Money in huge increments isn't always cash and rarely does it go directly to the person.
Susie Superstar has signed a six picture deal with a "cash " payout of $60 million over the life of the contract plus a percentage on the back end.
Her movie Superwoman does $200 million at the box office worldwide, it now goes into a 5 year cycle of DVD, downloads, cable tv premiere, non premium cable tv premiere (HBO vs FX) and then network tv channel premiere. The bidding was furious but now its all locked up by Susie got both a producers credit and 2% on the back end.
Her first check is half up front, $5 million and that check is for cash, it goes to Susie Superwoman LLC #1, which she is the sole shareholder of. She then skips personal taxes and adroitly got her the producer title to pay her $500,000 per $100,000 , 000 of box office and then another $500k over the distribution life cycle of five years, she agrees to do two one hour mini shows to be sliced up during the network viewing. She also gets 2% on the backend, $2 million by movie close date.
Her second payment of $5mil she takes as Class A stock in Galaxy Films and signs a rider agreement to not sell more than 10% every year so she wont tank the stock.
Susie has her up front producers fee, back end reward distribution fee and $2 mil bonus pay. That $3 mil she uses for personal bills and taxes. After paying her tax rate, lawyers, accountants and managers their percentages, she gets out with $500,000 cash. She promptly puts half down on a loft in Tribeca and divvies up the rest to 2 years of expenses at $12,500 a month. 15% of this will go monthly to a 401k sponsored by her LLC. #1 and $5000 every January to a Roth IRA, with 30 years until 59, she's got several million thrown into the future.
Year 2 gets more complicated because the money keeps rolling in. LLC #2 takes half of the $10 mil fee, another bundle of Class A stock. More personal taxes and staff but this time she takes the leftover cash and buys a store for her mom and siblings, as the brand face, she's able to get three investors and they pour in $5 million, valuating her cash of $250k and brand as worth 50% or $5 million. LLC #4, owned by Susies entire family, shares distributed 50% to Susie, 50% divided amongst parents and siblings. Susie will do press, magazines, mention products but its in Chicago, she can't be involved in day to day management but its a resounding success bringing in $1 million in profits after expenses. Her shares are now worth $500,000 from $250 k in and $250k half of half of profits.
Superwoman 2 did $250 million.
Superwoman 3 is estimated to do $300 million. She sets up LLC #3 which she uses to buy an apartment complex in Chicago for her family to manage, the new flagship downtown store occupying the whole first floor. Susie charges rent back to her own LLC #4 and uses the money to invest in a 50% ownership in a resort in Fiji.
The 5 year cycles the DVD, tv, vod, cable bring in another $100 million , which her lawyers point out is another $1 on the back end of the final tail back end. She takes the additional $2 million as more stock, bringing her tally to $12 million in stock.
Superwoman 3 is estimated to do $300 million. She sets up LLC #3 which she uses to buy an apartment complex in Chicago for her family to manage, the new flagship downtown store occupying the whole first floor. Susie charges rent back to her own LLC #4 and uses the money to invest in a 50% ownership in a resort in Fiji.
The 5 year cycles the DVD, tv, vod, cable bring in another $100 million , which her lawyers point out is another $1 on the back end of the final tail back end. She takes the additional $2 million as more stock, bringing her tally to $12 million in stock.
Superwoman 4 she approaches the studio to give her the $10 million acting fee, $1 mill in producer fee and potential $2-4 million back end 1 and 2nd back end as venture capital of at least $15 million .
Susie wants to build Susie Production Studios with the cash. Full staff, offices, studio time and cameras, she has two sitcoms in mind. If the numbers don't even out take the shortfall from Superwoman 5 & 6, which can now be guesstimated at $15 million all told.
4 is a hit and Susie turns to Galaxy and asks that the $15 million be used as a production bridge loan to fund 13 episodes of Susie's World, her sitcom. Netflix has estimated $20 million if she can deliver that many full views in the first three months of release. Susie has coincided a massive national marketing campaign for 100 super fans to go to a resort in Fiji where she's convinced her costars, store and studio to watch the sitcom on the beach after finding 100 Easter Eggs in the series. All expenses paid. Susie's deal to Netflix is $1million upfront to cover expenses of such a campaign and $5,000 each guest expenses -----as they will go stay at Susie's Shangri La, her Fijian resort. Incidentally its featured prominently in all advertisements and offers an all inclusive package with payment plan and timeshares for the 10,000 other folk from around the world who book reservations.
The insanity begins.
Susie smugly watches as Netflix subscriptions jump 1 million people for her show and her audience watches each episode a minimum of three times, 39 million views., bringing them $89 million for at least one month in subscription fees. They're happy to break Susie Production Studio $20 million.
Susie travels almost exclusively domestically on the Galaxy Films coast to coast jet service, her production company covers car and driver and security for her 24/7, her production company pays the rent on a nice home in Brentwood, Susie pays for her own food but she bundles clothing costs between her production company and gets to keep her film wardrobe , she has healthcare through her studio and still pulls down a decent salary to keep cash in her checking account and pay into social security , she also draws a salary from her Chicago enterprise store of beauty goods which covers her expenses and hotel stays when there---she has a company credit card. Internationally Susie's expenses are covered by her salary and credit cards from her Fijian resort, where she's a VP. Her biggest confusion is often which card/stream to pay for something with so she's become accomplished at bringing up one of her enterprises at 90% of her dinners and lunches so she can charge it to that line.
As the script for Superwoman 6 is almost done, Susie calls a meeting. Against a $100 million dollar budget, Susie estimates if she gives up the flat number of $15 million, that's 15% of the film that Susie Productions will give in, plus she's marked at least 25% of the film that can be done at her rented studios. Make her a 15% partner for the last bit of this almost 12 year rolling deal, she'll executive produce, bring it in under budget and give them first look at the 3 movies and 2 drama series she's developing. Which means they'll get first shot at partnerships to make hits.
Also she needs to get an acceleration on her stock rider. She has found a wonderful house in Montecito, $20 million, 10% down but the stock has to held in a trust until she gets her first production company disbursements in a year which she'll need Galaxy to give to the current owner as Class A stock transfer/payment, worth a minimum of $15 million on top of the $2mil guaranteed in the trust, good faith. She'll make up the shortfall by then from her salary from her own production company, $5 million. If they can swing it in 60 days the owner says they'll take the stock in a trust, confident it will rise in value past $20 million in a few years.
High paid individuals never take direct cash, they generally get paid in large sums in stock or leverage to another deal. Companies transfer millions without tax penalties unlike people. The high-ender push is to get away from cash and get a seat at the table where the pie is being truly divvied up, as a company, not a person.
Well done on $60 million, Susie could pay less than $5 million in taxes, reap $100 million over a 12 year span.
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