LOOKING AT STAN v. MARVEL

[MattBrady]

<img src="http://classic.newsarama.com/Creators/stanlee.jpg" align="right" width="117" height="125" alt="Stan Lee"> After stewing for just about a week, the <a href="http://classic.newsarama.com/cgi-bin/ubb/ultimatebb.cgi?ubb=get_topic&f=1&t=000054" target="_blank">suit</a> filed by Stan Lee against Marvel can still cause some to shake their heads – some in sadness, and some in outright confusion. The complaint itself is fairly straightforward, but still can quickly overwhelm with numbers, percentages and amounts quoted from financial documents.

“Stan regrets that it has come to this, but he felt that he had no other choice, given the unbelievable position that Marvel has taken, that is has generated no profit from the characters used in the Spider-Man movie,” Lee’s attorney Howard Graff told Newsarama in his only comment on the case.

Graff’s statement highlights one of the more vexing allegations in Lee’s complaint - one that Marvel claims it has not seen any money from Spider-Man. Ignoring for a moment what has been stated in Marvel’s financial documents, this is a possibility. In fact, when all is said and done, Sony/Columbia may claim never to have made a profit from Spider-Man.

In increasingly creative, but legal accounting methods, Hollywood films, despite larger and larger box office returns, have been making less and less money, and increasing production costs is only part of the story. The issue won’t come down to parsing words on the level of “it depends upon what your definition of is is…” but the case between Lee and Marvel will most likely come down to what your definition of “profit” is.

Follow along to watch the magically disappearing profit…

Just playing with some rough numbers, Spider-Man’s worldwide box office gross, as estimated by Marvel should be somewhere around $850 million. As was reported in the mid-‘90s when Paramount claimed it had lost money on Forest Gump - gross box office can quickly wither in front of your eyes.

From the top, approximately one half of the gross goes to the theater owners, so now, we’re already down to $425 million. The film cost approximately $150 million to make, and another $50 million to market. Spidey’s $850 million has now turned into $225 million. At this point, the money is Sony/Columbia’s to play with, and various costs and fees are deducted from the amount, such as studio overhead, producer expenses, internet costs, distribution expenses, etc. Essentially, and legally, the original $225 million that Sony/Columbia had to play with can evaporate, or shoot right through the black and into the red.

Remember here (and still – Marvel’s financial claims aside) – Marvel’s agreement with Lee said that Lee would receive 10% of the profits that Marvel made on any movie. To get Spider-Man to Sony/Columbia, Marvel was paid a cash advance license fee by Sony in early ’99, between $10 and $15 million against gross revenues, of which, presumably, they’d share a percentage of Sony/Columbia’s profits. So – after all their bookkeeping, the studio claims they only made say, a $6 million profit on Spider-Man (again – profit would be money over and above when all the bills are paid), they wouldn’t owe Marvel anything, as the license fee was an “advance,” that is, Sony/Columbia gave Marvel the money upfront, ideally planning on recouping it later.

As a matter of fact, in that particular instance, with only $6 million profit, Son/Columbia could claim they lost money on Spider-Man, as they paid Marvel between $10 and $15 million before the first camera rolled, so therefore, they would have lost somewhere between $4 and $9 million (the difference of between the profit and the advance).

To boil it down further with a hypothetical number, if Marvel had a 5% profit share agreement with the studio along with their advance, this would mean that Marvel would only see money after 5% of the Sony/Columbia’s profits equaled $10 - $15 million (the advance amount). For Marvel to see money from Spider-Man in that situation, Sony would have to claim a $300 million profit on Spider-Man. While Sony was claiming a $172 million increase in operating profit from Spider-Man in late July, that number may or may not stand by the end of the year, and again, could be absorbed in any variety of means. After all, if it can manage it legally, as with any company, it would behoove Sony to hold on to all the money it can, even if it has to adjust and nudge the final accounting of Spider-Man’s profits to prevent paying other profit participants. And it’s all legal and accepted in the entertainment industry.

And remember – all of the above is just for Marvel to see any money from the film. According to the agreement between Marvel and Lee, the former publisher would receive 10% of the profit Marvel made from the film – however big or however small.

Along with Gump, these kind of accounting practices were decried in 1988 by Art Buchwald’s lawyer after Buchwald won a ruling against Paramount for using his ideas as a basis for the Eddie Murphy film Coming to America without attribution or payment. The court awarded Buchwald 19% of the film’s net profits, and the studio promptly claimed it owed the writer nothing, as the film, on paper, had lost the studio money.

So – long story short, that’s how Marvel could claim it has seen no profit from the Spider-Man film, and will not see any “for the foreseeable future” as Lee alleges Marvel has told him in his complaint.

As for television series based on Marvel properties, such as X-Men: Evolution, and Mutant X, television series generally have razor-thin profit margins, and often, lose money during their initial runs, only to make it back when the series move into syndication, so assumedly, Marvel may claim that it has made no profits on its more recent television series – that is, those which have gone into production since 1998, when the agreement between Marvel and Lee was entered into.

Regardless of Sony/Columbia’s accounting practices on Spider-Man, sources pointed out the real crux of Lee’s case will force Marvel to justify their reportage to him that they have not made any money from Spider-Man, X-Men, and the properties’ ancillary rights with statements made in the company’s financials, which claim that the company will enjoy income of roughly $70-$100 million in total EBITDA (earnings before interest, taxes, depreciation and amortization – all of which eat away at the amount that can be claimed as “profit”) over the next two years, thanks to Spider-Man alone.

The company did not break down the specific channels through which the money would enter Marvel, that is, via Marvel proper (increased trade and comic sales), as payments from Sony from the studio’s profits on the movie, or via the joint venture the Marvel entered into with Sony in 1999 to exploit merchandise related to the Spider-Man film. Lee’s complaint alleges that Marvel and Sony split monies generated by the joint venture 50/50.

The complaint points out a release issued by Marvel on August 8th, 2002, which stated that the company had received approximately $12.8 million in contributions to earnings related to Spider-Man, including approximately $5.3 million in net royalty income for the joint venture with Sony. Additionally, the complaint states that Marvel claimed it would recognize $4 million in third quarter revenue from its participation in the Spider-Man movie’s box office receipts and in the company’s interest equity from its joint venture with Sony.

So – boiling it down again, Marvel, according to the complaint, told Lee that it has not seen any profit from Spider-Man, yet – as the complaint points out, it has made claims that appear to contradict what it has told Lee in its financial statements. Most likely, the devil actually will be in the details, with accountants and lawyers going at it to define what, specifically, the agreement between Marvel and Lee referred to, and what, specifically, the statements Marvel has made in regards to it’s Spider-money mean.

Another topic that has come to light with the filing of Lee’s suit is its timing - while sources said that Lee’s interview on 60 Minutes II had nothing to do with the decision to file, there was another event recently that made the timing of Lee’s filing seem a little…serendipitous – the reversal of the Joe Simon verdict. According to a close acquaintance of Lee, one of the main reasons the suit wasn’t filed earlier was the former publisher’s unwillingness to believe that his 60-year relationship with Marvel could, or possibly would end over something such as this.

That aside for a moment, some observers have pointed out possible connections between the two. The net outcome of the Simon reversal was re-opening the door for the creator to seek to terminate the transfer of copyright he allegedly made to Marvel in 1940 for Captain America. The bone of contention between Marvel and Simon is once again whether or not he was creating “work for hire” when he created Captain America. In effect, a creator who was at the time, thought to be working for the company, is claiming ownership of one of Marvel’s flagship characters.

Additionally, according to the views of some legal experts, comic books don’t legitimately fit neatly into the categories laid out by work for hire statutes. In the eyes of some, all that’s needed would be a high profile case with a very good attorney to forever change the landscape of work for hire, and allow all creators to claim ownership of characters created while in the employ of a publisher. It’s a longshot that such a case would ever come to trial, but still, two years ago, the idea of the Supreme Court hearing a case that could strike down the Sonny Bono Amendment, and drastically change the landscape of the Public Domain was seen as a longshot as well.

So – getting back to Lee. Again – as a hypothetical situation – Lee has alleged that Marvel is not adhering to the agreement between him and the publisher. In effect, the contract has been broken, as one party is not following the rules (both in paying Lee and delivering to him an accurate accounting of the monies received from its films and television series). If the contract has been, as alleged by Lee, broken by Marvel, then there is little legal reason for Lee to adhere to its conditions.

