When Donald Sutherland filmed his two days on comedy classic Animal House, he was offered a flat fee of $50,000 or a reduced fee and 15% of the eventual box office takings. He took the guaranteed fee … and forever regretted not capitalising on one of the biggest comedies of all time. His two days’ work could have netted him close to $20 million. This article is about when and how you can take your slice of the pie as an actor—albeit on a more modest scale than the late great Donny S. Let’s talk about profit share agreements, and what they mean for actors.
Profit share is an compensation agreement between a producer and/or company and a production member. It guarantees that a participant will receive a percentage of the production’s profits once sales have been recouped. Profit share is predominantly found in independent or community theatre contracts, although on rare occasions it may apply to an independent film.
Before we dive in, we need to be very clear about something. This article was written by a producer and industry creative who has been on both sides of a profit share agreement. I am many things, but two things I am not are a lawyer or financial advisor. Here because a contract seems fishy or the numbers don’t add up? Best to seek direct support in the form of legal expertise. However, if a street-smart, crash-course on the topic of profit share is what you’re searching for, then look no further.
Let’s begin with the basics:
What is Profit Share?
Profit share is an agreement made between a producer (or company) and an artist in a production. It stipulates that the artist will receive an agreed-upon percentage of profits, once expenses for the production have been recouped.
Profit share is particularly popular in the independent theatre scene. It can promise some form of monetary compensation (and therefore attract a more professional level of actor.) However, there is usually a tacit understanding that a profit share agreement is more a gesture of good will than it is a guarantee of a handsome payday. To offer profit share to an actor or creative is a mark of respect. It demonstrates a recognition of their investment of time, talent and effort into a show.
Profit share may be offered as the sole compensation for work on a production, or offered up in conjunction with a flat, guaranteed fee. In independent theatre, the promise of both is rare, as profit share is a useful tool for keeping production costs low before tickets are sold.
How Much Will I Earn in a Profit Share Agreement?
No surprises here: the answer to this question will change from production to production. However, with a few basic figures on hand, you should be able to calculate the rough ballpark of what your cut may be. To do this, we’re going to teach you a quick budgeting tool for independent shows we call the 25% rule.
- Multiply the number shows in the season by the number of seats in the venue. Then multiply that number by the cheapest possible ticket option (usually the concession/seniors rate.) Whatever number you come up with is the maximum amount of money a production can make. Here’s an example: 10 shows x 80 seats in the venue x $35/concession ticket = $28,000
- The 25% rule has you calculate one quarter of this number, which is what you’d stand to make if you sold one quarter of the seats in every show. $28,000 / 4 = $7000. That’s your budget: safe, manageable and doesn’t rely on a sold-out season to keep you out of debt.
How does this help you work out your cut? Calculate the maximum sales, subtract the show’s budget (check with the producer on this) and then divide that number by your percentage point. If you were promised 10% of our example show’s profits ($21,000) then you’re looking at a maximum cut of up to $2100. Not a bad pay day at all.
This number can be larger or much smaller. For instance, full-price tickets may be almost double the concession, cutting the required number of seats to sell. So any profit share estimate should be exactly that: an estimate. Don’t go spending that money until it’s sitting in your account.
Profit Share vs. Flat Fee
If you are lucky enough to be given an option between profit share and a flat, guaranteed fee, you’ll have an important decision to make. Before you do so, weigh up the pros and cons of each option:
A flat fee, guaranteed by a contract, is the safer bet. It may also be the most profitable in the event that the show doesn’t sell well, or the production budget blows out. If either of these disasters occur, you’re covered completely and the producer is obligated to fulfil the agreement by which you signed on.
However, a profit share arrangement can be extremely valuable. It’s worth weighing up the clout of the company and the other creatives, the marketing budget and the venue—which is to say nothing of the quality of the script itself. If you think the show will be popular and successful, then profit share might net you an exciting chunk of change.
When to Agree to Profit Share
As there is no guarantee of payment in a profit share deal, you should enter into such an agreement carefully. Can you afford to work on a project that may not pay you a dime? There’s no harm if the answer is “no”. In fact, learning when to say “no” to a role is a foundational skill for every actor to develop in their career.
Now for a more positive note. If it’s a great project you believe in, and you can afford to work for free, then a profit share agreement is icing on the cake. You could end up with great reviews, a line on your CV, a whole new wing of your creative community, some valuable acting experience and enough money to shout your castmates a round of drinks at the end of the run. Doesn’t sound so bad when you put it that way.
If you’ve got the option to choose between a flat rate and a percentage point, it’s up to you. How much are you willing to gamble on the show’s success? Just remember that you should never take on a project that is going to put you in serious financial peril—no matter how enticing the role might be. That way lies resentment and burnout.
Examining your Contract
All details of a profit share agreement will be laid out in your artist contract. Once you have this document in your hands, read it carefully before you sign and return it to the producer.
Independent theatre contracts are generally only a few pages long. Many will utilise a similar format, such as a boiler-plate that the producer found online. And this is why any confusion or ambiguity in a contract should warrant a conversation. If there are important details you need clarified, or if anything is missing or seems incorrect, talk to the person who sent it to you.
Often… usually… hopefully… the problem you encounter is an oversight, or an indication of a producer’s mistake or inexperience, rather than a sign they are simply evil. So talk to them. See if you can resolve the issue with a clarification or an amendment to the contract. You always have the option to walk away.
Note: Just a quick reminder that this article is not written by a lawyer. If you have the means/the access, it’s best to show a contract to a legal professional.
Common Red Flags
Finally, let’s look over some common red flags for profit share agreements. These are the kinds of issues that warrant some further scrutiny, or perhaps a conversation:
Be wary if:
- There is no contract. Here’s a great quote by legendary Hollywood producer Samuel Goldwyn. “Verbal agreements aren’t worth the paper they’re written on.” If somebody promises you a profit share arrangement, get it in writing. A contract is best, an email at the very least.
- The profit share estimate is wildly high. If a producer promises you a profit share of thousands in exchange for you signing on to a show, they’re likely trying to hook you in with the promise of fortune and glory.
- The producer won’t discuss/amend the contract. It’s always worth examining your contract and talking it over with a producer if you have any doubts. If they are unwilling to do this, or are reluctant to change an aspect of the contract without good reason, that’s worth bearing in mind.
- You don’t know what percentage of profits you’re entitled to. Know how much you’re getting. If you suspect there are points missing in the agreement, you can do a quick check in with your fellow cast and creatives and ensure everybody’s pieces add up to 100.
- The producer won’t show you a budget. You have a right to know how the money is spent, particularly if budget doesn’t exist for you to be compensated up-front. Most companies will share a full budget report within 28 days of payments being finalised. Chase this up if it doesn’t materialise and read it carefully.
- You are being paid in tickets to the show. No other way to put it: this one is a flat-out scam. If a producer tries to pay you in tickets to your own show, or sets aside tickets for you to sell in order to receive payment, they’re hoping you’ll drum up business through family and friends. That is not your job.
Conclusion
So there you have it: our guide to profit share for actors. Let’s leave the topic with a little optimism. As we stated above, profit share is a sign of good will more than anything else. If it’s built into a production, you can take that as a sign that the producer or company cares about actors.
Try to have a little faith when it comes to resolving issues and dealing with uncertainty. The money-person on a show may not have your artistic temperament or experience. But they’re still committed to creating the best possible show for an audience, just like you. Look for the good in that person, even if the contract is basic and their budget is ambitious. You’ll be surprised how many things neatly resolve with some healthy discussion.
Good luck!
