"Producer's Corner" by Bruce Lazarus Everybody into the Pool
My name is Bruce Lazarus, and I am an entertainment attorney and producer. Every Tuesday night I host a free TeleCourse in which I invite a theatre-industry professional to discuss an specific aspect of the theatrical production process with both experienced and novice producers.
On Tuesday, March 3rd, our guest was Roger Gindi, General Manager of such Broadway and off-Broadway hits as Our Country's Good and Nunsense, and currently general manager and producer of Shakespeare's R&J off-Broadway. Roger discussed one way in which a producer can help his or her production through those first weeks when it is finding its audience, or through a similar slow period in ticket sales - by using the royalty pool.
Before I explain how a royalty pool works, allow me to define a few terms that figure into the explanation. Gross Weekly Box Office Receipts is the term for the total amount of money accumulated from ticket sales over the course of a given production week, after deducting fees that need to be sent to any phone charge services or credit card companies. It is usually abbreviated to "GWBOR". Weekly operating profits are what is left when all the costs of operating the show - rent, salaries, advertising, etc. - are deducted from the GWBOR.
Now, everybody into the pool. Under a regular royalty agreement, a playwright, for example, will be entitled to a percentage of the GWBOR every week ( the Standard Royalty). In a royalty pool situation, which must be agreed to by all the participants in advance, the expenses of running the show are paid first leaving the weekly operating profits. Then, a certain percentage is given to the investors in the show, and the remaining percentage is split among those in the royalty pool participants (Author, Director, Producer and others) according to the same ratio they receive their Standard Royalty (Pro-rata) . For example, under the off-Broadway collective bargaining agreement with the Society of Stage Directors and Choreographers, 60% of the Weekly Operating Profits are returned to the Producers and investors, and 40% is split amongst the participants in the pool Pro-rata. So, rather than for example 5% of the GWBOR for the playwright, 2% for the Director and 3% for the Producer (a total of 10% of GWBOR), they may get respectively 5/10ths, 2/10ths and 3/10ths of 40% of the Weekly Operating Profits. All royalaty participants will be guaranteed a minimum royalty payment each week even if there are no Weekly Operating Profits to share. How does a royalty pool situation help the producer keep the show running? The weekly costs of running the show are protected before anyone reaps royalties. The upside for the Producer is thati if the show is loosing money or only marginally making a Weekly Operating Profit the royalties are kept to a minimum. This is good for all concerned as it will hel[p the show open in hopes of finding its audience. The upside for those "in the pool" is that if the show does very well, and the Weekly Operating Profits are high, their royalty payment may exceed what they would have received as their StandardRoyalty. Keep in mind, however, that the royalties of those "in the pool" are usually capped at somewhere around 125% of what they would receive if they were receiving their Standard Royalty of GWBOR so that on the very high end they do not get a windfall..
The royalty pool is an example of how the investors, producers, and creative talent on a show can all assume different levels of risk, but risk nonetheless, to keep a show going. That's show biz.
To participate in the free Tuesday TeleCourse or just listen in, all you need is a telephone, however you must register by calling ((212) 769-3282.
Bruce Lazarus the former Director of Business and Legal Affairs for Walt Disney Theatrical Productions and producer of the current off-Broadway show Shakespeare's "R&J."
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