Along these lines, paragraph 5(a) of the agreement between Lee and Marvel states: “you hereby assign, convey, and grant to Marvel forever throughout the universe all right, title and interest solely and exclusively which you may have had control or have had control in the following: any and all ideas, names, titles, characters, symbols, logos, designs, likenesses, visual representations, artwork, stories, plots, scripts, comic books or comic strips, episodes, literary property, and the conceptual universe related thereto which will or have been in whole or in part disclosed in writing to, published, merchandised, advertised, and/or licensed by Marvel, its affiliates or their predecessors and successors in interest and licensees (which by agreement inures to Marvel’s benefit) or any of them (the “Property”) and any copyrights, trademarks, statutory rights, common law, goodwill, moral rights and any other rights whatsoever in the Property in any and all manner and media and/or fields, including all rights to renewal, or extensions of copyright or trademarks and to recover for past infringement and make application to institute suits therefore (the “Rights”).”

(Also, oddly, according to the agreement, Marvel granted Lee the rights to the Femizons characters, which he created for Marvel in the early ‘70s. The agreement also gave permission for Lee to exploit the Femizons for his own benefit as long as he wished. Consequently, the property is currently in early development at MGM with Bruce Willis’ production company, Cheyenne.)

Paragraph 5(d) states: “Subject to a material breach of this agreement, you agree not to contest either directly or indirectly the full and complete ownership by Marvel, its affiliates, designees, or successors in interest, of all right, title and interest in and to the Property and Rights or the validity of the Rights, which may be conferred on Marvel by this Agreement, or to assist others in so doing. Examples of such prohibited contestation would be, without limitation, applying for copyright, renewal copyright, trademarks, service marks, patents, etc. for the Property and/or Rights herein specified or the publication by you or your assigns or agents of literary property which would infringe upon, violate or be confusingly similar to such Property and/or Rights.”

The language in the agreement concerning the copyright of characters is most likely due to at the time, Joanne Siegel’s filing for the termination of the transfer of copyright her late husband, Jerry, made to DC Comics. Siegel filed paperwork in April of 1997, and the fact that she had done so was well known throughout intellectual property legal circles, despite that the news of the termination effort did not break until August of 1999.

Further in Lee’s agreement, paragraph 5(f) reads: “It is agreed that the failure to pay pursuant to Paragraphs 4(a)--4(c)[Lee's salary, survivor payments and stock options] hereof for any reason, after notice and a thirty (30) day cure period, shall be a material breach which shall permit you at your option to vitiate Paragraphs 5(a)--(5(e) (the Assignment) above and place the parties to the "Assignment" in the condition that existed between them just prior to the date of execution of this Agreement and nothing contained herein, including the existence of the conveyances contained herein, shall be used as evidence in any subsequent proceeding nor shall it prevent the parties from taking any position with respect to the ownership of the Property or the Rights. It is further agreed that as to all other breaches of this agreement, you shall be relegated exclusively to a suit for either specific performance or money damages or both, if appropriate, at your option.”

Long and short, given the stipulations, the promise to pay 10% is in paragraph 4(f), outside of the conditions for Lee to claim material breach of the agreement, and thus vitiate (invalidate) 5(a) through 5(e) of the agreement, and thereupon return to the conditions that existed between himself and Marvel prior to this 1998 agreement.

That said though, could a savvy lawyer sidestep that condition (4(f) not being included in the conditions for finding for material breach), and therefore, claim that, because Marvel broke the agreement, Lee not bound to adhere to any of the contract and is therefore entitled to make a run for his share of the Marvel characters?

As any given trial has shown the American population time and again, in the legal system, anything is possible - and especially so in the trials of the comic book industry where something as small as an unsigned wavier from 1961 could have very serious implications today. With the apparent “softening” of Marvel’s claims against Joe Simon in the reversal, a claim for part of the copyright for Spider-Man isn’t quite as laughable, at least legally, as it used to be.

Add that to the argument that comics aren’t work for hire, and suddenly, from Marvel’s eyes, this ugly situation could grow much, much worse, as the person who was seen by middle America as “that nice old man who invented Spider-Man” on 60 Minutes 2 tries to get characters he played a role in creating back.

Again – a disclaimer – the above discussion about the agreement between Marvel and Lee is a hypothetical (and admittedly worst-case for Marvel) situation, but, like Joe Simon’s rumored claim to go after a piece of Spider-Man in that case, Lee claiming a degree of ownership of Spider-Man could very possibly be one of the sabers Lee’s legal team may rattle before this is all said and done.

As for its end – how will Lee vs. Marvel wind up? From a public relations standpoint, it’s bad news for Marvel, and a trial could be seen as worse, whether the publisher wins or loses – if the publisher wins, they’re seen as robbing the little guy of his just due; while if they lose, they made that same “nice old man” fight for what was rightfully his. Undoubtedly, for the industry and Marvel’s public image, a settlement would be best, but only time will tell.

As for the next step, Marvel now has to respond to the complaint before the matter moves forward through the judicial system. When asked to comment on any of the above, Marvel said that it does not comment on matters either in, or pending litigation.

[notmertz]

whew! I made it to the end.

[Aaron Weisbrod]

Wow! What a GREAT article. You reall did a nice job breaking down this case, Matt. :)

That aside, one thing in Lee's contract really jumped out at me:

Along these lines, paragraph 5(a) of the agreement between Lee and Marvel states: “you hereby assign, convey, and grant to Marvel forever throughout the universe all right, title and interest solely and exclusively which you may have had control or have had control in the following: any and all ideas, names, titles, characters, symbols, logos, designs, likenesses, visual representations, artwork, stories, plots, scripts, comic books or comic strips, episodes, literary property, and the conceptual universe related thereto which will or have been in whole or in part disclosed in writing to, published, merchandised, advertised, and/or licensed by Marvel, its affiliates or their predecessors and successors in interest and licensees (which by agreement inures to Marvel’s benefit) or any of them (the “Property”) and any copyrights, trademarks, statutory rights, common law, goodwill, moral rights and any other rights whatsoever in the Property in any and all manner and media and/or fields, including all rights to renewal, or extensions of copyright or trademarks and to recover for past infringement and make application to institute suits therefore (the “Rights”).”

"Forever throughout the universe", huh? I don't know if I would ever, EVER sign a contract that said something like that! :p

However, as the article mentions, these uber-constricting terms will be a moot point if Marvel is found to be in violation of the contract... :p

You talk about A LOT being on the line... wow. This is going to be pretty darn exciting...

Bracing himself for the upcoming storm,
Aaron Weisbrod

[TTROY]

And the telling thing is that they are saying that they made no money--- when comes to paying Lee his 10% but they say they DID make money when it comes to reporting details of the finances to stockholders.....

This is all big Kang storyline...my head hurts...

So in the Ultimate universe Marvel made money?
but made no profit in the original marvel uiniverse....


At last we see the true purpose for the Ultimate titles!!!!

[csGuy]

[quote] forever throughout the universe <hr></blockquote>

I guess all that leaves him with are alternate dimensions and pocket universes right? :D

Great article btw Matt, are you fluent in Legalese?

[Nat Gertler]

[quote]Originally posted by Matt Brady:
<strong>Additionally, according to the views of some legal experts, comic books don’t legitimately fit neatly into the categories laid out by work for hire statutes. In the eyes of some, all that’s needed would be a high profile case with a very good attorney to forever change the landscape of work for hire, and allow all creators to claim ownership of characters created while in the employ of a publisher.</strong><hr></blockquote>You may want to be careful with that word "employ"; the law treats work made for hire quite differently for an employee than for a freelancer, and the categorization at hand would seem to be the freelancer categories.

[quote]If the contract has been, as alleged by Lee, broken by Marvel, then there is little legal reason for Lee to adhere to its conditions.[...]Long and short, it appears that Lee could claim that Marvel is in material breach of the agreement, and according to 5(f), Lee can vitiate (invalidate) 5(a) through 5(e) of the agreement, and thereupon return to the conditions that exited between himself and Marvel prior to this 1998 agreement. <hr></blockquote>The contract would seem to suggest otherwise. As section 5(f) states:
"It is agreed that the failure to pay pursuant to Paragraphs 4(a)--4(c) hereof for any reason, after notice and a thirty (30) day cure period, shall be a material breach which shall permit you at your option to vitiate Paragraphs 5(a)--(5(e) (the Assignment) above and place the parties to the "Assignment" in the condition that existed between them just prior to the date of execution of this Agreement"

...which would seem to say that a breech of 4(f), the movie/TV profits deal, does not void the rest of the contract, because it was not between 4(a) and 4(c).

