Can someone explain this to me. How does deferment normally work?

Basically it means you won't get paid, but if the movie gets distribution and turns a profit, you'll get paid your rate. It usually involves a contract, but is often oral (SAGindie has contracts).

You can also offer 'points' as part/all of the deferment.. each point=a percentage of profit (usually net, not gross) or you can defer their 'day rate' or a flat amount..

so my promise to profit share in the unlikely event I made money on this project is, in fact, deferment? Cool.

so my promise to profit share in the unlikely event I made money on this project is, in fact, deferment? Cool.

Yeap that's the deal. The way it's done contractually is you agree to pay the day rate or a fixed fee for the work done, the cast and crew sign releases so you've legal proof that you own the filma dn can use the performances.

In the deferment contract it's specified at which point payment is made. The core of this part of the agreement is the payment heirarchy, so normally the bank and any loans are top of the list, then the investors and then the cast and crew. It's normal to build in clause that allows you to make part payment if, for instance, the film makes enough money to pay the bank, loan and investors, but can only offer 50% the crew.

Deferments are particularly useful when it comes to sell your film because although you may only have spent $40,000 in a actual outlay, if you've got your cast and crew on union rate deferals then the actual budget for the film goes up to more like $400,000. As the first question a distributor or sales agent ever asks is "What was the budget?" ironically $400,000 is a better answer.

The down side is that once you've created what is in real terms an artificial budget of $400,000 it becomes much harder to get that film into profit. However, even if you've not gone into profit the good news is that becaus eof the payment heirarchy your investors are still going to make money back because they get paid early.

I'd strongly advise against giving points in your picture for two reasons:

1) If the film breaks out and does mulit million pound worth of business you end up vastly over paying your cast and crew.
2) It contractually binds you to distribute in part form every piece of money that comes in on the picture for perpetuity. (In reality this mean that if in fourteen years time the film is shown on Columbian TV and you're paid a fee you have to post out fifty cheques to people who've probably moved house half a dozen times since then.)

Most people who take deferments from indies know that in real terms they are working for free and see the contract as a lottery ticket. You tuck it away in the hope that it'll pay off.

I think deferments are a good thing for lots of reasons:

1) They allow you to say to your crew "I think you are worth union rates." Psychologically this is good and you get better work
2) It sets up a legal and contractual relationship between you, your cast and crew. This means that they have entered into a contract with you to provide their services for the payment that you've agreed. In real terms this means they can't walk out in the middle of film without being in breach of contract. On a feature I think this is very important, you can't have people opting in and out of the project when they like just because they are doing it for free.
3) I think that knowing how much each person is investing in the film in terms of their labour makes the producer and director see the cast and crew differently. In reality they are your biggest investors. If you're paying your lead actor $500 a day and they are putting twenty days into your picture, that actor has invested $10,000 in your picture. It puts a whole new spin on the concept of valuing people.

I'm always concerend using the term deferment as most people in the indutry know it's code for 'never getting paid'. The sad fact is the majority of deferments never get paid and when they do it's often at the cost of teh film ever seeing a return.

In short be careful how much and in what position you set up the deferments as if you go with deferments for everone you could end up never seeing money from the film.

The sad fact is the majority of deferments never get paid and when they do it's often at the cost of teh film ever seeing a return.

This is the reason that the payment hierachy is so important. So the investors get their ROI before the cast and crew get paid. The other thing to remember is that the producer needs to build in a defered payment for themselves as well, otherwise there is a strong chance that the people who do the most get the least back out of it.

So it is true that on paper the film may not go into profit (especially in the short term) the investors and production team, cast and crew all earn something. The other options are to:

a) Ask people to work for free - which means your film goes into profit by taking money from the people who work for you
b) Set smaller deferments, which is another version of the same thing.

I'm not comfortble with either. It's always better to be able to pay people some real money up front, but not many indies are in that position and deferments are better than nothing.

The other thing to realise is that if the the deferments are never paid it's either because the film hasn't sold, which means that the busines plan for the film was wrong, or the other reason is that producer/distribution company are running what's called a "rolling gross" which where they keep adding costs into the production to ensure they never meet the payment threshold.

