Most people (consumers) of entertainment know nothing about the business so they look at the blunt surface of a movie, a celebrity, the entertainment business and assume that A must mean B because Entertainment Tonight and The National Enquirer said so.
The problem with being a big star, an A lister is that there are very few places for you to go. Bruce became a star first on TV in a hit detective series in the 1980s and then made the leap to the big screen, films in the late 1980s and the 1990s. Scoring big blockbuster hits. Blockbuster hits that were hits around the world. That last part is very important.
One, pretty much every entertainment product TV/film you see is designed, for the past 75 years to make back its money and a profit, to the sponsoring studio, those who have royalty-licensing points, investors and stars who have “points” in the film. This point system goes back to Jimmy Stewart who famously made a lifelong killing of well over $50–100 million in his lifetime(and beyond his death in 1997) and continuing into his children’s, grandchildren's lives-futures, for taking back end points in.
Jimmy Stewart Started This All
In the 1950s, Stewart experienced a career renewal as the star of Westerns and collaborated on several films with director Anthony Mann. The first of these was the Universal production Winchester '73 (1950), which Stewart agreed to do in exchange for being cast in a screen adaptation of Harvey. It also marked a turning point in Hollywood, as Stewart's agent, Lew Wasserman, brokered an innovative deal with Universal, in which Stewart would receive no fee in exchange for a percentage of the profits. Stewart was also granted authority to collaborate with the studio on casting and hiring decisions. Stewart ended up earning about $600,000 for Winchester '73, significantly more than his usual fee, and other stars quickly capitalized on this new way of doing business, which further undermined the decaying studio system
From Wikipedia (because I didn’t feel like summarizing.)
So Bruce gets huge and after his first few movies into the 1990s starts renegotiating his contracts for back end points. That “back end” points is the first cloud break from celebrity, to star, to superstar to A lister. What makes an A lister an A lister is their ability to get viewers/consumers across all the platforms their products will move through, simply due to their presence in the project.
First Artists Production Company started this focused madness after Jimmy Stewart with Barbra Streisand, Sidney Poitier, Paul Newman and Robert Redford forming a production/investment company that was an immediate partner in any production they were in. (Front and back end points).
Along with Paul Newman, Sidney Poitier and later Steve McQueen, Streisand formed First Artists Production Company in 1969 so actors could secure properties and develop movie projects for themselves. Streisand's initial outing with First Artists was Up the Sandbox (1972).
Wikipedia
Now unless you’re ready to form such a large company—-with lawyers and accountants and such watching the production companies investments into projects, it’s simpler to stay wanting back end.
Mr. Bruce did both. Cheyenne Enterprises, (In 2000, Willis and his business partner Arnold Rifkin started a motion picture production company called Cheyenne Enterprises. He left the company to be run solely by Rifkin in 2007 after Live Free or Die Hard) through the 2000s was Bruce Willis’ foray into front end and back end. The problem with front AND back end is that you have to put up something (besides the star, generally cash.) So if a movie is going to cost $100 million, your company might have to guarantee $25 million to stay seated at the table and then someone like our star Bruce Willis would get paid back—-upwards of half a dozen ways.
- Percentage off the top for being involved (say 25%) as soon as the first monies come back in—-directly 25% of every dollar—-but the tangle of that is whether it’s BEFORE or after “expenses”.
- The biggest stars get paid upfront—-anywhere from $5 to $25 million per project. The problem with this is that depending on how “secure” of an A lister one is—-the payments might be staggered—-20% over the course of say 3–6 months or even a year because the production has to reap back the money.
- Back End wanting to get paid solidly, the A Lister says: “Pay me on the back end but for waiting for my due, after having done the work, I want “more” plus scale.” Scale might be $5000 a day multiplied by 90 days—-$450k. But the back end on a blockbuster hit could reap tens of millions. This is where “back end” gets tricky because there are several “forms” of back end.
- The first back end is essentially off of the domestic box office. Mr. Bruce’s film “Super Armageddon Hard” makes by the close of December 31st from movie theaters—-$100 million and his back end is 10% so he gets his scale pay PLUS $10 million.
- The second form of back end is domestic AND domestic rights/redistribution—-domestic box office, then the licensing fee from the 5 year tail end of every movie—-first round—-cable, TV, DVD, as many times as it’s played in those venues and DVD sold, which might add up to over 5 years total another $10 million (just to make our math simple). So $20 million.