[DarthRandall]

I am so glad I decided against law school.

I have to say that, despite what he may have done to other "work for hire" employees he had under him when he was a creator and publisher , I have to side with Stan on this one. It sounds to me like he's entitled to something, and if 10% is that agreed-upon something, then give it to him.

However, and with all due respect, please, please, PLEASE don't let him get creative control of the Marvel Universe again. He's never been a great writer, and pales in comparison to the guys who are writing the stuff now. I don't think I can take another "Aunt May's sick and Doc Ock has the cure" story.

Nuff said.

[MattBrady]

cleared up those two points, Nat.

MattB

[D.J. Coffman is your daddy]

Looks to me, if I read correctly there, that good old stan sold his soul a long time ago, and in agreeing to his "pension" he gave all the rights from there on out to Marvel.. and since they have compensated him that, even in times of loss or bankruptcy he gets nada, nothin, zilch from the Marvel Movies....

[Cliffy]

[quote]Originally posted by Nat Gertler:
<strong>which would seem to say that a breech of 4(f), the movie/TV profits deal, does not void the rest of the contract, because it was not between 4(a) and 4(c).</strong><hr></blockquote>

The contract can say whatever it wants about what kinds of material breaches void the agreement, but I think that's a waste of language. It only applies if the K is in force. (Because it is a provision of the K, right there in Sec. 5(f).) Therefore, if there is a material breach, Lee can treat the contract as no longer being valid and, as such, can ignore the 5(f) limitation as well. It wouldn't take a "savvy lawyer" but rather anyone who'd passed first-year contracts. Material breach is material breach.

That said, I don't think this part is a big deal. The perpetual license seems to me like it was merely prophylactic. Unlike Simon, there's (AFAIK) no question that when Lee did his creative work for Marvel he was an employee, not a freelancer, and that this work wasn't based on any prior creative work he'd done before joining Marvel. As such, unless there's some radical revision in copyright law in the offing, I don't think Lee had any rights to give away by this paragraph.

--Cliffy, Esq.

[Hdefined]

I'm sorry, no offense in anyway to Matt's journalism and research, but I think the whole "Sony and Marvel made no money from the Spider-man Movie" thing is bullshit. I mean, really. Where do companies get the money to make more movies? Video/DVD release? Spider-Man is, what, the 5th highest grossing movie of all time, and this means NOTHING when the figures return to the company? Obviously I don't know about the whole creative, commercial, and financial process of making a hollywood movie, but I believe movies in hollywood ONLY get made if they're going to make a profit, and as everyone said at the time, the numbers Spider-Man made exceeded all expectations.

If Marvel spits back in Lee's face, and if it actually comes to it that they remove "Stan Lee Presents" from all issues, then I'm boycotting in full force

[Relijah]

[quote]Originally posted by Matt Brady:
<strong> In increasingly creative, but legal accounting methods, Hollywood films, despite larger and larger box office returns, have been making less and less money, and increasing production costs is only part of the story. The issue won’t come down to parsing words on the level of “it depends upon what your definition of is is…” but the case between Lee and Marvel will most likely come down to what your definition of “profit” is.

Follow along to watch the magically disappearing profit…

From the top, approximately one half of the gross goes to the theater owners, so now, we’re already down to $425 million. </strong><hr></blockquote>

If movie studios didnt make money then there wouldn't be an industry, a successful industry at that so for them to say they dont make money is a bunch of crock.

Also, theatre owners take half the gross? Wow, someone forgot to tell my theatre owner that bit of info. Theaters make money off what they're able to sell to customers through snack bars and such which is why their prices are so high and why you can't bring in your own food. If theaters really did take in half of every movie ticket sold then they wouldnt care if you brought in your own food, in fact they'd encourage it so that people would be more comfortable and go to the movies more often. Heck in some cases,such as Disney's, sometimes theater's have to PAY the studio in some way just to even get their movies.

Movie theaters get half the gross? Thats just a joke...

[Slangword]

[quote]Originally posted by TTROY:
<strong>
So in the Ultimate universe Marvel made money?
but made no profit in the original marvel uiniverse....


At last we see the true purpose for the Ultimate titles!!!!</strong><hr></blockquote>

That would explain why Bill Jemas is listed as the inspiration for Ultimate Spider-Man instead of Stan Lee and Steve Ditko.

Good article, Matt. Lots of food for thought. This is the type of in-depth article I'd like to see more of.

--Scott

[Jonas.Vesterlund]

I just read through all that....and I maight have missed a thing or two.

But over-seas profits were never mentioned. I never understood why Hollywood never uses THOSE numbers when they talk about their profits....but now I might see why.

Remember the third DIE HARD flick? Well it never reached the numbers the studio thought and was considered something of a slight flopp.
(The fact that it was the highest grossing American film internationally....and then keep in mind that entertainment is one of the US's greatest exports...)

Sorry for rambeling but I hope I made some kind of point...

[Nat Gertler]

[quote]Originally posted by Cliffy:
<strong>The contract can say whatever it wants about what kinds of material breaches void the agreement, but I think that's a waste of language.</strong><hr></blockquote>Oh, understood. I was merely pointing out that it did little good to point out the section of the contract on voiding the contract, since that seemed specifically designed (effectively or not) to avoid voiding based on violation of 4(d)-4(f).
[quote]Unlike Simon, there's (AFAIK) no question that when Lee did his creative work for Marvel he was an employee, not a freelancer, and that this work wasn't based on any prior creative work he'd done before joining Marvel.<hr></blockquote>Stan was certainly employed by Marvel at the time. I have, however, heard or seen Stan refer to his writing for them as "freelancing", and heard other things that suggest that he was getting a page rate for the writing. If that is true, it could be argued that while Stan was an employee, the writing was not within the scope of his employment, and was thus freelance. An uphill argument, perhaps, but an argument nonetheless.

[Slangword]

[quote]Originally posted by John Doe:
<strong>Gee Stan, before you never had problems with Marvel's business practices. I hope they crush you. LOL :D </strong><hr></blockquote>

This sort of statement always bothers me. I personally have no idea if Stan had problems with Marvel before - I would bet that all most of us KNOW is that he hasn't sued them before. That doesn't mean he wasn't arguing with Marvel Management every day for the past decade about getting people more money, lowering the prices of comic books, or even more paper towels in the men's room.

Stan Lee and Marvel should both abide by the terms of their contract. If one side is not abiding by the terms, the other party should take action to correct the situation. Why do so many people have difficulty with that concept?


--Scott

P.S. I do enjoy your TV show. :-)

[Otis Banana]

Attaboy Stan! Stick it to the company you helped stick it to so many others.

[jpritchett]

[quote]Originally posted by Relijah:
<strong>
Heck in some cases,such as Disney's, sometimes theater's have to PAY the studio in some way just to even get their movies.

Movie theaters get half the gross? Thats just a joke...</strong><hr></blockquote>

Actually, it's not a joke at all. I'm the one who gave Matt Brady a lot of the information about the financial side of the movie business. I'm an executive for a film financing and distribution company, and I can assure you that the information is correct.

Distributors (commonly referred to as studios, but this is not always the correct terminology) typically set up a "sliding scale" term sheet for splitting the box office grosses with exhibitors (theater owners). The studio typically receives a higher percentage of the box office gross earlier in a film's theatrical run, with the percentage decreasing each week, eventually ending up in favor of the exhibitor.

Historically speaking, the overall split of the domestic box office gross has been roughly 50-50 between the exhibitor and distributor. In more recent years, that figure has tilted slightly in favor of distributors, since there are more "open large, and fade fast" blockbuster-type movies than in previous years.

Hope that clears things up, but regardless of what your local theater owner may have told you, Matt's information in this article *is* correct.

Jason Pritchett

[jpritchett]

[quote]Originally posted by Jonas.Vesterlund:
<strong>I just read through all that....and I maight have missed a thing or two.

But over-seas profits were never mentioned. I never understood why Hollywood never uses THOSE numbers when they talk about their profits....but now I might see why..</strong><hr></blockquote>


The "over-seas" numbers are included in the $850 million box office gross figure that Matt used in the article.

[Michael P]

Legalese... incomprehensible! Can't... stay... awake! Must... do it... for... Aunt May!

