Deferment for Cast/Crew
- Thread starter knightly
- Start date
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..
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.
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.
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.
clive said:
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.
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!
"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.
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.
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.
Last edited:
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.
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.
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.
[Q]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.[/Q]
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])