- The third back end points includes international—-where the real money is made. Domestic, first run cable, TV, DVDs AND international—-international box office is equal to or more important that domestic box office—-because there are more people in China, India, Europe, South America, Africa who will see this in movie theaters, on their international cable systems, their international TV broadcasting and their international DVD sales (by international I’m also including that everything has to be dubbed in the theater/audience language (which could mean 5 to 50 other languages). The bigger the film, the wider this back end becomes and the more complicated it becomes. But for simplicity lets call it 5 years and $30 million.
- The fourth form of back end is The Universe. The universe is a newish term included in contracts since the late 1990s for performers and products. Because the universe in legal parlance is described as space—-and space includes, you guessed it, cyberspace and what is narrowly called streaming now. If bundled all together (which probably wouldn’t happen to deals/contracts that were signed before 2010ish—-an A Lister would reap their back end, their production companies 25% profit literally for the life of a project, which is about 125 years at this point. (This universe term” legally probably includes other planets within our “known” universe—-which would mean Mars and any planets that humans land on and play movies. Yeah, business goes that deep. People in 2221 on another planet, will somehow be paying back into a royalty system for entertainment from the 20th century.)
- The fifth form of back end is the most basic and is known as residuals. Essentially if you’re part of a project, entertainment, TV and movies, and you so negotiated it or it was de riguer (after the mid 1970s), you get residuals. The reason why this started then was so many TV and movie stars did not get it prior unless expressly negotiated—-the entire cast of the Brady Bunch—-Sherman Sherwood omitted residuals from their contracts and made tens of millions for every time it was repeated; the cast got their first paychecks and that was it. The same happened for the majority of the Gilligan’s Island cast. Both casts created massive lawsuits and have reaped forward from movies', specials, etc. but not for past work. But from those legal decision times, contracts changed for stars, celebrities forward from the 1970s.
Bruce’s back end profits are sort of a timeline track rather than a forever.
- Hit 1980s TV show—-residuals for 20+ years, no ownership so maybe in total Paychecks + $1 million from TV repeats and DVD sales (may or may not include streaming).
- Paychecks from a dozen movies through the 1990s until 2000—-let’s call it $100 million but then we also have to consider taxes and divorce and children. (that he would’ve put money in trusts for). So let’s say from strictly paychecks, after taxes and such, he arrived in 2000 with $20 million dollars.
- Back End Points Domestic—-studios had to sweeten the deal beyond cash mid 1990s so they first gave him points on domestic. For a decade let’s call that $10 million on 6 of those dozen films.
- Back end on the 5 year tail end (cable, TV, DVDs)—-maybe another $5 million
- Back end on international, including all the other back ends—-but he was only able to get this as a rider on 2 of those 12 films. But it’s still an impressive $10 million (however, he “lost out” on what would’ve been $100 million if he’d had this for the other 10 as well)
For about 15 years of work, after children/divorces/family and taxes—-he’s walked away with say $65 million.
But all of the projects he’s worked on—-say 30 by then, have amassed a worldwide profit of $3 billion and counting.
He’s made less than 2% of what his work is “worth”. Knowing these numbers he floats his tag price as perhaps $5-$10 million upfront, 25% of production and full back ends—-which on a $100 million dollar film could speak to $40 to $50 million per project.
Now the movie studio, playing the long game of 125 years to each project, knows it will be able to generate say at least $250 million on every project that costs $100 million from the get go—-but if you recalculate that even with compounding interest, it’s an additional $50 million to get Mr. Superstar A Lister onto a project, and it’s a 125 year bet that Yellow Cab, the $100 million sci fi blockbuster will be more of a hit than their conservative $250 million projection of profit over $100 million. So the studio starts figuring out—-do they need or want a Bruce Willis?—-because the difference is about $50 million dollars (practically, upfront).
Someone like Bruce Willis, having fulfilled all of his 1980s, 1990s contracts, treats 2000-forward, differently. He needs a piece of the pie, not simply a paycheck nor is he worried about notoriety/stardom and fame—-he’s achieved all of that. Now he’s looking at the way the studios make REAL money—-off of fame and repetitive productions. It might be too complicated and expensive to start a competing movie studio—-but its not nearly as expensive to start treating himself, his Fame, as one.