[jpritchett]

[quote]Originally posted by Hdefined:
<strong>I'm sorry, no offense in anyway to Matt's journalism and research, but I think the whole "Sony and Marvel made no money from the Spider-man Movie" thing is bullshit. I mean, really. Where do companies get the money to make more movies? Video/DVD release? Spider-Man is, what, the 5th highest grossing movie of all time, and this means NOTHING when the figures return to the company? Obviously I don't know about the whole creative, commercial, and financial process of making a hollywood movie, but I believe movies in hollywood ONLY get made if they're going to make a profit, and as everyone said at the time, the numbers Spider-Man made exceeded all expectations.
</strong><hr></blockquote>

I'll state again that Matt's information regarding Hollywood accounting practices is correct. Your understanding of the word "profit" is most likely very different from a corporate definition, and across different industries, accounting practices and procedures differ radically. There are perfectly legal ways to "hide" profit which most people do not fully understand.

[enabler]

[quote]Legalese... incomprehensible! Can't... stay... awake! Must... do it... for... Aunt May! <hr></blockquote>

ROFL

[Hdefined]

come to think of it, I've also heard that theaters make most of their money on food. In fact, that's what I was told when I applied to work at a Lowe's. They told me that the food is where they make their sales and it's more important than mere ticket sales (and was most importantly the reason I decided not to work there).

Sorry buddy, don't know what your numbers are telling you, but it's not how the business works

[Jeremy Williams]

If Stan loses, will he still receive one million a year? With all the sh*t storm this have produced, if the conclusion is that Marvel made not much money, maybe Stan will realises that he should have wait before rushing to do this...? Because with all the bitterness all this will produce, Stan Lee will never be looked at in the minds of people as "Mr.Marvel" like Walt Disney is to his cartoons. There`s a bad vibe there for sure. All the fozzyness and warmt when i thought of Stan because of all the great characters he helped created that i love(that fozzyness that made his speach in Mallrat memorable to me) is now eradicted, oblivion. :( :rolleyes: <img src="confused.gif" border="0">

[jpritchett]

[quote]Originally posted by Hdefined:
<strong>Sorry buddy, don't know what your numbers are telling you, but it's not how the business works</strong><hr></blockquote>

Are you referring to me with this "sorry buddy" statement? I'll say this one more time: exhibitors retain roughly half of the box office grosses. Period. Look it up in any good movie business book if you don't believe me. I will also state, again, that I *work* in film financing and distribution, so I deal with these matters on a daily basis.

Also, please note that I never said anything about concessions. *Of course* concessions are important to exhibitors, and the profit margin on concessions is extremely high.

[Cataan]

Matt,

Enjoyed your analysis, but you are overlooking the crux of the issue. Per his employment contract (I believe clause f), Lee receives 10% of Marvel profits that Marvel receives from profits of those who use Marvel characters. So, if Marvel receives a license fee, Lee gets nothing. If Marvel receives a percentage of revenue, Lee gets nothing.

Cataan

[TemporalFlux]

The golden rule of Hollywood - NO movie has EVER seen profit. Pure altruism is the only thing that keeps the studios producing movies. They scrape by eatting corn bread so you can be entertained.

*wink wink wink*

[JimHughs4]

[quote]Originally posted by Hdefined:
<strong>come to think of it, I've also heard that theaters make most of their money on food. In fact, that's what I was told when I applied to work at a Lowe's. They told me that the food is where they make their sales and it's more important than mere ticket sales (and was most importantly the reason I decided not to work there).

Sorry buddy, don't know what your numbers are telling you, but it's not how the business works</strong><hr></blockquote>

You know, your statement in no way invalidates what Pritchett was saying. Theaters keep about 1/2 the money from ticket sales, maybe a little less, and make MORE money from concessions because the profit margins are a lot higher.

[JimHughs4]

[quote]Originally posted by jpritchett:
<strong>

Are you referring to me with this "sorry buddy" statement? I'll say this one more time: exhibitors retain roughly half of the box office grosses. Period. Look it up in any good movie business book if you don't believe me. I will also state, again, that I *work* in film financing and distribution, so I deal with these matters on a daily basis.

Also, please note that I never said anything about concessions. *Of course* concessions are important to exhibitors, and the profit margin on concessions is extremely high.</strong><hr></blockquote>

Next time I'll go to the second page before posting...sheesh... :)

[Nat Gertler]

[quote]Originally posted by Jeremy Williams:
<strong>If Stan loses, will he still receive one million a year?</strong><hr></blockquote>It's a lifetime contract, so unless Marvel can find some excuse to void it under, yes (and asking that a contract be held to does not generally constitute a reason to void it.)

[The Blue Spider]

[quote]Originally posted by John Doe:
<strong>

Grow up, Boy Scout. O.J. Simpson is a free man. What bothers me is I can't express my lack of sympathy for Stan without you Boy Scouts getting on your moral high horse. :p </strong><hr></blockquote>

<font color=blue>so not only do you hope that Marvel can invalidate the contract according to the plaintiff's defintions, but you are glad that a defendent of double-murder trial walks the land free under mysterious circumstances?</font>

[Academic]

[quote]Originally posted by Hdefined:
<strong>come to think of it, I've also heard that theaters make most of their money on food. In fact, that's what I was told when I applied to work at a Lowe's. They told me that the food is where they make their sales and it's more important than mere ticket sales (and was most importantly the reason I decided not to work there).

Sorry buddy, don't know what your numbers are telling you, but it's not how the business works</strong><hr></blockquote>

Pick up any book on Hollywood accounting in the era of conglomerate-owned film studios and you'll see that, in fact, the numbers and understanding of the business ARE true.

Theatre owners get a minimum amount of the box office to cover expenses for each showing of the film, followed by a percentage of the remaining gross as determined by the sliding scale.

Lowe's EMPHASIZES the concession stand because that is extra profit on top of the ticket sales. Customers have no other reason to come to the movie theatre other than to see a specific film -- so by that logic, the ticket is already sold. Food increases the profit exponentially, especially since a large coke costs them something like 15 cents for the liquid and 20 cents for the cup (on average).

Every company can play with the numbers. I worked for the largest grocery chain here in Canada (Loblaws) and they say they make less than one cent of every dollar after expenses -- which makes you wonder because they have sales all the time that indicate there's a higher mark-up involved.

[Warren V. Wind]

[quote]Originally posted by Hdefined:
<strong>If Marvel spits back in Lee's face, and if it actually comes to it that they remove "Stan Lee Presents" from all issues, then I'm boycotting in full force</strong><hr></blockquote>

How sad would it be for it to come down to that!!
To me without the "Stan Lee Presents" tag it isn't a Marvel book!?!
I would seriously think about stopping to buy any Marvel books, if that should occur!
I would rather spend my $50.00 a month on some DC or any other company's titles!!

Marvel should just step up and pay "The Man" what they owe him, plain and simple!!

It might be cheaper for them in the long run to settle with him!

[Cliffy]

[quote]Originally posted by Nat Gertler:
<strong>Stan was certainly employed by Marvel at the time. I have, however, heard or seen Stan refer to his writing for them as "freelancing".</strong><hr></blockquote>

Interesting, although I'm not sure it'd make a difference. (But I really don't know enough about copyright law to have an opinion.)

--Clilffy

[hiphophead]

So you wanna make a movie...Abbott and Costello Style

Who's in the movie? What's the name of the movie?
I don't know how much the movie made? third Base!!

If the Spider-Man movie franchise is not profitable? Why make a sequel? Now I know why Stan waited for the 60 Minute piece. Avi Arad stated that the sequel will make billions of dollars.

[Cliffy]

[quote]Originally posted by jpritchett:
<strong>Historically speaking, the overall split of the domestic box office gross has been roughly 50-50 between the exhibitor and distributor. In more recent years, that figure has tilted slightly in favor of distributors, since there are more "open large, and fade fast" blockbuster-type movies than in previous years.</strong><hr></blockquote>

Although IIRC, Spider-Man had some legs to it, which suggests that the theatres would get a better-than-average percentage of the take.

--Cliffy

[Duke Stratosphere]

[quote]Originally posted by Matt Brady:
<strong>(Also, oddly, according to the agreement, Marvel granted Lee the rights to the Femizons characters, which he created for Marvel in the early ‘70s. The agreement also gave permission for Lee to exploit the Femizons for his own benefit as long as he wished. Consequently, the property is currently in early development at MGM with Bruce Willis’ production company, Cheyenne.)
</strong><hr></blockquote>

Hey! Are we talking about Thundra, et al, that showed up in Fantasic Four? Goofy idea, but I loved those issues! Is this why we haven't seen "Ultimate Thundra" yet? :D

Seriously, I'd love to see what Waid would do with Thundra if he were interested and could legally do so. Guess that makes me a die hard fanboy!

