild fringe payments (and sometimes a deduction of limited distribution costs). Net profit participants are usually payable after the studio has deducted all distribution fees, all gross participants (or adjusted gross participants) payments, all deferments, all costs for marketing and advertising and all negative costs of the picture. Because of this structure, net profit participants are rarely paid. Deferred Compensation If an actor gives a quote for his acting services and the budget cannot support that quote, the actor can agree to defer a portion of his compensation. Then the negotiation focuses on when is the deferred compensation paid and how is it paid. Actors negotiate for payment at a specific point in time (e.g. payment one year from completion of principal photography or payment when the picture reaches a certain level of U.S. box-office receipts as reported in the Daily Variety or the Hollywood Reporter.) The producer, on the other hand, may negotiate that the point in time at which deferment is paid is when the producer has recouped distribution fees, print, advertisement and marketing costs. Start Date The negotiation of a start date is very important for established actors. Often times the have very demanding schedules and to secure a firm start date allows the actor to schedule other commitments and avoid losing out on other projects. However, the actor's schedule must be balanced with the producer's need to schedule the start date in advance in order to be able to secure financing and distribution based on the actor's commitment. Many times producers are required to pay actors on the scheduled start date even if the project is delayed (except for force majeure issues) and are required to pay overages (i.e. additional fees) if the schedule exceeds the agreed upon work period. Therefore, producers negotiate to have start dates to be as flexible as possible and will attempt to have the start date begin on an approximate date or within two weeks before or after a specific date. Services An actor's services are generally divided into three work periods: pre-production, production and post-production. The actor is guaranteed compensation for a specified period of time of work. For example, an actor can be guaranteed 1M for 2 weeks of pre-production, 10 weeks of principal photography, 2 "free weeks" of principal photography and 3 days of post production. One area of negotiation is what happens if the actor's services are required beyond the expiration of the negotiated employment period. Usually the overage rate is a prorated rate calculated by dividing the fixed compensation by the number of workdays. The actor will negotiate that any overage will be prorated based on the quoted fee and divided by the time in principal photography only (e.g. 1M divided by 10 weeks = $100,000/ day). However, the producer will negotiate to include in the prorate the additional 2 weeks of pre-production making it a total of 12 weeks (e.g. 1M divided by 12 weeks =$83,333/ day). Therefore, the more workdays included the lower the overage rate paid to the actor. Other issues commonly addressed when negotiating the work period are whether the actor's travel days are paid at a full rate or reduced rate. Or whether the actor is required to work consecutive days, and if not, whether the actor is paid in between work days. All of these points must be negotiated ahead of time to avoid any misunderstanding or delays. Credit One of the most highly negotiated areas of the agreement is the clause concerning an actor's credit. The SAG Agreement does not address which actors receive credit, nor does it regulate the placement, position or size of the credit. Usually, the placement, position and size of an actor's credit will depend on the stature of the actor and the extent of the role. Actors must negotiate to have their on-screen credit appear in the main titles (or before the main title) and on a separate card. Producers avoid granting a separate card credit to less established actors. Instead, they give these actors credit on a shared card with actors of similar stature. Among cast credits, first or second position is most desirable. If those positions are unavailable, many actors will attempt to distinguish their name by negotiating to receive "with [actor's name]" at the end of the credit sequence. Finally, actors request that their credit be no less than the size and type of any other actor's credit. Premieres and Previews Established actors always negotiate to be invited to attend the North American premiere screening of the film as well as film festival screenings of the film. And if travel is required, actors should request first class transportation, hotel accommodations and a per diem allowance. Conclusion Before entering into negotiations for an actor's agreement, it is important for both the actor and the producer to understand the various deal points as well as the SAG minimum terms and conditions. These negotiations are best handled with the help of an experienced entertainment attorney. [ back to top ] |