Film-Tech Forum ARCHIVE: How often have Price-Per-Capita demands been made?

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Posted by Michael Coate (Member # 757) on 05-20-2013, 06:29 PM:

I've been doing some research on an early 1980s blockbuster and was surprised to find some promotional materials for some theaters include a disclaimer about a price-per-capita demand. Does anyone have any experience dealing with this sort of thing, and how often did it happen? Was it only for theaters in smaller cities? Did the distributors really make demands on pricing, or was this simply a veiled attempt by the exhibitor to pass on to the moviegoer the consequences of strict terms of a booking deal? Anyway, here's the text of the disclaimer:

quote: Price-Per-Capita disclaimer
In order to show [title of anticipated blockbuster] in [city] at the same time it opens across the United States, the Distributors have demanded a price-per-capita, forcing the admissions to increase during the first five weeks. [Exhibitor] apologizes for this and will continue to bring you the finest in first run movies. After the fifth week admissions will return to normal.

Posted by Darryl Spicer (Member # 711) on 05-20-2013, 11:52 PM:

I know this happened or something similar in my area back in 1983 when Return of the Jedi opened. All tickets were the same price all day long, no matter if you were a child, senior or an adult. I think the price was $4.50 and for the regular engagements of other features the price was $3.75 in the evenings and I think $2 matinee and child prices.

Posted by Robert Harrison (Member # 3202) on 05-23-2013, 01:19 PM:

In the late 1980s, second run theaters in the Chicagoland market reduced their price to $1 for all ages. In 1989, Paramount put their foot down and demanded a $1.05 per capita. The few theaters that acquiesced raised their admission for Par films to $3. The distributor would only allow a theater to charge a mere dollar for their films if they waited until a month before home video release to show them.

Posted by Jack Ondracek (Member # 1466) on 05-23-2013, 02:46 PM:

This is not a factor for any theatre with admission rates at, or near the national average. The per-cap is targeted at theatres with really low admits.

The studios can not dictate your admission price... let 'em in for free, if you want. The per-cap establishes a minimum rent per-person VS the established percentage rent for that week. They get whichever is higher.

Posted by Lyle Romer (Member # 1266) on 05-31-2013, 10:16 PM:

quote: Jack Ondracek
The studios can not dictate your admission price... let 'em in for free, if you want. The per-cap establishes a minimum rent per-person VS the established percentage rent for that week. They get whichever is higher.

In a way they do dictate the admission price. They know a theatre can't survive at 85% film cost. It's basically a legal way of controlling the price.

Personally, I think prices would be kept lower if they just charged a flat per capita rental instead of percentage (assuming it was reasonable). That way if a theatre has to cover an additional 25 cents per person in overhead, they can just raise the price 25 cents instead of 75 cents.

I will also never understand the justification for the aggregate deals where the rental percentage goes up based on the North American total gross.

Posted by Frank Angel (Member # 248) on 06-02-2013, 06:04 PM:

Oh, it's understandable -- it's called, the studios have the exhibitor by the balls. And and as I understand it from what a manager explained to me, how about this: an Exhibitor plays a title for 5 weeks. The percentage ratio is a sliding scaled with the highest percentage paid on the first week to the lowest on the last week, 85%, 75%, 65%, 55%, 50%.

Mr. Exhibitor finds that his grosses on the forth week are higher than the second and third weeks, so he is very satisfied because on the forth week he is only paying 55% to the distributor. So he sends in his Box Office reports and his overages based on that sliding scale. Then a few weeks later, the distrib comes back and says, "Wait a minute, Bub, your 4rd week grosses are the higher than the two prior weeks, so you are going to have to pay the highest percentage -- 85% -- on the 4th week, not 55%." They've rigged it so the theatre pays the hightest percentage on the highest grossing week, no matter which week that is.

How's that for a kick in the gonads.

Posted by Mike Blakesley (Member # 26) on 06-02-2013, 09:07 PM:

You're correct Frank, but it's never 85%. The highest I've ever heard of in 34 years in the biz is 70%. Then it goes 60, 50, 40, 35. Sometimes it'll be 70 for two weeks, then 60 for two weeks etc.