[John Jones]

[quote]Originally posted by Jeremy Williams:
<strong>Stan Lee will never be looked at in the minds of people as "Mr.Marvel" like Walt Disney is to his cartoons. There`s a bad vibe there for sure. All the fozzyness and warmt when i thought of Stan because of all the great characters he helped created that i love(that fozzyness that made his speach in Mallrat memorable to me) is now eradicted, oblivion. :( :rolleyes: :confused: </strong><hr></blockquote>

Yeah, I know what you mean. It's just awful when a person fights for something their legally entitled to. Darn Stan Lee for not bowing into submission over all this. Now my image of a perfect world is completly shattered. Boo-hoo. Sheesh.

[jpritchett]

[quote]Originally posted by Cliffy:
<strong>

Although IIRC, Spider-Man had some legs to it, which suggests that the theatres would get a better-than-average percentage of the take.

--Cliffy</strong><hr></blockquote>

Marvel tried to create the perception that the movie had "legs," but if you look at the numbers (something I truly wish more people would do before commenting--that's not directed at you necessarily, Cliff), Spider-Man grossed $285 million of its $404 million domestic box office within its first 3 weeks.

[samnoir]

I think what the article needs to clarify is if Marvel's deal is as a Gross Profit Participant or a Net Profit Participant. What is described here is the scenario of Marvel is a Net Profit Participant. Is this the case? If Marvel is a Gross Profit Partcipant, they take their cut right after the distributer's take, before fees are factored in. Surely Marvel must have the foresight and clout in this matter to have Gross Profit Participation, especially in the merchandise licensing, much of it coming out under the Toy Biz banner.

Marvel as a public owned company is also obligated to report profits and any information regarding their share of the Spideerman movie take must be available in the quarterly reports, which have indicated that Marvel has been quite profitable lately (or is this the numbers manipulation that they are talking about?)

The other thing we should note about Television, especially the animated realm is that increasingly, revenue streams actually come from licensing of the animated characters on merchandising, ranging in everything from t-shirts to knapsacks to action figures, as is the case with X-Men Evolution.

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[GPM]

[quote]Originally posted by jpritchett:
<strong>

Marvel tried to create the perception that the movie had "legs," but if you look at the numbers (something I truly wish more people would do before commenting--that's not directed at you necessarily, Cliff), Spider-Man grossed $285 million of its $404 million domestic box office within its first 3 weeks.</strong><hr></blockquote>

[GPM]

[quote]Originally posted by jpritchett:
<strong>

Marvel tried to create the perception that the movie had "legs," but if you look at the numbers (something I truly wish more people would do before commenting--that's not directed at you necessarily, Cliff), Spider-Man grossed $285 million of its $404 million domestic box office within its first 3 weeks.</strong><hr></blockquote>

So, theater owners probably did not make 50% of the profits by your own definition, correct? How would that be possible if what you say is true?

[Hunter]

[quote]Originally posted by Hdefined:
<strong>come to think of it, I've also heard that theaters make most of their money on food. In fact, that's what I was told when I applied to work at a Lowe's. They told me that the food is where they make their sales and it's more important than mere ticket sales (and was most importantly the reason I decided not to work there).

Sorry buddy, don't know what your numbers are telling you, but it's not how the business works</strong><hr></blockquote>

It's fairly easy for someone at the local level to say "this is where we make our money" without having the first clue about what goes on at the corporate level -- having worked in retail and in retail management, I can say this with some certainty. That may be where that particular branch's profit comes from, but I doubt that entire chains are solely dependant on how much stuff they sell at the snack bar.

Further validated by this statement (which I hadn't gotten to the first time, oops)

[quote]<strong>Lowe's EMPHASIZES the concession stand because that is extra profit on top of the ticket sales. Customers have no other reason to come to the movie theatre other than to see a specific film -- so by that logic, the ticket is already sold. Food increases the profit exponentially, especially since a large coke costs them something like 15 cents for the liquid and 20 cents for the cup (on average).
</strong><hr></blockquote>

Just my opinion, though, since everyone's throwing one in.

[wilsinga]

This case really isn't that difficult. To put it simply, Marvel is saying all the money that they have received from Spider-Man is licensing money...because they license the Spider-Man character to Sony...and this money is exempt from the agreement with Stan. Stan disagrees with this position and is suing them.

This is how Marvel can claim to shareholders they have made money off of Spider-Man, but claim to Stan there is no profit he can share in.

It has nothing to do with shady box office accounting practices, or work for hire agreements.

[jpritchett]

[quote]Originally posted by GPM:
<strong>

So, theater owners probably did not make 50% of the profits by your own definition, correct? How would that be possible if what you say is true?</strong><hr></blockquote>

You obviously didn't read all that I wrote. As I've said over and over again, the 50-50 split is a rough, historic estimate that has been changing to slightly favor the distributors in recent years, mainly due to the "blockbuster" movie phenomenon. Still, the 50/50 split is an easy (and entirely accurate) benchmark to use. In Spider-Man's case, the real numbers may have been more like 55/45, for example, but for illustrative purposes, again, Matt's examples are fine.

I don't understand why I'm taking so much heat for trying to explain something. I'm having people who do not work in the industry that's been spoken about tell me that I don't know what I'm talking about. Unbelievable.

EDIT: Just realized that I typed "inaccurate" instead of accurate in my original post.

[JimHughs4]

[quote]Originally posted by jpritchett:
<strong>

You obviously didn't read all that I wrote. As I've said over and over again, the 50-50 split is a rough, historic estimate that has been changing to slightly favor the distributors in recent years, mainly due to the "blockbuster" movie phenomenon. Still, the 50/50 split is an easy (and entirely inaccurate) benchmark to use. In Spider-Man's case, the real numbers may have been more like 55/45, for example, but for illustrative purposes, again, Matt's examples are fine.

I don't understand why I'm taking so much heat for trying to explain something. I'm having people who do not work in the industry that's been spoken about tell me that I don't know what I'm talking about. Unbelievable.</strong><hr></blockquote>

Don't worry about it. You made your point clearly and now everyone gets to attack it. It's the magic of message boards! :D

[The Blue Spider]

[quote]Originally posted by John Doe:
<strong>

You, Sir, are a master of twisting words. I never wrote any of that. "The plaintiffs defintions" (your misspelling) do not define truth or reality. Stan (and probably not you) is not a contract attorney. Just because I don't have sympathy for Stan or agree with your opinions, does not make me a bad person. I have a step stool if you need help getting off your high horse. I apologize for disagreeing with your "politically correct" opinions. I thought I was in America. :rolleyes: </strong><hr></blockquote>

<font color=blue>You sir, are a poor student of twisting words. I never said you weren't in America.</font>

[Slangword]

[quote]Originally posted by John Doe:
<strong>

Grow up, Boy Scout. O.J. Simpson is a free man. What bothers me is I can't express my lack of sympathy for Stan without you Boy Scouts getting on your moral high horse. :p </strong><hr></blockquote>

Mature people stick to the principle regardless of personal feeling about the people involved. If that's being a Boy Scout, then I guess I should have joined way back when.

My post was motivated by the fact that after a long, well-thought out article that pointed out how we really don't know all the circumstances behind the agreement. There was a one-line post that seemed like you hadn't even read the article. It was more how you expressed your lack of sympathy for Stan's position than the fact that you are not sympathetic.

I don't honestly know if Stan's in the right or not, particularly after reading the article that started the thread. I do know that he's got a reasonable right to sue if he feels the agreement's not being met. That's part of living in a free country. I also know that I have no real idea of what Stan has or has not done to help others get money due them. I do know that Stan has NEVER been the final word on financial matters for Marvel, and thus looking at just the result will not tell us if Stan was on the side of the angels or the devils in any sort of dispute. And I know that it doesn't matter - he still has the same rights as anyone else.

If you feel that I'm on a moral high horse for asking that statements be supported and for wanting the discussion here to be more thoughtful than sarcastic, that's fine. I come to Newsarama to learn things, not to read jokes.
--Scott Rowland

[Scavenger]

[quote]Originally posted by jpritchett:
<strong>

I don't understand why I'm taking so much heat for trying to explain something. I'm having people who do not work in the industry that's been spoken about tell me that I don't know what I'm talking about. Unbelievable.

</strong><hr></blockquote>
You must be new to comic fandom. True experts are never as correct as self proclaimed experts!

I personaly liked the whole "Well, while this is your job you're talking about, I once talked to the guy who squeegees the popcorn machine window at my local theater, so I'm sure you're wrong." vibe to the thread.

