Reader Question: Do you have advice on handling money after first script sale?
That first deal is a breakthrough, not a career, so it pays to be money-wise.
That first deal is a breakthrough, not a career, so it pays to be money-wise.
Two questions from Robert McBride:
SCOTT, WHEN A WRITER GETS HIS/HER CHECK, do they then pay the agent and or manager OR is the agent/manager’s cut taken out before the writer touches the check?
Brendan Cowles was kind enough to provide this response:
Usually you will sign a release allowing your agent/mgr/or lawyer to process your checks. Buyer sends check to agency. They pay themselves, lawyer, manager, then pay you the difference along with a statement and copy of the original check from the buyer/employer.
That’s pretty much it, at least in my experience. You do see occasional lawsuits by agencies against talent (I Googled “agency lawsuit talent withholding commission” and came up with this example) which suggests perhaps there are arrangements where talent gets paid before reps. But I believe standard procedure is for reps to get their cut first.
Second and more important question from Robert:
Also can you give some advice on what a writer should do when he gets that first big check? i.e. get an accountant (if so why) etc
Once again Brendan was kind enough to weigh in with this solid advice:
Sock that money away. Build up two years of income before you give up your steady day job pay check. I didn’t do this and wish I did.
Abso-effing-lutely. A writer doesn’t know all that much about the mysterious ways of Hollywood business, but this axiom is The Truth: You get gigs, you don’t get gigs. You’re hot, you’re cold. You’re flush with cash, your bank account gathers cobwebs.
In other words, you should expect to go through some lean times to go along with — hopefully — your successful stretches.
Selling one script is a breakthrough, not a career.
You need multiple deals to become established, not only in terms of your own personal finances, but as a known entity within the Hollywood development community.
But let’s say you score big with your first deal, your buddy cop action comedy spec script Lugnutz & Corndog sells for a cool $1M! Huzzah! A millionaire!
Not quite.
First off, the reported $1M includes a production bonus that only gets triggered if the movie gets made. So the actual numbers may be $500K versus $1M, meaning you are only guaranteed the first half-million.
[By the way that production bonus can be reduced depending upon who gets what ultimate writing credit for the movie. Thus if you end up sharing credit with someone who comes on board the project to rewrite you, your $500K production bonus would go down to $250K. If two other writers share credit, your bonus gets reduced by 67%.]
Unfortunately like so many projects that Hollywood acquires, Lugnutz & Corndog dies a slow painful death in Development Hell, so you don’t see any of that production bonus. But hey, you get $500,000! Granted, that’s a nice hunk of change, however let’s figure in some of your expenses.
Agent: 10%
Manager: 10%
Lawyer: 5%
WGA: 1.8%
You will also need at least an accountant who knows entertainment finances or a business manager to handle your money, the latter of which can charge an additional 5% or more (their pitch is the investments they orchestrate for you will result in revenues that more than cover their percentage).
So you’re looking at about one-third of your income gone before you see it. That $500K is now down to $350K. Then there are taxes which you can mitigate somewhat by creating a loan-out corporation, but that results in certain administrative costs and taxes of its own. Let’s just figure you owe another 33% in federal and state taxes, and corporate fees, so your $350K is reduced to about $225K.
Still decent money, but what if you don’t land a gig for a year? Spread out that $225 over 2 years and suddenly your million dollar deal translates into about one hundred grand per year.
And it’s not just about the money. It’s about the pressure to make the money. It’s hard enough to write and be creative while doing it. Having the proverbial sword of Damocles dangling over your head in the form of zero income for an extended period of time can flat-out wear on you. Also given that pressure, you may find yourself going up for writing assignments you’re not particularly enthusiastic about (“Battleship 3? Sure, I can write the HELL out of that,” you exclaim to your agent lying through your teeth.)
Circling back to Brendan’s advice, best to establish yourself within the business and sock away some dough before quitting your steady gig slinging Slurpees at the local 7–11.
Three other things.
First, if you live outside Los Angeles and sell a spec script, your reps will almost certainly advise you to relocate to So Cal. While it’s possible to start and even sustain a career as a screenwriter living in North Dakota or Lichtenstein, the simple fact is it’s more difficult. Why? One big reason: Networking opportunities are so much greater if you live in L.A. That means everything from setting up meetings with industry types to sudden OWA opportunities to chance intersections with movers and shakers who could become big proponents (insert meet cute with Studio Exec in the organic produce aisle at Gelsons).
Unless you live in some major urban area like NYC or San Francisco, moving to L.A. will probably mean a steep increase in your expenses. However it may be worth the additional cost to put you more into the center of action.
Also if you have any interest in working in television, you pretty much have to live in L.A.
Second, one practice you can adopt to maximize your earning potential is to stack projects [I wrote a Business of Screenwriting column about it here.] That way you are always working on multiple stories, each of which is a potential sale and/or writing sample.
Third, always be working on a spec script. Even if you’re flush with writing assignments, several of them lined up into the next year, if you have an original story you’re passionate to write, there’s no good reason not to be working on it. I wrote about that here in another Business of Screenwriting post. And if you do hit a lean stretch, you’ve got a spec ready to go out, at least put something out there to kick-start your stalled career.
Then again Lugnutz & Corndog may get produced. It may become a smash hit spawning sequels (Lugnutz & Corndog: This Time With Mustard). You may become the action comedy king or queen. An actual A-list writer. Good for you! From my keyboard to God’s ears!
But while you may not have to worry how to cover this month’s rent, you’ll have your own set of financial issues. I am reminded of the story conveyed to me by an agent about a famous A-list screenwriter who every January would hold a confab with his team of reps, list all of the various real estate properties he owned (e.g., Aspen, Vermont, Jamaica), totaling the amount of money he needed to cover his annual “nut,” then he would ask, “So how are we going to get me that income this year?” First world problems admittedly, but still enough to keep you up at nights in your $50,000 Monarch V-Spring bed.
What say you, GITS readers? What money advice do you have for aspiring and fledgling screenwriters? Please head to comments and have your say. And speaking of money matters, best of all, like everything here on the blog, it’s free!
NOTE: The reason I chose the $1M example isn’t to feed the Hope Machine — I believe I have been explicit many, many times about how hard it is to break into the business and that movies don’t owe anybody a living — but rather to show how the very idea of a million dollar spec script sale is itself not only rare, but also in some ways illusory in reality. Break it all down like I did above and what you’re left with is not nearly what you thought you might have made.
Finally I’ve had some back and forth with a few other writers via email re this post. While the advice Brendan offers — keep your job, bank your money — is prudent, the fact is when I sold K-9 as a spec script, I quit stand-up comedy and moved from the Bay Area to L.A. Granted terminating my stint as a entertainer may not have had the same gravitas as, say, walking away from a career as a lawyer or a dentist, but still I took a leap of faith. And frankly in one respect, it was precisely what I had to do in order to immerse myself in the craft, basically a 24/7/365 pursuit to play catch-up after not having any formal and barely any informal training in the craft.
Which is to say, there is no one way to approach the business of screenwriting, just like there’s no one way to write. If you sell a script and are confronted with a choice about whether to write full-time or relocate to L.A., get the best advice you can, talk it out with your loved ones, consider the pros and cons, listen to your gut, then decide.
But know going in, you are in for a roller coaster ride, my friend. As the lady says:
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