points

Points refers to the percentage an artist gets contracturally, either from the film's net profits (typically) or in unusual cases from a piece of the "gross" revenues earned by the film. 5% of the total would be 5 points. These "points" are commonly joked about because of the very creative accounting in the film industry, designed frankly to cheat these profit participants out of the money due them. The cheating is done rather easily by padding the expenses attributed to a given film (often arising from other projects or entirely unrelated to the film itself, but still piled on) or hiding the profits and revenues earned.

I recall off the top of my head a case back 30 years ago when Ridley Scott sued the companies and producers of ALIEN after they claimed the hit film had not made ANY profit at all, so they didn't owe him anything! You can imagine how hard it would be to collect on one's points for an average film, when the clowns in the industry had the temerity to claim that ALIEN had lost money!

One final note: people outside the film industry, or who have not studied the matter in any depth, don't understand the concepts of gross and net when applied to movies. Quite simply, a film's gross for profit participation purposes is NOT the box office gross that is so widely touted in relation to a film -e.g., how much TITANIC "grossed" or how is this year's biggest hit, the 2nd TRANSFORMERS film, grossing. The gross for a film, used as a starting point for calculating all percentages, is always a much smaller figure, not a "net" figure, but smaller than the boxoffice gross as illustrated here. Let's say TRANSFORMERS grossed $100,000,000 at the box office in its first week of U.S. release. The gross revenue generated TO THE FILM is the SHARE of that $100 mil that goes back to the film, called FILM RENTALS (another confusing term, not referring to video at all but the traditional renting of the film for exhibition in theaters). Gross film rentals of TRANSFORMERS would be say $60,000,000 out of the $100,000,000; the other $40,000,000 is kept by the exhibitors playing the film as their share of ticket sales, while a small amount is also siphoned off as sales taxes that have to be paid out of the $100,000,000 in ticket sales -if you pay $12 at the b.o. window for a ticket they don't add sales tax, it is included in the $12, so the grosses you read about in the newspaper are inflated by including the tax.
Cheating at the exhibitor (theater owner) level can occur when a theater owner, with or without the collusion of the film distributor, spreads the boxoffice gross illegally amongst several films -the temptation is alwasys there at a multiplex with many screens, and some salles nearly empty while others are overflowing with customers. Applying some of those dollars to flop films that really didn't earn them is lucrative for the exhibitor because contractually he won't have to send as much of that money back to the distributor, compared to the tough terms (and sliding scales) he's facing on the hit film. Again, a nice scam if you think you can get away with it.

(When I was covering the industry in the 1980s I found interesting evidence of just such scams here in NYC, where "phantom" films would be playing at multiplexes -namely movies that were no longer actually being shown but had been playing at the sites in the weeks before -they were still being advertised in the newspaper's starting time listings (as if an error/oversight) and getting fake grosses applied to them, out of money actually earned by the newer films that had replaced them on a screen. This is pretty difficult to police, as a multiplex can easily move around the films between screens, dropping the worn-out titles, even during a week, not just on a Friday when new openings will occur.)


Similarly, any ancillary revenues have to be reduced by whatever factor is involved: if TRANSFORMERS generates $50,000,000 in DVD and Blu-Ray sales, it is only that portion of the $50M that goes to the distributor that counts in the gross revenues, not the portion that the retailer keeps or any taxes again.

The tricky part comes with NET. ALL expenses of any type, including costs of remodeling the producer's home or swimming pool if he is unscrupulous enough to include that as part of the film's overall costs (he will if he can get away with it) are deducted from the gross revenues to determine the film's NET profit (usually a loss). Studio overhead has traditionally been a big item- some studios would tack on 20% or 25% of the cost of a film to its cost in calculating its NEGATIVE COST (i.e., the cost of preparing, producing and completeing a film right through the point of creating its finished negative in the lab), arguing that this overhead is necessary to keep running a studio and funding future projects through the development process. Also included in the negative cost typically is the INTEREST on the money (borrowed, generally from banks) used to produce the film -paying all its pre-production costs and production expenses. A film that takes a long time (used to be the case with all animation projects) will incur a hefty interest cost, again calculated right up to the point when the picture is relased and starts earning back money. The huge costs of marketing a film, not part of the negative cost, are then deducted routinely from the gross revenues. Print costs, substantial now that films oven at 3000 screens at once, and still important since the digital revolution has only just begun in terms of projection at theaters, are a big deduction from the gross revenues. Once all costs of all types are deducted, if there's anything left over that is the NET.

So the typical chump working on a film, whether he be Brad Pitt, Christopher Nolan or Woody Allen, gets NET POINTS, which like our recent phenomenon of stock options on start-up companies promising an IPO, can frequently be worthless. The true big shots of this world, say a George Lucas or a Clint Eastwood, can qualify for GROSS POINTS, and have a fighting chance of receiving a percentage of the gross revenues at the end of the day.