Thanks for the info, by the way!

[John Osen]

[quote]Originally posted by Slangword:
<strong>

Mature people stick to the principle regardless of personal feeling about the people involved. If that's being a Boy Scout, then I guess I should have joined way back when.

My post was motivated by the fact that after a long, well-thought out article that pointed out how we really don't know all the circumstances behind the agreement. There was a one-line post that seemed like you hadn't even read the article. It was more how you expressed your lack of sympathy for Stan's position than the fact that you are not sympathetic.

If you feel that I'm on a moral high horse for asking that statements be supported and for wanting the discussion here to be more thoughtful than sarcastic, that's fine. I come to Newsarama to learn things, not to read jokes.
--Scott Rowland</strong><hr></blockquote>

Hi Scott! I appreciate and agree with most of your very well-written and thoughtful letter.
Here's how I feel. My principle is pro-Marvel regardless of personal feeling about the people involved and I'm sticking to it. This is supposed to be an open forum for people to discuss their opinions. Everytime I try to express my opinion about this case people (including you) make negative posts about it including quotes. I think it's sad I can't express myself without being attacked. My point about O.J. is that life is unfair and things don't always work out the way they should. I have great respect for your position, but feel if you're really here to learn, you're wasting time writing negative responses to my quotes. Also, I feel there's always room for humor in any discussion. God Bless You and best of luck in the future. :)

[howler]

itried to read through the article ..i really did..but in the end i just skimmed through it.what i really think marvel was buying from lee was his right to ownership of the marvel characters..don't care what stan might have signed in the past marvel knew theu had to get his name on a new document that stated he was in effect giving up any copyright on the characters...when lee saw what spiderman grossedhe simply got greedy and wanted more.

[Hdefined]

alright, if YOU say theaters keep half the ticket price profit, which could be from $4-$5 per ticket, and most everyone still agrees that they arguably make MORE money on refreshments (let's say, $3 popcorn, $2 soda, and let's assume only 50% of the ticket-buyers get one of the two, 25% get both) it STILL doesn't make sense. Ticket price earnings would be equal or more than refreshment earnings.

We harrass your logic because it doesn't follow logically. Until you can do better, accept it

[jpritchett]

[quote]Originally posted by Hdefined:
<strong>alright, if YOU say theaters keep half the ticket price profit, which could be from $4-$5 per ticket, and most everyone still agrees that they arguably make MORE money on refreshments (let's say, $3 popcorn, $2 soda, and let's assume only 50% of the ticket-buyers get one of the two, 25% get both) it STILL doesn't make sense. Ticket price earnings would be equal or more than refreshment earnings.

We harrass your logic because it doesn't follow logically. Until you can do better, accept it</strong><hr></blockquote>

Who are you? Seriously. Do I come into Burger King and tell you how to flip burgers? No. So please stop talking nonsense about something you simply seem incapable of understanding.

The AVERAGE ticket price last year in the United States was under $6.00. That figure comes from the Motion Picture Association of America (MPAA). While evening show tickets in most major cities are $8.00 or more, you have to realize that in a vast majority of the country, evening show tickets are much cheaper, plus factor in matinees, children, and senior tickets.

My logic follows perfectly. You just don't have all of the facts, and you keep creating bizarre counter arguments that really don't have much substance. I do not wish to spend any more time arguing with you over something about which you're not informed.

[GPM]

[quote]Originally posted by jpritchett:
<strong>

Who are you? Seriously. Do I come into Burger King and tell you how to flip burgers? No. So please stop talking nonsense about something you simply seem incapable of understanding.

The AVERAGE ticket price last year in the United States was under $6.00. That figure comes from the Motion Picture Association of America (MPAA). While evening show tickets in most major cities are $8.00 or more, you have to realize that in a vast majority of the country, evening show tickets are much cheaper, plus factor in matinees, children, and senior tickets.

My logic follows perfectly. You just don't have all of the facts, and you keep creating bizarre counter arguments that really don't have much substance. I do not wish to spend any more time arguing with you over something about which you're not informed.</strong><hr></blockquote>

Are the average tickets prices affected by discount theaters and matinees? That's probably not where or when most people went to see the movie. Most suburban areas I've been to the ticket price was over $7.00. To compensate for your statistic evening ticket prices would have to be really cheap to average out to $6.00.

The reason I keep questioning you is because your facts are contrary to other things stated by other experts in the industry whose names I actually know. Also, one of the other posters dared to contradict you based on information told them by a theater owner and you basically told them the theater owner was a liar. You've been extremely rude and condescending towards people who dare to question your omnipotence when you could have been gracious and answered their questions. Instead you decided to act in an unprofessional manner which leads me to question your supposed "expertise".

[jpritchett]

[quote]Originally posted by GPM:
<strong>

Are the average tickets prices affected by discount theaters and matinees? That's probably not where or when most people went to see the movie. Most suburban areas I've been to the ticket price was over $7.00. To compensate for your statistic evening ticket prices would have to be really cheap to average out to $6.00. </strong><hr></blockquote>

Once again, I'll state that my numbers are accurate. They're directly from the MPAA. I don't know where else one would get more accurate numbers.

<strong> [quote]The reason I keep questioning you is because your facts are contrary to other things stated by other experts in the industry whose names I actually know.</strong><hr></blockquote>

And who would these other "experts" be? In what way is what they have said contrary to what I've said?

<strong> [quote]Also, one of the other posters dared to contradict you based on information told them by a theater owner and you basically told them the theater owner was a liar. You've been extremely rude and condescending towards people who dare to question your omnipotence when you could have been gracious and answered their questions. Instead you decided to act in an unprofessional manner which leads me to question your supposed "expertise".</strong><hr></blockquote>

I don't feel that I've been rude or condescending to anyone who actually was polite back to me. I have no problem with people questioning my statements, or asking me to explain them. What I do not appreciate is comments from people who do not work in the film industry, implying that *I'M* the one without the facts or the correct information.

I will state, for the last time, that if that local theater owner told the poster that, then he's wrong. I know that might be hard for you to believe, but it's true.

There's a reason Matt asked me to give him some background information regarding this case: that reason is that, as I've said before, I'm an executive with a film financing and distribution company. I deal with these issues on a daily basis. I feel like a broken record stating this over and over.

I have yet to see anyone provide any real, "contrary evidence" to what I've said. The few contrary posts have all been anecdotal and speculative, and have not contained any concrete, verifiable information. My statements and statistics can be backed up by any number of industry-related websites, books, and magazine articles.

Anyway, this endless back and forth is only causing this thread to lose any semblance of coherency, so I'm going to bow out now. Hopefully, you'll understand where I'm coming from, and, if you still really think I'm just making all of this up, please do a little research at the MPAA's website (www.mpaa.org), or the Paul Kagan and Associates website (Kagan is the leading research and analysis firm for the entertainment industry).

Have a good evening.

Jason

[deadparrot]

[quote]Originally posted by jpritchett:
<strong>

I don't feel that I've been rude or condescending to anyone who actually was polite back to me. I have no problem with people questioning my statements, or asking me to explain them. What I do not appreciate is comments from people who do not work in the film industry, implying that *I'M* the one without the facts or the correct information.

I will state, for the last time, that if that local theater owner told the poster that, then he's wrong. I know that might be hard for you to believe, but it's true.

There's a reason Matt asked me to give him some background information regarding this case: that reason is that, as I've said before, I'm an executive with a film financing and distribution company. I deal with these issues on a daily basis. I feel like a broken record stating this over and over.

I have yet to see anyone provide any real, "contrary evidence" to what I've said. The few contrary posts have all been anecdotal and speculative, and have not contained any concrete, verifiable information. My statements and statistics can be backed up by any number of industry-related websites, books, and magazine articles.

Anyway, this endless back and forth is only causing this thread to lose any semblance of coherency, so I'm going to bow out now. Hopefully, you'll understand where I'm coming from, and, if you still really think I'm just making all of this up, please do a little research at the MPAA's website (www.mpaa.org), or the Paul Kagan and Associates website (Kagan is the leading research and analysis firm for the entertainment industry).

Have a good evening.

Jason</strong><hr></blockquote>

Much better handled. I'm sure you are correct, but you really can't blame people for asking these
questions since most of us have never heard these statistics before. Lawyers will be asking these same questions of expert witnesses at the trial if it goes to one. Granted, they will phrase them quite differently and possibly more eloquently, but I am sure the questions will be posed.