However, I'm always interested in new ways of structuring film finance, how do you pay your cast and crew Phil? I know it's possible to look for greater levels of investment, but investors need an pretty good ROI so you are dramatically increasing what you need to sell the film for. If you offer a 150% return on investment raise $80,000 to make the film, you then have to sell for $120,000 to get the film into profit. If you did the same film on deferments you only have to sell for $80,000. In every respect deferments are the cheapest loan in town and increase the chances of the film going into profit.

However, I'm always interested in new ways of structuring film finance, how do you pay your cast and crew Phil? I know it's possible to look for greater levels of investment, but investors need an pretty good ROI so you are dramatically increasing what you need to sell the film for. If you offer a 150% return on investment raise $80,000 to make the film, you then have to sell for $120,000 to get the film into profit. If you did the same film on deferments you only have to sell for $80,000. In every respect deferments are the cheapest loan in town and increase the chances of the film going into profit.

No I agree totally. Deferments are the best way for Indie films to get made. For our next film Fixers most have agreed to a flat, upfront daily rate with no deferments or points. We have some deferments for the bigger cast members but for the most part small flat daily + expenses +food etc.

Clive (or someone else), do you have a sample deferment contract/clause you could post here?

This is advice from Skillset a UK body...

"You should note, however, that the majority of films do not go into profit and you may never be paid. Try to ensure that only part of your fee is deferred and also ensure that the contract is benefiting you in some other way, such as training. If you do agree to a deferred fee this should be higher than an up-front payment because you are taking the risk that you will never be paid the fee. "

It's a shame but due to the deferred thing being abused for so many years people are now advised against it!

Anyways found this online :

http://www.dependentfilms.net/download/compensation.txt or
http://www.sagindie.org/contracts2.html

These may be of help!

When I was starting I did a lot of "deferred" work. I really believed what the producers told me and I know they believed it - that I would be paid. Even though a few of the movies I worked on got a small release the deferred payments never reached us below-the-line crew. I don't think I was ever cheated, I believe the movies never made enough money to pay off the original investors, the actors and the above-the-line people.

But I gained experience and contacts so it was worth it.

These days I'm willing to defer part of my pay on a project I believe in or really like the people. I won't defer more than 50% - I try to keep it at about 30 to 40 percent.

As a producer I never ask anyone to work for free nor do I use the euphemism. But I do ask people to work for less than their usual day rate. For me, I find that is a more open, honest way of doing business - not to mention much easier on post-production accounting. And as a writer, a director, DP or special effects "hired hand" I would rather just take whatever the company can afford up front and not deal with a deferred contract.

When I was starting I did a lot of "deferred" work. I really believed what the producers told me and I know they believed it - that I would be paid. Even though a few of the movies I worked on got a small release the deferred payments never reached us below-the-line crew. I don't think I was ever cheated, I believe the movies never made enough money to pay off the original investors, the actors and the above-the-line people.

But I gained experience and contacts so it was worth it.

I think there are some good points here, ones that newbie producers rarely pick up on.

1) Producers often go into a production with an inflated idea of what the final product will be worth and therefore over spend in production. I know that this is true of No Place where we spent $18,000 (real money) on the soundtrack when we could have compromised a little and spent a fraction of that. This points to one of the biggest problems in the film industry (poor business skills). The truth is that in any other business these kinds of errors between production cost and value of product in the market place would be career stoppers; not in the film industry though where they are the norm rather than a rougue exception.

One of the reasons for this, I think, is that people often over crew for thier first movie and also aim too high in terms of production values, instead of looking at the real money value of their product and concentrating on the basics – getting a good story. I also think that it's all too easy to loose sight of the business issues when clouded by your belief in the quality of your film. I also think that producers often don't see their deferments as real debts or their cast and crew as real investors. So, although they are talking $400,000, in the back of their mind is the reality that they only need to raise $50,000 to secure their own pay day. One of the things that caused me to leave me ex-business partner was the day he turned round to me and said that he'd be happy to get $60,000 for our $350,000 film because as an investor he would be getting a 100% return on the money he'd put in; it didn't seem to matter to him that neither the cast or crew would ever recieve any payment. Even when people don't say it outloud any producer who can recoup their investment is always going to see that as the bottom line goal.

