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Pay-or-Play: Is There No Other Way?!

by Jeff Steele

Way #1 – Pay-or-Play

Indie producers seem to get very agitated around the topic of pay-or-play,  a guarantee which they feel is forced upon them by agents (for the benefit of the actor or director), that the talent will be paid their fee, should the talent not be used in the production.

But, this isn’t a bad thing, nor is Pay-or-Play anything to stress over; there are far more important things to be getting agitated about. For instance, I would be willing to wager that 99% of indie films collapse before their film closing happens.  If you don’t secure your financing, you don’t have to pay, because you, the producer, also never got to play. This is one of several Conditions Precedent (CP) that are part of a pay-or-play offer, which protect producers.

Now, if a producer does get to the point of closing the financing on a film, there aren’t a lot of compelling reasons to axe the star, unless the film just landed a bigger star that can significantly elevate the value of the project/budget to warrant jettisoning the old star, and paying them out.

But, it is worth noting that there are several reported instances of stars calling-on these guarantees, where someone got stuck holding the $15m tab.

Way #2 Backing Offers

“Backing offers to talent” is another approach, wherein you can offer a role to an actor and demonstrate proof-of-funds (from your investor) that will substantiate the offer.  This is an acceptable way to do business.

Some reps, however, will insist the money be put in escrow/trust while the actor considers the part…that is ludicrous. Nobody separates you (or your investor) from their money.  Ideally, if you can demonstrate proof of funds to a reputable, mainstream, packaging agent or attorney, then their assurance will generally sastisfy the reps.  This method limits the number of times you have to expose your financial information to 3rd parties.

Way #3 Poorman’s Pay-or-Play

Lastly, I periodically hear about actors that charge fees to read scripts (e.g. $10k is paid to the actor; if they pass, then you get your money back; if they sign-on, then $10k is applied toward their acting fee, unless the project dies, then it’s foreited (sort of a poorman’s-pay-or-play).

I assume the logic behind this (and the escrow offer) is to weed out the feebelest of the 99% of indie projects that are inevitably going to collapse.  This is when you know you’re in B/C/D-list actor land.  They demand it because they don’t know you.

Nonetheless, it’s silly and a waste of time.

What I’m about to say next is so fundamental and so important,

I mentioned it in the very first paragraph of my very first post, on this site. I am going to stress it again:

“it doesn’t take much…to tell the professionals from the amateurs: one look at a producer’s finance plan (as well as their choice of attorney) tells me right away.”

If you’re going to do business with CAA, WME, ICM, Paradigm, Gersh, Innovative, or any of the other agencies or management companies, then you better come in swingin’, with a lawfirm such as Stroock, Sheppard Mullin, Loeb, Ziffren-Brittenham, Bloom, or another attorney that has a verifiable track record of closing talent deals with the bigger agencies.

Copyright © 2010. Film Closings Inc. All rights reserved.

8 Responses leave one →
  1. March 2, 2010

    Great info Jeff. Thank goodness our lead (John Billingsley – CSI, 24, Cold Case, 2012) wasn’t one of those actors who charges $10K for a read. I am going to revisit my finance plan to make sure it doesn’t broadcast the fact that this is my first indie feature.

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    • March 2, 2010

      Thanks James. Your lead sounds like a pro — glad you had a good experience. I think the key to a successful first feature is to be aware of what you know, and be extra-aware of what you don’t know (so you can surround yourself with people who have that knowledge.)

      Jeff

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      • Jon Stevens permalink
        June 27, 2011

        The closing paragraph is very solid advice. If you don’t know, have the integrity of telling yourself you don’t know and surround yourself with a team that do. If you don’t know, you better learn, otherwise you’ll be manipulated by those that do.

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  2. maria permalink
    July 26, 2012

    Is it necessary to put attached talent on a retainer until financing is raised?

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    • Jeff Steele permalink
      August 18, 2012

      No, it is not necessary. In fact, it’s discouraged.

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  3. March 20, 2013

    I am an independent filmmaker in North Carolina. I read this article and I am very excited because I have a party interested in enabling me to make these type of offers for my next film! Is there any way you could contact me so I can clear up the few questions that I have regarding this process. It would mean the world to me.

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  4. Steve Meyers permalink
    September 9, 2015

    We have pitched a deal to CAA on behalf of Robert Downey Jr.
    Before we got out of the gate the first question from CAA was just that, “If it’s fully financed and you’re able to show proof of financing and would like to make a pay-or-play offer”

    We are Indie and we think we have our ducks in the row.

    Thanks for the intel.

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    • September 9, 2015

      Thanks for sharing Steve. If you if and when you make your pay-or-play offer, make sure is conditioned on closing of the bond (i.e. a Conditional Pay-or-Play Offer).

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