2010 Facts on Pacts
Variety has come out with its annual Facts on Pacts analysis of producer deals (subscription required) at studios. And no surprise, the numbers continue a downward spiral:
The erosion of Hollywood’s studio deals is accelerating.
In the half a year since Varietys last Facts on Pacts compilation, the number of term deals at the major studios has dropped 12%, to a total of 133, as the majors continue their cost-cutting efforts.
Significant names whose deals have expired in the last six months include David Friendly, Paul Haggis, Nina Jacobson, McG, Chris Nolan’s Syncopy, Principato-Young, Brian Robbins’ Varsity, Gary Ross’s Larger Than Life, Charles Segars’ Sparkler Entertainment and Robert Simonds.
The number of studio deals is now 55% fewer than a decade ago, when 292 deals were listed in Varietys 2000 report. That number fell to 241 in 2001, stayed fairly consistent for the next half-dozen years and then plunged to 184 two years ago and 151 last year. (The figure does not include 22 pacts at such players as Relativity, Imagenation Abu Dhabi, Overture and Reliance).
While over two dozen deals have expired, only 10 new deals have been signed over the past six months.
What are these pacts typically like?
In the early 2000s, typical three-year deals usually had three components — overhead costs for an office and staff, often well over $1 million annually; an annual discretionary fund of about $750,000 for purchasing material, usually with a $250,000 per-project cap; and a guaranteed fee of around $1 million as an advance on producer’s fees.
The downside for producers who got movies produced was that all that studio spending would usually be charged against profit participation monies. That’s been an incentive for producers to strike out on their own without a studio deal.
In recent years, studios have ratcheted back significantly, with veteran producers estimating that spending on term deals is less than half what it was as little as eight years ago — except for the largest and most-established producers, such as Jerry Bruckheimer at Disney and Ron Howard and Brian Grazer’s Imagine Entertainment at Universal.
Discretionary funds don’t exist; overhead and guarantees have been slashed.
In the past, many production pacts were what are known as “vanity deals,” where a studio will sweeten an offer to lure A-level talent to a movie project by giving them an overall producing deal, so some of the decrease is a big ‘so-what.’ But there are some significant producing names who currently don’t have studio deals.
If they have a deal with a studio, producers are always trying to find new material to make into a movie to keep their deal intact. If they don’t have a deal, producers are frenzied to find new material in order to make a movie and land a pact.
In either case, it’s a good thing for screenwriters who write a great script.