I know some of the posters got quite forceful about their opinions, but if someone insulted you, I missed it. The burger flipping comment was obviously intended as an insult, and in my opinion, was uncalled for.

If other industry insiders react this way to being questioned, then Stan stands a good chance of winning.

[Taylor Porter]

I'm not trying to take sides, but I don't think that jpritchett has contradicted himself or failed to make sense. All he has said is that theatres keep half of the gross, and no one has any proof to dispute this. What does the snack bar have to do with their deals with the studios?How much or how little the theatre makes on concessions or how much they value this money has absolutely nothing to do with their take of the box office. I don't understand why people don't accept what he's saying. Maybe he's been a jerk and maybe he hasn't, but he has been logical and made sense.

[deadparrot]

Here is an article I found that doesn't necessarily contradict what Mr. Pritchett said, but it does explain why so many of us were shocked at his figures.

<a href="http://www.startribune.com/stories/1526/3408507.html" target="_blank">http://www.startribune.com/stories/1526/3408507.html</a>

If I interpreted the article correctly, a blockbuster movie like Spider-Man probably did not even get close to a 50-50 split in profits because it opened big and nade a lot less later on. However, a film like My Big Fat Greek Wedding would definitely make at least a 50-50 profit and very might have given theater owners a bigger piece of the pie because of its incredible longevity.

Also, I read on another industry page that the method Mr. Pritchett described is only one of at least three different standard ways a movie studio can divide its profits with exhibitors.

[deadparrot]

Here's another article I found that claims that movie studios make most of the profits.

<a href="http://money.cnn.com/2002/03/08/smbusiness/q_movies/" target="_blank">http://money.cnn.com/2002/03/08/smbusiness/q_movies/</a>

I'm not sure why I should believe the editors of CNN and Money magazine though.

[jpritchett]

[quote]Originally posted by deadparrot:
<strong>Here's another article I found that claims that movie studios make most of the profits.

<a href="http://money.cnn.com/2002/03/08/smbusiness/q_movies/" target="_blank">http://money.cnn.com/2002/03/08/smbusiness/q_movies/</a>

I'm not sure why I should believe the editors of CNN and Money magazine though.</strong><hr></blockquote>

Actually, neither one of those articles contradicts anything I said. In fact, they BOTH use statistics that actually back up what I've said. Please go back and re-read my initial explanation of how box office grosses are divided, and you'll see that it corresponds with what both of the articles say. Both articles point out that the box office gross split favors the distributor in the initial weeks of release, and then shifts in favor of the exhibitor each succeeding week. OVERALL, across ALL movie releases, the split is roughly 50/50 over the life of a film's theatrical release (and, to add another layer to this discussion, in foreign territories, a distributor actually typically keeps LESS than 50% of the box office gross, for a variety of reasons that vary from region to region).

Perhaps some of you aren't realizing that I'm saying this is the AVERAGE. Of course there are going to be exceptions where, on a single particular film, the distributor will retain more than 50% of the overall box office gross because of a big opening and a quick burn-off. Those films are off-set by the MY BIG FAT GREEK WEDDINGs, SIGNS, and THERE'S SOMETHING ABOUT MARYs of the world. In THOSE instances, the distributor retains LESS than 50% of the overall box office gross, because the film stays in theaters for many weeks, or sometimes months.

A theater owner who claims that concessions are the only way he/she makes a profit has a narrow view of his or her business. Think of it this way: a theater owner could just as easily say that the concessions are a way to cover their overhead and that the films' box office gross are what keeps their theaters profitable. They'd still be partially incorrect, but that's just as viable as statement as those who claim that concessions are the only way they stay in business.

Also, let me state AGAIN, that I've NEVER said that concessions were not an important part of any theater owner's business. I have simply been talking about the way that the box office gross is split between distributors and exhibitors ON AVERAGE, across all theatrical releases--not any particular film.

Honestly, I don't know why that's so hard to grasp. Why is everyone so determined to prove me wrong?

Jason

[Nat Gertler]

[quote]Originally posted by GPM:
<strong>Are the average tickets prices affected by discount theaters and matinees? That's probably not where or when most people went to see the movie.</strong><hr></blockquote>The "average ticket price" is the average price for a ticket that was purchased -- i.e., add together all of the money paid for tickets and divide it by the total tickets sold and you get that figure. That includes all of the matinee, senior discount, kid discount, and discount house tickets. The average price last year was $5.66, according to the National Association of Theater Owners, as cited at <a href="http://www.mpaa.org/useconomicreview/2001Economic/sld007.htm" target="_blank">http://www.mpaa.org/useconomicreview/2001Economic/sld007.htm</a>


[quote]The reason I keep questioning you is because your facts are contrary to other things stated by other experts in the industry whose names I actually know.<hr></blockquote>Please, feel free to actually name and cite these experts.

[quote]You've been extremely rude and condescending towards people who dare to question your omnipotence when you could have been gracious and answered their questions.<hr></blockquote>He's been treated extremely rudely by people who think that because they remember once talking to someone, that makes them experts. I think he's dealt quite well with it. And yet he gets harangued.

[OMAR]

[quote]Originally posted by jpritchett:
<strong>Honestly, I don't know why that's so hard to grasp. Why is everyone so determined to prove me wrong?

Jason</strong><hr></blockquote>


New in town?

[noitall]

quote:
--------------------------------------------------------------------------------
Originally posted by jpritchett:
Honestly, I don't know why that's so hard to grasp. Why is everyone so determined to prove me wrong?
Jason


--------------------------------------------------------------------------------


New in town?

--------------------

-OMAR

LOL>>>>>>>>>>>> That one I enjoyed.

[GPM]

[quote]Originally posted by jpritchett:
<strong>

Actually, neither one of those articles contradicts anything I said. In fact, they BOTH use statistics that actually back up what I've said. Please go back and re-read my initial explanation of how box office grosses are divided, and you'll see that it corresponds with what both of the articles say. Both articles point out that the box office gross split favors the distributor in the initial weeks of release, and then shifts in favor of the exhibitor each succeeding week. OVERALL, across ALL movie releases, the split is roughly 50/50 over the life of a film's theatrical release (and, to add another layer to this discussion, in foreign territories, a distributor actually typically keeps LESS than 50% of the box office gross, for a variety of reasons that vary from region to region).

Perhaps some of you aren't realizing that I'm saying this is the AVERAGE. Of course there are going to be exceptions where, on a single particular film, the distributor will retain more than 50% of the overall box office gross because of a big opening and a quick burn-off. Those films are off-set by the MY BIG FAT GREEK WEDDINGs, SIGNS, and THERE'S SOMETHING ABOUT MARYs of the world. In THOSE instances, the distributor retains LESS than 50% of the overall box office gross, because the film stays in theaters for many weeks, or sometimes months.

A theater owner who claims that concessions are the only way he/she makes a profit has a narrow view of his or her business. Think of it this way: a theater owner could just as easily say that the concessions are a way to cover their overhead and that the films' box office gross are what keeps their theaters profitable. They'd still be partially incorrect, but that's just as viable as statement as those who claim that concessions are the only way they stay in business.

Also, let me state AGAIN, that I've NEVER said that concessions were not an important part of any theater owner's business. I have simply been talking about the way that the box office gross is split between distributors and exhibitors ON AVERAGE, across all theatrical releases--not any particular film.

Honestly, I don't know why that's so hard to grasp. Why is everyone so determined to prove me wrong?

Jason</strong><hr></blockquote>

I'm not determined to prove you wrong. You are probably correct. What I am saying is that there are reasons to doubt you. Because you work in the industry, you think we should take your word for it automatically even if we have constantly heard the opposite of what you say. I have read article after article about movies and none of them have claimed that movie theater owners make 50% of the profits on average. Most claim that their take is much less. Every movie theater owner I've spoken to says the same thing. You're asking me to disregard everything I've ever heard or read and believe you without proof based soley on your word. You also left out the fact that the CNN/Money article specifically states that movie studios make most of the profits from ticket sales. The only thing that's hard for me to grasp is why I should I believe you based soley on the fact that you say so.

Deadparrot posted the CNN/Money article which clearly states that movie studios make more profits on ticket sales. If you can provide me with another source that specifically tells me that movie studios and movie theaters split their profits 50/50 on average then I'll be more than happy to believe you.