Some of the studios (Disney, Warners and I think Universal on some titles) are using the new "sliding aggregate" scheme where the percentage is the same for the whole run, and goes up higher depending on how the film grosses nationwide by the end of its run. With Disney, for example, the highest is 64% if the film grosses over $350 million (or something like that). If the film tanks at only $125 million, then the rent is 53% or somewhere in that range.

If you wait until the film is about to go to video then the rent might drop to 40 or 35% if you're lucky, but if you want to play it while there are still actual fans wanting to see it, then you're looking at the aggregate percentage. It's a screw job for the smaller guys, but then what isn't these days?

These numbers are for a first-run house in the U.S. If you're running a sub-run, or in a different region, your mileage might vary.

Posted by Monte L Fullmer (Member # 2797) on 06-04-2013, 02:08 AM:

Subs and discounts can hit down to 28% ... and the danged film can do some serious gate returns at the discounts along with high per caps at the snak bar.

Disney is always a tough one for discounts: thirty plus on the percentage and film must run clean for the first week and even the second week on occasion.

The one I could never understood how it works was the old "90/10" agreeement, thus please, a little help on this one. Thx

-Monte

Posted by Mike Blakesley (Member # 26) on 06-04-2013, 02:50 AM:

It still exists. Each cinema has its weekly house allowance, or estimated operating expenses for that auditorium, which is submitted by the cinema and accepted (or negotiated down) by the studio.

If the movie has terms such as 90/10 vs. 60%, you subtract the house allowance from the actual gross to get the adjusted gross, and then figure 90% of the adjusted gross to get the 90/10 rental amount.

Then you figure the percentage rental based on the actual gross x the percentage.

Now, you compare those two rentals and pay the higher of the two.

For example, let's say I gross $5,169 on E.T. Part 2. My house allowance is $1500 and the terms are "90/10 vs 60%."

So you compare:

$5169 gross - $1500 house allowance = $3669
90% of $3669 adjusted gross = $3302.00 rental

-OR-

60% of $5169 actual gross = $3101.40 rental

Hence I would owe the higher figure, $3302.00.

This is what's called "hitting the 90/10."

Posted by Frank Angel (Member # 248) on 06-04-2013, 03:20 AM:

Originally when I first came to the performing arts center, they were booking as a "non-theatrical" (16mm in a 2500 seat house, if you can believe that). They were being hit with guarantees of anywhere from $300 to $1000 PER SCREENING against 50% to as high as 65% on tiles that were already on video. Try making THAT work if you want to play three shows a day over a weekend! Plus being burdened with the proviso that they couldn't advertise the engagement. Having worked first in a real theatre and knowing what theatrical deals were like, I quickly put a stop to that highway robbery, put in 35mm and declared "We are an art house." and replaced the word College with the word Theatre in every piece of publicity to leave my office. We have been a "theatrical" art house ever since, and over the years have made more money for all those greedy studios than they would ever have made with their nastly little, screw-it-to-the-stupid schools-scam.

And for those who say, "Well, yah, but you were taking business away from the theatres around you"...the answer is, not a chance, because we only ran titles that not a single multiplex within 50 miles would touch. Any commercial multiplex itching to play a double bill of CAROUSEL and THE KING AND I? Fat chance. We even did cross-plugs for a local Century theatre a block away and had a great working relationship with them. They never saw us as a threat. Only once did we have a title booked that they wanted to play and we happily pulled it out of our schedule.

It's a funny business the movie business...and not funny haha

Posted by Mike Frese (Member # 4361) on 06-04-2013, 10:44 AM:

quote: Mike Blakesley
Some of the studios (Disney, Warners and I think Universal on some titles) are using the new "sliding aggregate" scheme where the percentage is the same for the whole run, and goes up higher depending on how the film grosses nationwide by the end of its run. With Disney, for example, the highest is 64% if the film grosses over $350 million (or something like that). If the film tanks at only $125 million, then the rent is 53% or somewhere in that range.

Universal has made it interesting somewhat as they were giving you (at least me) 3 different film rental options: 1) the agg depending on total BOR like Disney, 2) an agg. percent, & 3) the sliding scale. Made it some what like gambling to see which way would be the cheapest.

90/10: I never had a film rental in the past 6 years where 90/10 came into play.