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By Admin | August 2, 2011

Over the past several months, I’ve been inundated with a slew of feature film investment packages, each nicely gift-wrapped with notable actors attached. Should this have happened a few years ago, I’d be far more jubilant about having such fortune fall into my lap. But, these days the value of actors has fallen so drastically, that having a name or two doesn’t guarantee success, nor does it mean the picture will even get made. While the curious case of the “falling stars” is what we’ll discuss next week, this article will focus on the one thing all recent indie film packages seem to have in common:

Pay-Or-Play deals.

Now, I know I’ve discussed pay-or-play deals in previous articles, but the recent rash of them littering indie film packages triggers me to discuss them in further detail, so filmmakers have a clear understanding about how they work.

Before I dive into why pay-or-play deals are a really, really, really, really, really bad idea for independent films, let’s discuss exactly what they are first.

A pay-or-play deal means once an actor agrees to be in your film, you owe them their full acting fee, whether or not the film actually gets made. Thus, if your financing falls apart minutes before your cameras start lensing, the actor(s) with the pay or play is owed their full fee. That’s right, their full fee. No excuses, ifs ands or buts. Thus, once you’ve agreed to a pay or play deal, you’ve spent the money before the ink dries on the contract.

Now that we’ve discussed what they are, here’s why indie filmmakers should never engage in pay-or-play deals.

“B” List Actors Do Not Deserve Pay-Or-Play Deals
Only “A” list actors have a chance at getting your film financed based on their names, and most “A” listers can’t even do that these days. Since most indie movies don’t have access to “A” list actors, what we are talking about here are those on the “B” list. Additionally, since “B” actors have never had value, and now they have even less since their “A” list counterparts are depleted in value, giving a “B” list actor a pay-or-play deal will shoot your production in the head, not just in the foot. Remember, “B” list actors will never get you financing, unless they themselves write the investment check. Thus, don’t throw your production into a financial abyss over a worthless actor. Harsh words, I know, but these words are not untrue.

Anatomy Of A Pay-Or-Play Clause
Here’s an example of an actual pay-or-play clause in a recent contract that was sent to me:

“The full budget of the Picture is funded and (insert actor’s name here) is made unconditionally pay-or-play with full fixed compensation placed in a mutually approved escrow account prior to commencement of principal photography, but in no event later than the earlier of (i) the time at which any other person rendering services in connection with the picture is deemed pay-or-play, or (ii) the time at which (insert actor’s name here) is requested to travel in connection with the Picture.”

Wow. That’s a mouthful. In an effort to simplify, here’s what the two deal points mean:

(i) If you want my actor in your film, you’re going to put his or her fee in an escrow account in a bank that we (the actor’s representatives) can verify and have full access to, so if you try to screw us, or if your film dies before it’s born, we can make sure our actor client gets paid.

(ii) The second you give someone else a pay-or-play on this film, we get one too.

The funny thing is the actor this clause was written about is barely on the “B” list, much less an “A” list name. In fact, the only way this person would ever be considered to be on the “A” list is if they had a box-office smashing, Oscar-winning breakout performance, or if someone opened-fire on the alphabet, and the letter “A” was the only survivor. Short of that, this person deserves to be on the “A” List like I deserve to be a starter on the Lakers (if you knew me, you’d know how ridiculous that analogy is).

Don’t shake your head just yet, because here are a few plausible reasons why agents, lawyers and managers are attaching pay-or-play deals to “B” actors:

Lack Of Trust For New Filmmakers
Agents, managers and lawyers are in the business of making money, and very little of that money comes from independent films. Thus, it’s natural to question whether or not someone is telling the truth about having money, especially in this industry during these economic times. Furthermore, film professionals like working with people they’ve worked with before, so when you’re the “new-payday-on-the-block,” expect to be scrutinized closely until you pay, and your payout doesn’t bounce!

Loss Of Income For Actors Who Turn Down Other Work
When a representative slaps a pay-or-play deal onto an actor of “lesser value,” they are just trying to make sure their client gets paid, because their client is saying “no” to other offers that are scheduled to shoot during the time your production has them blocked. Hence, having a pay-or-play in place makes total sense for the actor and their representatives, but it doesn’t make sense for the independent filmmaker.

Now that you’ve gotten a glimpse of why actors and their representatives will demand a pay-or-play, here is how you can combat such a demand.

Get Your Film Financed First!
Having money in hand will solve most tenuous situations, especially with actors. If you have money before you approach them, and they still demand a pay-or-play, try this answer:

“I’m sorry, but the conditions of our financing don’t allow us to engage in a pay-or-play deal. However, we are prepared to agree to your client’s other terms.”

If the actor’s representative still plays hardball, just calmly tell them the money you have allotted for their client will go to another actor who doesn’t require a pay-or-play. When push comes to shove, nine out of ten times you’ll get your actor. Besides, even if you don’t wind up getting your man or woman, you’ll wind up with someone just as good or better, and you won’t have to stress about going bankrupt and getting sued.

Don’t get me wrong. There is nothing wrong with pay-or-play deals, and they absolutely do serve an important purpose for “A” list actors. I’m just saying that such deals should be reserved for tent pole studio films that can absorb the financial loss, and should never come into play on comparatively tiny independent films whose entire budgets are smaller than the catering budget of a studio film.

Okay, people. That’s what I’ve got for you this week. Thanks again for lending me your eyes, and I look forward to borrowing them again next Tuesday!

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  1. Michael D. Jackson says:

    Pay-or-Play doesn’t just apply to actors, it applies to anyone in the film making process. And I encourage everyone, whether it’s an independent film or not, to get one.
    I’m a freelance DP/Camera Op & have been screwed twice by independent film makers, in the last few months.
    I’ve been brought on board on 2 different projects, sent the script, my brain picked for which cameras to use, etc. Many days spent figuring out all of this, reading the script, getting a storyboard in my head as to ideas to shoot each scene. Time set aside for the filming (turning down other projects that were scheduled at the same time). Then the producer/director makes a deal with some film school for equipment use/or another independent film company to co-produce, & it’s “sorry” we have to use their people now.
    But they still use all the info & ideas you worked with them on. And now you’re back to square one, no money for all your time, & looking for the next gig.
    I for one, will no longer get involved without a pay-or-play contract on another independent film.

  2. Anthony Alfidi says:

    Great article on pay-or-play. Most investors understand “pay-TO-play” to be a cram-down clause in a startup’s term sheet, so it’s intriguing to see a similar term used in film finance. The crowdfunding phenomenon allows both films and startups to be funded online. Investors need to know the nuances in these phrases.

  3. RonNukem says:

    Absolutely agree on all counts!

  4. geraldine winters says:

    The other contract that needs careful examination is a SAG low budget contract. It is a bad deal for filmakers the same demands operating. Unless you pay a yearly fee to SAG, close to 5000- a year wether you sell the film or not. The film can be shown only at theaters or festvals and any deal with tv, DVD sales, cable etc requires additional fees and cuts to SAG. Essentially they own your film and will SUE to get payed! BEWARE!

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