2) I think that indie films are a great place for people to do "pay their dues." Film schools pump out thousands of graduates every year, more than there are jobs in the industry and if you're offering them the opportunity to work in professional enviroment, that in and of itself is of value. It goes without saying that the same is true of your cast.

I think if I've learnt anything from my first feature it's about not getting ahead of yourself and making sure your film is at a budget level that you can absolutely make a profit from. In real terms this means doing things like looking at royality free music instead of tying a musician to a deferment contract; it's about picking formats that you can sell from, but that allow you to do your post production yourself, with the equipment you have; it's about finding ways paying people without paying them. For instance for the next picture I'm trading my time and expertise for equipment and a whole host of other things.

I think for a first feature it's unlikely that you'll have pre-sales to act as a budget guideline, so you have to work on the worse case senario that the film will bring in nothing and look at costing your film from that budget level. Instead of thinking "if I invest $10,000, I can sell this for $40,000?" You need to think can I afford to spend $10,000 on my showreel and in building up a fan base? Unless you know exactly who is going to buy the film and for how much any other assumption is going to come back to haunt you.

When negotiating the deferments I think you have to have that kind of clarity with the cast and crew. I'm offering this deferment, because if the film does well I want you to gain financially, but if the reason you're here is because you need to get paid then this production isn't for you, because I can't guarantee that.

I'm a tad late to the party here, but tonight, as lucj would have it, I was just trying to figure this stuff out for my first feature. I have always figured on deferred pay for everyone involved in my film. The fact that my firends are the actors tends to give me some leeway there. They have agreed to it, but I haven't come up with exactly what percentage. Do I do net points, and if so how many? I was thinking 3-5. Or do I offer them a deferred set dollar amount?

For my money I'd work out a daily rate that is reasonable and pay what you can upfront and the rest in second place deferments after you have paid back your investors. Points and profits are always a sticky point and at the end of the day you want to retain as much of the hard cash profits that you can.

I think the biggest problem with derferments is that although they solve short term problems, like - I don't have enough money to pay a cast and crew, they do this by creating long term problems when (as usual) the deferment turns into "Non-payment"

Personally, I think that there has to be a better way to do it and if I ever work one out I'll let you know.

I'm almost tempted to suggest that it's perhaps more honest in the long term to ask people to work for free (with a token $1 payment to secure rights to performance) - then if the film does go into profit send out some bonus cheques as a thank-you.

I think I might try that on my next picture.

I think the biggest problem with derferments is that although they solve short term problems, like - I don't have enough money to pay a cast and crew, they do this by creating long term problems when (as usual) the deferment turns into "Non-payment"

Personally, I think that there has to be a better way to do it and if I ever work one out I'll let you know.

I'm almost tempted to suggest that it's perhaps more honest in the long term to ask people to work for free (with a token $1 payment to secure rights to performance) - then if the film does go into profit send out some bonus cheques as a thank-you.

I think I might try that on my next picture.


I like that too. I feel more honest if I do it that way. I think I'll discuss it with them openly and honestly, them being friends of mine, and we'll figure it out together.

Problem is though can you get proffesionals to work for free or just (and no offense to anyone) ametuers? What pro can afford to work for nothing at all?

Problem is though can you get proffesionals to work for free or just (and no offense to anyone) ametuers? What pro can afford to work for nothing at all?

My experience is that it depends on the project and also what time of year you shoot. If you shoot in the middle of production season April through to September, then you are going to struggle to attract crew to work on a project for the love of it. However, once the main productions have shut down for the winter lots of pro's are kicking around with holes in their scheules. Now, after nine months of working on commercials and Sky football presentations most pros are all to willing to come out and do something a little more creative, even if there isn't a wage.

The other advantage of shooting out of season is that rental houses have equipment sitting around unused, and anything they can get in is appreciated (By that I mean you can really negotiate hire rates down).

This is probably a UK issue though, because I don't think california has a production season, what with the permanent fab weather (:( it's cold here).

I think the other issues here are about what kindof rep you have as a director and how cool the project is. I've a reputation as being a good director to work with; I give people a lot of creative freedom. This means that pros are more likely to give me their spare time. It also helps to get creative with your scheduling (shoot over six weekends instead of a two week block - use more than one sound guy and only ask for three weekends from each of them.) Get creative with it.

