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Economy Tarnishes Pay for Stars of Silver Screen

April 13, 2009
By James L. Hirsen, J.D., Ph.D.
contributor to

For decades, movie studios have been dreaming of lower salaries for big-name stars.

With gobs of hedge fund money, soaring DVD sales, and an endless slate of new films, many stars in the past had the upper hand when it came to negotiating deals.

That was then, this is now.

Wall Street isn’t all that interested in the Sunset Strip these days, financial institutions aren’t lending, and DVD sales are dropping like rocks.

Tough economic times have Hollywood studios laying off employees, cutting expenses, and releasing fewer films. And when it comes to big-name stars, studios often just say no.

In the good ol’ Hollywood days, a top movie star’s agent would cut a deal with a percentage of the total revenue. The arrangement was known as “first dollar gross,” in which the celebrity got that portion regardless of whether the studio recouped its expenses.

Such deals shifted more of the risk to the studio. In today’s climate, such a project is unattractive to investors.

When Eddie Murphy starred in “Meet Dave,” he got his percentage of the $12 million in revenue even though the film cost the studio $70 million. And Julia Roberts will get her millions off the top of the box-office receipts for “Duplicity” despite its having brought in only $34 million thus far but having cost $60 million.

The first-dollar gross provision was a response to “creative accounting,” which was used for a long time in Tinseltown and resulted in mythical net deals.

For example, as part of Leonardo DiCaprio’s compensation for “Titanic,” he took 18 percent of the net profit of a movie we now know is the biggest-grossing film of all time. DiCaprio collected the usual amount on a net deal: zip, zero, nada.

Elite screen stars still are going to get the primo deals, but many of the box-office’s lesser lights are going to get the lowball treatment.

Mickey Rourke was the choice to be a villain in the upcoming “Iron Man” sequel. The Oscar winner was offered only $250,000. Likewise, Scarlett Johansson was sought after for a female heavy in the same movie. Johansson also was offered only $250,000. Reportedly, both stars’ agents were able to negotiate an additional $150,000.

Universal refused to give Russell Crowe a first-dollar gross deal for the upcoming “Nottingham,” while Paramount nixed such deals for Harrison Ford in “Morning Glory” and Steve Carell in “Dinner for Schmucks.”

What’s next, stars’ being denied armpit waxing and papaya peels?

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James L. Hirsen, J.D., Ph.D.
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