Film-Tech Forum ARCHIVE: Guarantees and advances

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Posted by David E. Nedrow (Member # 4981) on 01-05-2010, 07:14 PM:

Are many studios asking for upfront guarantees these days for studio product?

And for advances, what sort of amounts are we generally talking about?

Right now, we're concentrating on indie product, but would like to bring in the occasional "mainstream" film when it fits our model.

-David

Posted by Mike Blakesley (Member # 26) on 01-06-2010, 01:03 AM:

We have only paid an advance maybe twice in the last 10 years or more. Your mileage may vary based on your grossing and payment history.

When we have paid advances, it's usually some amount between $400 and $1000 depending on how much of a blockbuster the movie is. Again this might be based on our gross potential.

I can't remember the last time we paid a guarantee.

Posted by Matt Fields (Member # 3211) on 01-06-2010, 06:57 AM:

Guarantees are illegal in Ohio. You will, however, most likely have to pay advances for the first six months to a year that you are in business with some but not all of the the studios.

The most I ever had to put up was 2500 for Toy Story 2. Remember putting up 1500 on several other pictures.

The studios will keep the advance and apply any credit to the next picture of theirs that you play.

Posted by Jonathan M. Crist (Member # 413) on 01-06-2010, 09:13 AM:

Both guarantees and advances are illegal in Pennsylvania.

Posted by Randy Stankey (Member # 64) on 01-06-2010, 10:13 AM:

Please show me where that is written.

I know we have paid both guarantees and advances. However, I have not seen the actual contracts. There may have been some kind of terminology used to get around the law.

My boss will be all over that like flies on shit!

Posted by Jonathan M. Crist (Member # 413) on 01-06-2010, 04:23 PM:

Randy:

In Pennsylvania the controlling statute is the "PA Feature Motion Pictures Fair Business Practices Law" which was enacted in 1986. The complete statute is found beginning at 73 PS Sections 203 et seq. and outlaws may things including blind bidding etc. The section which prohibits guarantees is found at 73 PS 203-5; and the section which prohibits advances is found at 73 PS 203-6.

Posted by Frank Angel (Member # 248) on 01-06-2010, 09:35 PM:

I was led to believe that Blind Bidding was also outlawed by the Paramount Concent Decrees.

What exactly is the difference between and up front Guarantee and an Advance; I have never paid an advance, but guarantees were the norm, at least in the last 30 years. In the prehistoric days we were able to play pictures flat -- basically a guarantee without the percentage.

Posted by Jonathan M. Crist (Member # 413) on 01-06-2010, 10:23 PM:

The Paramount decrees had nothing to do with blind bidding. Those decrees were dealing with the anti-trust issue of the studios owning their own theatres and only showing their own product in their own theatres in areas where they had theatres. The decrees required the studios to divest ownership of their theatres.

What is the difference between a guarantee and an advance? A guarantee is a payment no matter how the picture performs. If the picture tanks the distributor loses all the money he paid but if the picture does well it is applied as a partial payment . In contrast an advance is simply a partial up-front payment and if the final film rental for that picture doesn't equal the advance payment the balance of the advance money is supposed to be returned to the exhibitor (in reality the distrib just applies the overage to another outstanding - or future - bill for another picture). [In other words with a guarantee there is no possible overage but with an advance there can be.]

Blind bidding is the practice of offering a picture for bid and exhibition without an advance screening. One of the films that
caused the PA theatre owners to seek protection of the legislature was Paramount's "Best Defense" in the summer of 1984. Billed as an Eddie Murphy movie (he actually had a bit part that appeared to be spliced in after the fact) Paramount did not screen the picture for theatre owners and demanded huge GUARANTEES (not advances). Best Defense was huge bomb and every theatre owner who played lost their shirts - with no recourse - and Paramount refused to negotiate. So the PA theatre owners went to the legistlature and the 1986 PA statute was the result.

Posted by John Hawkinson (Member # 1135) on 01-07-2010, 12:26 AM:

That's fascinating. I'd be willing to bet that the laws prohibiting guarantees don't apply to nontheatrical venues, like Randy is.

It's not obvious from reading the law, but 73 P.S. § 203-3 (2009) defines:

quote:

"BLIND BIDDING." Bidding, negotiating, offering terms, accepting a bid or agreeing to terms for the purpose of entering into a license agreement prior to a trade screening of the feature motion picture that is the subject to the agreement.

"DISTRIBUTOR." Any person engaged in the business of renting, selling or licensing feature motion pictures to exhibitors.

"EXHIBIT OR EXHIBITION." Showing feature motion pictures to the public for a charge.

"EXHIBITOR." Any person engaged in the business of operating one or more theatres in this Commonwealth.

And I'd bet that Mercyhurst might not qualify as Exhibition under those terms...

Though honestly, I don't know that I'd prefer exclusive flat-rate pricing to percentage/guararantee -based pricing...

--jhawk

Posted by Randy Stankey (Member # 64) on 01-07-2010, 09:14 AM:

We sell tickets to the public. In fact, for movies, only about 1/3 to 1/4 of the audience are students. The rest are general public.

I'm still reading up on the laws. I've been having a good on-line source.
I'm on vacation from work till the end of the week. When I return, I just might hit the library and read up.

I'm not certain how the contracts are written but I know we pay so much as a guarantee then pay a percentage of the overage. However, I know we are still considered a "non-theatrical" venue.

I'm pretty sure there is some weaseling going on here... [Roll Eyes]

Posted by Mike Blakesley (Member # 26) on 01-07-2010, 11:04 AM:

I suppose different divisions of film co's might have different ways of doing things, too. When I first got into the biz in 1979, quite a few of our films were $250 vs. 35% (meaning $250 was the minimum). But, our previous owner was a 35% guy; he didn't care how long the movies took to get here, he didn't want to pay more than 35% for them. When we took over, we told the booker to get product in here as quickly as possible, so within a few months we were grossing enough that we virtually always were paying more than the $250, so eventually it just went away and has stayed gone.

I do remember the days of flat bookings. It was fun now and then to bring in an older movie for $100 or less. We did that with the old Paul Newman movie "Slap Shot" once - it did great!

Posted by Jonathan M. Crist (Member # 413) on 01-07-2010, 03:52 PM:

Randy:

You can find the Pennsylvania statutes online at:

PA Statutes

Posted by Tony Ratcliff (Member # 1196) on 01-07-2010, 04:07 PM:

I occasionally pay the minimum for films, on something that bombs. It is usually $100 or maybe $200 at most.
(Yes, I've had films do that bad in the past year!)
There usually is a minimum that each distrib informally and irregularly inforces on films.
But like others have said, it comes into play very seldom on current films.

Now once a film is out of release, it is usually $250 minimum vs 35% terms. WB classics are usually $350.
We usually do our classic films as free admission, so the flat $250 is normally what we pay.