I also tend to offer them very interesting projects.

The other key thing is that in terms of production personnel, you need three good pros to make a feature, a sound recordist, a gaffer and DOP. If you're running a complex feature with lots of kit, then you're also going to need a pro 1st AD. Above and beyond that you make do with people dtraight from college looking to get their first exprience, providing you have the skill levels yourself to help them develop and also to watch their backs for them.

I think there is a tendency in indie films to over crew (especially in the UK). On my next feature I'd be surprised if I use any pros, other than my sound-guy (even that's open to debate, and will dedend on how well the beachtek equipment works).

As to acting talent, the idea that you can't get great actors to work for free, well that's just not true. For the right project and if you can guarantee the right levels of exposure then actors will work for free.

As to acting talent, the idea that you can't get great actors to work for free, well that's just not true. For the right project and if you can guarantee the right levels of exposure then actors will work for free.

I think that's the bottom line. All sorts of things can be done if the script is a killer.

I think that's the bottom line. All sorts of things can be done if the script is a killer

The other thing is you live in Florida which is a "right to work State" I think you'll find that SAG rates can't be enforced and that local SAG representatives will help you find a cast to fit your budget.

(I've shot stuff in Florida and was shocked at how low the wages were for the performers [as negotiated by the producer])

As I understand it, the SAG Ultra Low Budget agreement allows for many changes from the regular SAG rules. You pay your SAG actors just $100 per diem (plus pay into the health/pension plans for SAG). You are not bound to pay any of the other talent. This agreement does limit your budget and profits from the film -if you make over the ceiling on the film, you must then convert to a SAG Low Budget or regular SAG agreement and retro-pay all your people accordingly- which is very expensive.

If you get one B or C list SAG actor who wants to fill up their time and everyone else will work for gas $$ and craft service, you can make a film for very little money.

I think the biggest problem with derferments is that although they solve short term problems, like - I don't have enough money to pay a cast and crew, they do this by creating long term problems when (as usual) the deferment turns into "Non-payment"

Personally, I think that there has to be a better way to do it and if I ever work one out I'll let you know.

I'm almost tempted to suggest that it's perhaps more honest in the long term to ask people to work for free (with a token $1 payment to secure rights to performance) - then if the film does go into profit send out some bonus cheques as a thank-you.

I think I might try that on my next picture.

The film I produced - my first film I guess although I only went in as director at the end of a total debacle with one month to go before shooting - was deferred payments. In writing.

They are a bad, bad idea.

Since people don't get upfront money (we fed them, transported them, etc. but no pay) the amateurs amongst them seem to be the first (but by no means only) to get on their high horse about making sacrifices with no return on their efforts. It has ended up meaning the film is unlikely to ever be released as currently in the can since some of the worst of them quit completely before doing ADR.

My first feature I am producing and DIRECTING, everyone is on contracts. Daily hourly specified, total amount paid specified, total hours required for before the pay clicks over to a penalty rate specified, everything. It just isn't huge money. However, it has got me the best stage actors and out of wokr pros in the whole region, because they know where they stand, they see the contract as the minimum professional standard, and most of them do a lot of their best work for free in the theater anyway so any pay at all is wonderful for them.

The main thing is, I share the dream, and I pay myself last. Everyone knows I pay myself last, and they see me working hard, being passionate without being rude to anyone, and displaying professionalism and vigor. It works.

To anyone - DON'T USE DEFERMENTS. It looks bad and leads to bad blood and weirdly, it attracts more money-hungry people than open honesty about how small the budget is. I think because deferment encourages a gambler mentality from people who think "well it will make nothing... but it could make MILLIONS and then I'd be RICH! ha ha ha ha ha!" whereas a contract chills everyone out and emphasizes that the operation whilst small budget is professional and will fire their ass if necessary.

My 2 cents.


-Jonathan

Have any of you sold a film to a distributor? Just curious.

Yeah, I understood this meant a Point/percentage payoff. But whats the difference between net and gross profit? Can someone explain that? This is where more people get screwed. I dont know anyone who has made a film but I know some musicians who got burned. Something to do with not getting real pay for the first 3 albums.

