You sweated and slogged for months to perfect the script. You’ve fought and bled another few months pitching everywhere in LA. At last, a producer has recognised your talent. She agrees to buy it. Hooray! You’ve made your first sale! Congratulations!
It’s time to ditch the day job back in Australia, Delhi or Estonia, right?
Now hold on there a minute … Not so fast. How much are you actually going to get on your first sale?
Great question! And not an easy one to get direct information on, either.
Nonetheless, for most of us the answer will be: Not enough to tell your office boss where he can jump. Generalisations about how much you will net on your first sale are quite difficult to make. Especially in the individualistic wheeling and dealing world that is Hollywood negotiation. However, I will attempt to provide realistic parameters for you.
Firstly, much depends on what standing you already have in the entertainment industry. For example, are you a published novelist? An accomplished playwright? An actor that has played support roles across several films? Or someone with a ‘producer’ credit in a profitable feature? If so, you have more credibility to bargain with than an unknown from nowhere.
But what if you are just a regular unsold screenwriter who is ‘discovered’ by a mid tier production company at a pitchfest?
How much can you expect to win?
When faced with a ‘baby’ writer, most production companies would opt for an option deal rather than a total screenplay purchase. This means they pay you a lot less initially, but you still hold all the rights to the story if they fail to develop a film by the expiry date of the option. If you are faced with this compromise, it is advisable to push as hard as you can for an one year expiry. They should purchase a second option if they want more time than that.
But how much would the first option payment be? For an unsold, uncredited, writer: Quite often zero! In any case, five thousand USD gross would be the high end of what you could expect. (Sorry to disappoint you.)
Sounds pretty crummy, doesn’t it? Well, like it or not, the reoccurring impression I got while I was in LA is that your first sale is always modest. It is from the second sale, onwards, that you start to accumulate greater and greater bargaining power.
I should also mention that fully professional screenwriters in LA really pay their bills with the money they get from writing assignment work for studios and production companies. Any script sales they win (“spec sales”) are a bonus on top. Even the best of them don’t score a spec sale every single quarter.
In the first half of 2010, a total of 28 spec sales have been sealed in LA.
(source: Jason Scoggins)
This represents just 15% of what has been put on the market.
But suppose … Just suppose … After a couple of years of clever networking, all the dominoes fell the right way for you. Thanks to an alliance of a hot young gun agent, an enthusiastic producer’s assistant, and a good entertainment attorney, you are in the position of scoring a 100k screenplay sale with a “mini-major” production company. Time to look for a beachside property in Santa Monica, right?
Not so fast! There are a few cash flow nitty-gritties to worry about even then.
The first thing you need to understand is that the production company will not release the whole of the 100,000 USD in one go.
Instead, the 100k gross will be divided up into instalments. Where each instalment is payable upon delivery of a completed rewrite. Typically there will be a down payment to start you off, followed by lesser increments thereafter. Suppose, in this case, the down payment is 30%.
So the first pay cheque that arrives on your letter box will be 30,000 USD.
Not a bad return for six months of writing and pitching, I admit … Except that this cheque won’t arrive straight away.
In practice, it can take many additional months of wrangling before the 100k total sale figure is finally agreed upon by all parties. On top of that, the company’s accounts department can be expected to drag the chain for several weeks more. I guess the bean-counters need to have lots of cups of tea and committee meetings before they can send you your first cheque. Annoying but unavoidable.
So the bottom line is that the thirty percent down payment can be delayed for long months after your first meeting with the execs. Which means that the 30k reward represents more like 12+ months of work, rather than 6. You better not be behind your rent while staying in LA!
But the fun and games are not over even then.
Once the 30k cheque arrives, various parties get to take their percentages of this figure before you get the leftover. These parties include your agent, your manager, your attorney, the IRS, and the WGA. The carcass that’s left for you can be as little as 45% of the face value of the cheque. Not a great feeling, but then all businesses have their costs. Things are only simple in wage world.
Now look: I don’t mean to tell you all this to murder your dreams. On the contrary, my purpose here is to forewarn you about cashflow realities even when you do score a screenplay sale. Can you imagine the financial damage you can do to yourself if you are not awake to these considerations?
In summary, your first screenplay sale will not catapult you to the stratosphere. However it does represent an important milestone. Namely, the beginning of your career as a going professional. Be proud of that achievement by all means. But don’t go silly about it. Be sober, rather than crazy, when you win your first sale.
Steven Fernandez is a writer-director of short films and theatrical shows in Sydney, Australia. He is currently writing Human Liberation – an epic novel and screenplay package set in mythic ancient Greece.
Acknowledgement: I wish to thank Ben Sitzer for fact-checking.