Are there any industry standards for points?

Cracker Funk

Cracker Funk

I'm getting pretty close to approaching my first potential investor, and one of the biggest question-marks I have is for compensating myself. Upfront, I don't want one penny, because the budget will be small, so I want to stretch it as far as possible.

Needless to say, I want a percentage of any potential profit. Is "points" the right word to use for that? The bigger question, though, is whether or not there are any industry standards? I'll be again playing 4 key roles -- writer/producer/director/editor.

If it helps answer the question, I won't be investing any of my own money. I'm seeking an Executive Producer, and I'll be the Guy-Who-Gets-Shit-Done Producer. I read one website that suggests the standard is that you're selling half of your movie to investors, so that would mean that I, as Managing Producer, would keep a full 50%? Seriously? That sounds like a lot, is that normally how it works?
 
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I can't say industry standards, but I would keel AT LEAST half. For a few reasons, but namely-

1: you need control. It's your movie, if he owns 50% than the investor has tonsign off on every decision and if he owns more, he gets to make every decision.

2: you may need to give out more points to other people involved, mostly actors.

It's not uncommon to see othe businesses where one person invests everything and another does all the work and takes more home. Especially if you word it like "all investors are paid back first (plus 10% if you want/like) then percentage kicks in." basically if he invests $100k, the first $100k (or $110k) goes to him then you split everything after accordingly.
 
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Industry standard, from what I've read, is that half goes to the producer, and half to the investors. Then, if you give points to any cast or crew, it comes out of the producer's half.
 
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Cool, thanks for the responses. So, I'm making a couple assumptions, based on your responses -- let's see if I've got this right.

For easy math, let's say that it is a $100K budget. Let's say I found a DP who believes in the project, but is worth more than the amount of money I can afford to pay them, so we agree that they get 5 points.

The film is a success, and we sell it for $200K. The first $100K goes back to the investor, because that's not profit, that's just getting us back in black. From the second $100K, the profit, the investor gets $50K, I get $45K, and the DP gets $5K. Those numbers add up?
 
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Ernest Worthing said:
If you gave him 5 points of 50k, he would get 2.5k.
Click to expand...

Yeah, I wasn't sure if giving him/her 5 points meant they got 5% of the total profit, or 5% of my share; I guess that'd have to be determined between he/she and I (though, I really prefer to pay everyone upfront).

Blade, thanks for the further input. I had a feeling that sometimes the investor might get a larger share.
 
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Cracker Funk said:
Yeah, I wasn't sure if giving him/her 5 points meant they got 5% of the total profit, or 5% of my share; I guess that'd have to be determined between he/she and I (though, I really prefer to pay everyone upfront).

Blade, thanks for the further input. I had a feeling that sometimes the investor might get a larger share.
Click to expand...

Generally, the points are based on the total (100%), not just the producer's half. So you're DP would get 5% of the $100k.
 
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Yes, there are just a 100 points bc that's the way percentages work.

But no, you're not giving away ownership of ur movie if you pay someone 51% of the profits.

EDIT: oh it changed :) that was quick!
 
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cameronchapman said:
Generally, the points are based on the total (100%), not just the producer's half. So you're DP would get 5% of the $100k.
Click to expand...
That’s a very broad assumption - and not a good one.

In general, the investor is going to make the beast deal for
themselves. Understandable as they are taking the greatest risk.
So the “points” given come from the “producers gross” not the
total gross.

In general if an investor put in $100,000 they would get $125,000
before anyone else saw anything. Then they would get a percentage
(say 25 for this discussion) of everything until a certain point.

So if that $100,000 movie sold for $200,000 the investor would take
$125,000 off the top then take 25% of the remaining $75,000
($18,750) and the DP would get 5% of the 75 large or $3,750.

Of course you can set up the points differently. If you can get
the people putting up the money to take less, then your points
participants can get paid sooner.
 
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Ernest Worthing said:
Yes, there are just a 100 points bc that's the way percentages work.