Gross - amount taken before anyone gets paid, any division of profits.

Net - after profits taken by people with priority.

In approximately 100% of cases can you guess what happens if you have net points not gross points?

You guessed it, the people who take gross points, AND ARE THEREFORE AFFECTING PROFITABILITY, stage it so there is NOT profit and therefore no one with net points gets anything.

To anyone - DON'T USE DEFERMENTS. It looks bad and leads to bad blood and weirdly, it attracts more money-hungry people than open honesty about how small the budget is.

I shot my first feature using deferments, there was nothing up front for anyone except food and the experience of doing it. Despite that I managed to attract a great professional cast and crew, we had no problems with people during the production, and by the end of the two years it took to make they'd put each put about twenty-eight production days into it. (Some of which were eighteen hour days)

I don't know if I was just lucky. But, I don't think so. Everyone went into the film with a wage negotiated for their time, subject to the film selling. No one was on points, either net or gross. No body thought they were going to get rich out of the film.

In my opinion unprofessional behaviour in a production isn't about whether you're defering payment or not; in my experience it happens when either cast or crew lose faith in the production and therefore feel like thier investment of time is being wasted.

For me where the deferments are a problem is once the film gets into the sales arena. It took a year for us to complete post production, and the film has now been on the market for 15 months, without generating income. This means that people have been waiting nearly two and a half years to see some return for thier time. Since I left the company eighteen months ago my business partner hasn't been keeping the cast and crew informed about what's happening with the film. In fact, even I don't know. This lack of information to the cast and the long wait for any sign of the film doing any business is the thing that creates any issues I have now with anyone on the production. It's taken nearly two years, but people have quite rightly lost faith in the production.

For many actors and crew members what matters more than getting paid, is getting high levels of exposure for the film. This is especially true for the actors. I think where my film has let the cast and crew down is not in the fact that the deferments haven't been paid, it's more that the film hasn't had sufficient exposure and this means that no-one is reaping the benefit from the film.

I think the one thing that everyone I worked with understood that was if they didn't get paid, I didn't get paid; for every hour they put in, I put in ten; and, despite anything else I gave them a great working experience and between us we made a great film.

With all due respect, you just proved my point.

2 years, no pay- they'll never do that again imo.

With all due respect, you just proved my point. 2 years, no pay- they'll never do that again imo

I'm afraid you're wrong, almost all of my people are keen to work with me on my next film, and this time there is even less money to put into the production. I think this is because my people respect my work both as a writer and a director and they see the non-sales of the film as a failure of the industry rather than something that we did wrong.

But I understand what you're saying : what you are actually saying is that if you didn't manage to sell your film and pay wages that your cast and crew wouldn't want to work with you again.

I guess that's understandable, because your experience is that a member of your cast refused to help you complete your picture.

I don't know what the problem was on your film. It wouldn't be right for me to comment about a situation that I knew nothing about; however, what I do know is that when things go wrong it's always easier to blame lack of payment for the people problems than it is to look at how the production was managed.

I think one of the hardest skills to acquire as a director is man-management, and as I've said before an indie director who doesn't understand that his cast and crew are his most important investors tends to treat them as employees, rather than as collaborators. I've seen any number of indie directors throw thier weight around on set, fail to thank their people for work done, bitch about the work that they're getting from crew (for free), fail to keep to schedule, expect their cast and crew to drop everything at a moment's notice to do pick-ups because of techical mess-ups, fail to understand the needs of their performers and give them a poor acting experience and finally, ask people to work on a production where neither the script or the directer was ready (So, from day one everyone on the cast and crew can see that the film is a lemon).

The great thing about being a no-budget film-maker is you have to learn what it is that people want.

This is the most important truth about people in this industry ...

Any actor in the world, regardless of how famous will take a job that pays them nothing, over a job that pays them, providing that they believe in the film. Exaclty the same applies to crew, even the ones that say "I'll never work for nothing.

OK, There are times when putting food on the table, comes above anything else. But, even then people will want to work on the "Great" project over the paying one, even if financially they can't.

What went wrong on that first film was lack of control by me as producer over director and cast. It's never happened again or even remotely looked like it would on any film (or other production) I have had full conduct of since.