Using the information you've given, it doesn't work out mathimatically to a 50/50 or 50/45 split for Spider-Man's take. Granted, I only have the information you've given, but the best I can come up with based on the information given is a 65/35 split in favor of the studio. I know its different for other movies, but the article above is written about Spider-Man. You stated that the movie studio made 50% of the profits, but then later you say well, maybe they made 55% of the profits. And it still doesn't work out mathimatically unless you can provide us with further information. I'm talking about Spider-Man specifically in this paragraph not other films.

I'm not saying you are defintely wrong, but I do have valid reasons to doubt you.

I'm sorry you've been offended by all this, but if the world's leading geography expert told me that the United States is North of Canada, I'd need a little more to go on than his word because it contradicts everything else I've been told. I'm not a geography expert either.

Just so you know, I'm ignoring the concession part of a theater's profit as well.

[GPM]

D'oh! I made a lot of typos there. Bad marks on mathematically, definitely and solely.
D'oh!

[jpritchett]

[quote]Originally posted by GPM:
<strong>
If you can provide me with another source that specifically tells me that movie studios and movie theaters split their profits 50/50 on average then I'll be more than happy to believe you.
</strong><hr></blockquote>

<a href="http://www.jamesoregan.com/Selling_Film/3516.htm" target="_blank">http://www.jamesoregan.com/Selling_Film/3516.htm</a>

"Revenue Stream

A 100-screen release can generate up to $16M in revenue, known as the Exhibitors' Gross Revenue. Ordinarily, this is split with the distributor on a 50% basis, giving a Distributor's Gross revenue of $8M..."

<a href="http://www.pinnacleentertainment.com/indsbkgd.htm" target="_blank">http://www.pinnacleentertainment.com/indsbkgd.htm</a>

"The exhibitor pays a percentage of the picture's box office receipts (called the "rental") to the studio or distributor. The size of the percentage depends on the distributor's strength and the exhibitor's desire to show the film. A major studio release usually has a 50/50 split..."

<a href="http://www-marketing.wharton.upenn.edu/people/faculty/eliashberg_papers/model_to_manage_movie_screens.htm" target="_blank">http://www-marketing.wharton.upenn.edu/people/faculty/eliashberg_papers/model_to_manage_movie_screens.htm</a>

"One reason is the agreements studios require for exhibitors that agree to show their films. That commitment period ranges from two to 10 weeks, depending on the theater owner, its bargaining power and the marketability of a particular film. Some contracts require a minimum run even when there is no consumer demand. Another unusual feature is the split of box office income, which is divided in ratios such as 70/30 in favor of studios during the first few weeks of release, but gradually shift greater income to the exhibitors with ratios reversed to 35/65 by the end of a run. Although attendance typically declines the longer a movie plays, the theater gets a larger share of the box office gross. Complicating that equation is the loyalty that can be rewarded when studios rely on commitments from national exhibitors."

<a href="http://www.marklitwak.com/GLOSSARYfinal2.htm" target="_blank">http://www.marklitwak.com/GLOSSARYfinal2.htm</a>

"Film Rental: What the theater owner pays the distributor for the right to show the movie. As a rough rule of thumb, this usually amounts to about half of the box office gross."

[NOTE: Mark Litwak has written several books on business practices and contracts in the film/television industry, and is considered the "guru" of deal-making in Hollywood.]

<a href="http://nightanddayfilms.com/theindustry.htm" target="_blank">http://nightanddayfilms.com/theindustry.htm</a>

"The exhibitor pays a percentage of the picture's box office receipts (called "rentals") to the studio or distributor. The size of the percentage depends on the distributor's strength and the exhibitor's desire to show the film. A major studio release usually has a 50/50 split, while independent films average 47 percent (up from 45 percent in 1994) from the box office. Of course, the exhibitor keeps all the money for popcorn, candy, and soft drinks."

[GPM]

Cool. I apologize for giving you such a hard time. As I stated before, this was
contradictory to most of the articles I have read, so it was difficult for me to believe
without further evidence.

I can understand why theater owners might not be completely honest with their earnings
any more than Hollywood would be. Hide those profits!

I can also understand that perhaps the news media wouldn't think it was a good story if
they gave a balanced view of the facts. Most reporting is very biased. I just wanted to see
the other side of things.

Again, sorry for the skepticism, I just needed some proof. Thank you for taking the time
to answer my questions.

Sincerely,

Rich :cool:

[The Blue Spider]

[quote]Originally posted by jpritchett:
<strong>

A theater owner who claims that concessions are the only way he/she makes a profit has a narrow view of his or her business. Think of it this way: a theater owner could just as easily say that the concessions are a way to cover their overhead and that the films' box office gross are what keeps their theaters profitable. They'd still be partially incorrect, but that's just as viable as statement as those who claim that concessions are the only way they stay in business.

Also, let me state AGAIN, that I've NEVER said that concessions were not an important part of any theater owner's business. I have simply been talking about the way that the box office gross is split between distributors and exhibitors ON AVERAGE, across all theatrical releases--not any particular film.


Jason</strong><hr></blockquote>

<font color=blue>Out of curiousity, is it possible that a movie theatre can be in a position where concessions are the only way to get a profit?</font>

[Hdefined]

jpritchett:

good for you. we're all glad you have a nice little job. we're not all glad you have a nice overgrown ego. you might want to do some weeding before you come back. Just because you think you're right doesn't mean A) you are right and B) that anyone else will believe you. Get used to it. even if your statistics are 101% accurate, you sure do a shoddy job of explaining it clearly by coming across as either A) god-of-move-finance or B) closed-minded and unwilling to consider other people's opinions.

so yeah, hear that sucking sound? those were your people skills and credibility. goodbye

[jpritchett]

[quote]Originally posted by The Blue Spider:
<strong>

<font color=blue>Out of curiousity, is it possible that a movie theatre can be in a position where concessions are the only way to get a profit?</font></strong><hr></blockquote>

Well, again, I don't think you can look at it that way. Complete hypothetical here, but let's say a theater has overhead and operational costs of $25,000 week. And let's say that theater retains roughly an average of $22,000 of the box office gross each week. Also, let's say the theater makes $18,000 profit each week in concessions.

I suppose one could make the argument that, in a case like this, the concessions are the "only" way that particular theater is profitable. But, for me, I look at it and say that the concessions and box office gross go hand in hand. You can't have one without the other, really. The theater owner couldn't ONLY sell candy and be profitable, nor could he necessarily (at least in this example) ONLY show movies.

Does that make sense?

[Nat Gertler]

Hdefined:

You may want to redirect your last message. It sounds very much like a criticism of the information-starved individual who posted "Sorry buddy, don't know what your numbers are telling you, but it's not how the business works", which was not JPritchett.

[some_bloke]

[quote]Originally posted by Aaron Weisbrod:
<strong>"Forever throughout the universe", huh? I don't know if I would ever, EVER sign a contract that said something like that! :p </strong><hr></blockquote>

Yeah, but it says nothing about the multiverse. And good luck getting the Living Tribunal
to recognise the jurisdiction of this document.

[Nat Gertler]

[quote]Originally posted by some_bloke:
<strong>And good luck getting the Living Tribunal
to recognise the jurisdiction of this document.</strong><hr></blockquote>Perhaps, but you really have to worry about the effect of certain wording in the Negative Zone and on Bizarro Earth.

(It used to be that contracts called for rights throughout the known universe. I suppose they considered the "known" part too harsh a limitation.)

[The Blue Spider]

[quote]Originally posted by jpritchett:
<strong>

Well, again, I don't think you can look at it that way. Complete hypothetical here, but let's say a theater has overhead and operational costs of $25,000 week. And let's say that theater retains roughly an average of $22,000 of the box office gross each week. Also, let's say the theater makes $18,000 profit each week in concessions.

I suppose one could make the argument that, in a case like this, the concessions are the "only" way that particular theater is profitable. But, for me, I look at it and say that the concessions and box office gross go hand in hand. You can't have one without the other, really. The theater owner couldn't ONLY sell candy and be profitable, nor could he necessarily (at least in this example) ONLY show movies.

Does that make sense?</strong><hr></blockquote>

<font color=blue>Thing is...

how much is the overhead for getting the film?

and what if it is a small theatre?

[jpritchett]

[quote]Originally posted by The Blue Spider:
<strong>

<font color=blue>Thing is...

how much is the overhead for getting the film?</strong><hr></blockquote>

I'm not sure what you mean by this?

<strong> [quote]and what if it is a small theatre?</strong><hr></blockquote>

Well, then their overhead/operational costs, box office gross, and concessions profit will obviously be reduced. The relationship between the three doesn't necessarily change, though. We'd just be talking about smaller amounts, but in the same ratio, perhaps.