By Jeffrey and Todd Brabec
With the success of Chicago as a motion picture (which included its selection as best picture of the year), the broadway musical has taken on increased importance in the world of motion pictures.
The "broadway musical to motion picture sale" can take a number of different turns and encompass a number of areas, but virtually every agreement will encompass most of the considerations that follow.
Payment for the Rights. The motion picture company will pay a negotiated fee (e.g., from $1 million to over $10 million) for the rights to produce a motion picture based on the musical.
Obviously, the final compensation is based on the success of the show on Broadway and on the road, the conviction of the producer that the show can be successfully made into a commercial film, whether the film will have international appeal, and what is given up by the writers in other areas of the agreement.
Percentage of the Proceeds from the Film. The producer, writers, and music publishers are many times given a percentage of the net monies earned by the motion picture after the breakeven point for the film has been reached. A number of different formulas are used in this area depending on the company producing the film, and each is extremely complicated.
For example, breakeven for a film company can include, among other items, the recoupment of a multiple of the direct costs of making the film, fixed deferred payments (as opposed to deferred income based on how well the film does), a production fee for the film's producer, overhead fees to the producer equal to a set percentage of the production costs, supervisory fees to the film company financing the production, and the bank interest on the money needed to produce the film.
Fees for Remakes or Sequels. The film's producer will usually be given the right to produce a remake or sequel provided a specified fee is paid.
If additional compensation based on a percentage of the net earnings was received on the original film, the same formula or a percentage thereof would also be received for the remake. As for sequels, the fees paid and percentages are many times more than those that would be payable for a remake of the original film.
Fees for Television Films or Series. In addition to the motion picture, sequel, and remake rights, the film producer will also try to negotiate for television rights to a made-for-TV movie or series based on the play if the theatrical film is actually produced. In the event that the television version is released theatrically outside the United States, a further payment (usually the equivalent of or more than the television fee) may be due.
If a television series is based on the play (including a spin-off based on characters in the play), additional fees will be due, dependent on, among other factors, the running time of the series. In addition, many contracts provide for payments of negotiated fees (sometimes based on a percentage of the initial fee) for each rerun of the program up to a certain limit.
Other Issues. Some of the other areas which may be covered are marketing, promotion and publicity rights, co-promotion and tie-in-rights, video game rights, soundtrack album rights and royalties, additional monies if the film's box office and/or video receipts achieve certain plateaus, additional per composition synchronization/video fees and creative controls.