But no, you're not giving away ownership of ur movie if you pay someone 51% of the profits.

EDIT: oh it changed :) that was quick!
Click to expand...

I wasn't sure if I was making sense so I deleted it. LOL!

But yeah, you are right, you're not giving away ownership if you agree to pay someone 51% of the profit!
 
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I think I need to contact Bernie Lawson!

Just playin'. The more responses in this thread, the more it sounds to me like the "industry standard" is whatever I work out with a particular investor. The first person I'm contacting is not familiar with the filmmaking industry, so I'll communicate to them that 50% might be typical, but it varies from project to project, and because mine is particularly high-risk, I'm more than willing to let them take the lion's share.

Cheers!
 
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Cracker Funk said:
... and because mine is particularly high-risk, I'm more than willing to let them take the lion's share.
Click to expand...
Do.
Not.
Ever.
Use this term to an investor about your own project.

Someone else's film is "high risk".
Your film has an "increased" risk.
It's considerably less polarizing and fairly vague.

Does "increased" mean... 50% increase? Or 5% increase? or 0.5% increase?
No one KNOWS the answer, although we all have a pretty good idea.
But "high risk" don't sound good at all.

You really want to pay good layer-ly attention to your verbiage as to how ideas are posed.
This is salesmanship.
Sell.
 
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directorik said:
That’s a very broad assumption - and not a good one.

In general, the investor is going to make the beast deal for
themselves. Understandable as they are taking the greatest risk.
So the “points” given come from the “producers gross” not the
total gross.

In general if an investor put in $100,000 they would get $125,000
before anyone else saw anything. Then they would get a percentage
(say 25 for this discussion) of everything until a certain point.

So if that $100,000 movie sold for $200,000 the investor would take
$125,000 off the top then take 25% of the remaining $75,000
($18,750) and the DP would get 5% of the 75 large or $3,750.

Of course you can set up the points differently. If you can get
the people putting up the money to take less, then your points
participants can get paid sooner.
Click to expand...

Okay, from what I've been reading, it's customary for points to be calculated from the net film rental, though occasionally they're calculated solely from the producer's cut. From Independent Feature Film Production:
It is customary for the general partner to retain a certain number of percentage points (shares in the film's potential profits) for major talent such as writer, director, stars, and composer. These are generally deducted off the top from net film rental, thereby being shared by both the general partner and the limited partners [investors]. Occasionally, they will be deducted solely from the general partner's share of the partnership distributable cash. In the latter case, if the partnership distributable cash is divided 50/50 between the general partner and the limited partners, the percentage points for major talent will be worth exactly half as much as if they were deducted off the top from net film rental.
Click to expand...

The other thing this book points out is that you don't necessarily give your investors 100% until they recoup (and get whatever percentage above that you've agreed on). Sometimes you might be splitting 90/10 or 80/20 until that point is reached. It depends on the investor and what they're willing to do, and what you can negotiate.

I'd highly recommend this book to anyone going after traditional financing. It's got tons of info, it's just a little outdated when it comes to newer methods of financing and distribution.
 
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rayw said:
Do.
Not.
Ever.
Use this term to an investor about your own project.

Someone else's film is "high risk".
Your film has an "increased" risk.
It's considerably less polarizing and fairly vague.

Does "increased" mean... 50% increase? Or 5% increase? or 0.5% increase?
No one KNOWS the answer, although we all have a pretty good idea.
But "high risk" don't sound good at all.

You really want to pay good layer-ly attention to your verbiage as to how ideas are posed.
This is salesmanship.
Sell.
Click to expand...

Oh, yeah, I'm with you on that. I actually plan on using a race-horse analogy. I want to be honest with this person, and that means I need to let them know that it's definitely a gamble. If you buy a race-horse, you're not buying one blindly, but because you think there's something special about this horse, and that makes you think it can be the one who makes it to the Kentucky Derby.

Cheers!
 
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