What About MY Backend?

In an interesting screed on The Movie Blog, John Campea discusses the nature of (box office) performance bonuses for actors via the acknowledgement by Sean Astin that he earned $250,000 for all three Lord of the Rings movies. We don't need to discuss the profits added to Time Warner's coffers from this venture.

As one interested in return on financing risk, I take great heart from the following:

It has always been my philosophy that those who take the risks are the ones who should reap the rewards. New Line risked $300 million dollars on The Lord of the Rings. Sean Astin risked nothing. He was going to be paid his $250,000 no matter what. He had nothing to lose. So if Astin didn't stand to lose any money if The Lord of the Rings failed... why should he stand to benefit more than his contract if it succeeds? [see post]

Now there are actually a number of intelligent comments following the post that debate and expand his notions.

What I'd like to point out is that the econosphere (I mighta coined that one just now) of the movie industry is based on a slightly open capitalist market. Just like in the stock market where the price of a stock is equal to market perception of the value today of future performance, so too do studios make deals with talent.

With respect to Lord of the Rings, New Line certainly risked a trememdous amount on the film and it would be hard to argue that having Sean Astin in a major role would in any significant way reduce that risk.

However, where an actor takes a reduced salary to enable the funds to be raised for a budget (often on a "passion project") or there is expectation that a film has the potential to be gigantic and that the actor will help "open" the film, studios willingly negotiate participation deals. And those deals are for different levels of participation -- gross, adjusted gross, net, etc. -- that reflect the market expectation for the value of that asset (the actor).

I say that it is a slightly open market because there are very few ways to accurately predict, before the first frame is shot, how well a movie will do. Although sites like The Hollywood Stock Exchange try to provide an aggregation of public expectation through movie stocks and star bonds and research like these from professors at UCLAAnderson seek to explain movie choice.

At the end of the day, participation is warranted, but so are contracts without participation. It is the market, right or wrong, that determines worth.

Now, whether the present participation system works as the most efficient model is a discussion best left to another day with more time and words.