The deferment pay option is frankly witless in my opinion. Using it guarantees that no budget is where you'll probably stay. For example putting a pitch together to get funds from somebody else, you may as well stay at home if you include the deferred payment scheme as part of the budget. Likewise with pro crew. Sure people will help out but there is no credibility in deferred payment plans. They are rightly notorious. You might get an investor or two who is unscrupulous and sees the deferral option as an inspired way to screw the performers and crew on the deal but how often will that sort of thing work?

And as you say, with no knowledge of what happened on that first picture, better that you devote your next page-long post to a different topic. The weird dig about blaming other people - meh. Whatever. If you're in charge it's YOUR responsibility... I was in charge, the buck stops with me. That doesn't stop me from assigning responsibility for specific misbehaviour etc. It's called management.

We all have people who will work with us no matter what, hopefully. It's called team building. It doesn't matter a waffle to the basic premise of what most people say, and that is, no pay, no play. There is a thread on this very board right now on this subject from the point of view of a professional who has had enough of the "living off fresh air" approach to financing. Likewise the last two crew we have signed, we just tell them what the pay is. If it isn't enough for them, fair enough, no harm no foul.

I either work for free, no strings attached, or for a scaled fee. And those are the alternatives I offer everyone else. That way you know if this life is your calling and career or not. If it's just a hobby, why bother with deferral at all? As long as a person has a day job and makes films on the side, it is not a professional pursuit for that person. People who have the passion to chase a dream also need to be responsible to themselves and other people.

Deferral is akin to no win no fee for a lawyer in some respects except that no respectable lawyer would speculate a fee except in circumstances where there was a lot of merit in the claim. Likewise deferral should be a very special case for indies where there is some kind of distribution deal or some other kind of prize in the offing or already locked away. Otherwise it is close to breaking one of the cardinal rules: never rob your actors. Never make them pay for something associated with the shoot.

There's a library worth of writing on this, all of it based on real case histories.

As I understand it, the SAG Ultra Low Budget agreement allows for many changes from the regular SAG rules. You pay your SAG actors just $100 per diem (plus pay into the health/pension plans for SAG). You are not bound to pay any of the other talent. This agreement does limit your budget and profits from the film -if you make over the ceiling on the film, you must then convert to a SAG Low Budget or regular SAG agreement and retro-pay all your people accordingly- which is very expensive.

If you get one B or C list SAG actor who wants to fill up their time and everyone else will work for gas $$ and craft service, you can make a film for very little money.

Spot on.

Also the SAG modified agreement (or equivalent elsewhere) is utterly enforceable. Of course it is. Firstly because it is a legal agreement between film maker and cast and secondly because the industry would erase someone who continued to offend against the normal practices.

Whilst not BOUND to pay other talent it is more sensible to just scale everything and pay them something even if it's $50 and a box of chocolates. We give extras etc. bottles of booze or chocolates or T-Shirts or something. Gratitude is the best payment of all.

And as you say, with no knowledge of what happened on that first picture, better that you devote your next page-long post to a different topic. The weird dig about blaming other people - meh. Whatever.

Guess I deserved that. Sorry. :blush:

It doesn't change the fact that I made my first movie with deferments without it being problematic, which was the only point I was trying to make. Like you I don't think they are the best way of working and these days I'd rather ask people to work for free, than make promises that can't alter be delivered.

In an ideal world we'd all like to pay everyone scale for the work, but sometimes that just isn't possible.

All in all, it's just another tool in a producer box - sometimes it's useful sometimes it isn't.

sorry chipping in late on this as always. We used deferments on 'Left For Dead' and to some degree me are paying people back. But sales take a while to come through and these guys know taht they wont see their money for a while. Which means for the most part I will probably never see money for if I do it will be years in coming BUT the system worked well and we secured some great talent. Which is fustrating for us.

I agree with Clive in the fact that I want an alternative but I don't think asking people to work for free is it either. Whilst some will (expenses paid naturally) if your trying to attract talent with a certain level of expereince even a bullshitter like me has problems selling that.

So for the next film we are doing a combination of both paying a daily rate and an amount on the backend which means people are happy.

It's a hard one all this...