(In 2009, Willis signed a contract to become the international face of Belvedere SA's Sobieski Vodka in exchange for 3.3% ownership in the company)
He then with a dozen accountants, managers and lawyers, goes through the numbers on the value of his “fame”—-worldwide. From that they look at how many projects can his fame carry in “basic films”—-basic films are American, sci fi, action, thrillers with a basic 8th grade educational level/dialogue/complexity—-which can be translated/dubbed for probably about $100k. About 50–75% of the films produced in America for Americans.
Then people like billionaire Robert Johnson, after having sold BET to Viacom, decides to hop into the DVD/Direct to Customer/Streaming production business. RJK Productions churns out films that cost maybe $10 million for the high end and $1-5 million for the low end. And a dozen companies reproduce at this level including Saban and Emmet/Furla Oasis. Willis’ team starts talking to these micro-studios, simply holding his price tag.
The leverage American movie studios had through the 1990s was that they were the biggest game in town. Now America is not the only “town” in entertainment. The challenge of entertainment isn’t content (people will watch nearly anything, even if it’s a repeated, rehashed plot of “reboots” of past shows. People are drones. That's not the biggest problem.) The biggest problem is distribution, how to get the drug to the consumer?
Movie theaters, TV sets, DVDs, streaming on tablets and phones—-all of those bases have to be covered. Movie and TV studios tend to be locked into relationships or ownership of movie and TV/cable channels-networks but anyone else can print and distribute DVDs and streaming digital copies of movies to a larger distributor (Hulu, Netflix, Disney, Paramount, Viacom, Discovery).
So Bruce Willis, wisely and with business acumen, sees that he’s getting cut out of the pie by American movie studios because they probably need at least 75% of a project’s value to make it worth it—-after marketing, stars, production expenses, they’re selling smaller percentages of back end to (new) A Listers to protect their 75% cut but can’t give too much or they’ll have to cut into their concrete profit spread.
But companies like Cheetah Films (owned by Curtis “50 Cent Jackson) turn to Willis and DeNiro and Al Pacino and Val Kilmer—-and point out that it’s no longer simply the film that is being sold—-it’s the A Lister in the film. Cheetah, RJK, Oasis say to Bruce Willis:
“We can meet that 25% number you want of the whole pie on a project because it’s your FACE and CELEBRITY that are the real products, wrapped into a familiar project that people will buy——all over the Universe. And because you’re a star we’ll cut your work days from 90 on a movie to 30 so you can do one every other month. And your “pay” won’t be in simplistic cash—-it will be in stock from the companies investing, in cash, in future royalties—-into the additional children (he has 5) trust funds/tax havens (because not everything is made therefore paid in American money.)”
Willis looks at DeNiro (also in many Cheetah and Saban films, who has used this methodology to jump from a reasonable $100 million dollar fortune to a $400 million dollar fortune in 20 years) and thinks I can work less than half the year, provide for my going forward, make fun, silly films and reap the financial benefits as larger companies do off of the NEW PRODUCT: Fame. (Willis has made at least 10 films with Oasis, 3 or more with Cheetah and couple with Saban, plus others)
International and through the Universe.
That’s why he’s making 5 B list—-direct to DVD/video, streaming films a year—-because the American entertainment market doesn't pay him enough, there are 350 million Americans—-perhaps in a mega blockbuster, 35 million of them see a project in that 5 year long tail.
Between Europe, South America, Africa, India and Asia that’s about 3 billion people—-theaters, TVs, DVDs and streaming——remember not all of the world is in the “21st century” so half of them are cable, TV, and DVD watchers.
10% of a WORLD market? 300–350 million viewers vs only a max of 35 million in America.
Say in total 5 films reap HALF audience/profits—-175 million viewers—-lets call it ugly, fast math—-$1.750 Billion at an equivalent of a $10 cost to consumer—-and he gets 25% of that and it’s not taxed entirely in America (say he gets a polite $1 million per film paid to him in America)? For five months work. For conceivably another 10 years (he’s 66 now), with profits rolling in, back end and residuals for the next 125 years in stocks, companies ownership, trusts for family, lower taxes, etc.?
(Get ugly and cut my above estimations in HALF. And he’s still making out better than stars on the Forbes List. Notice he’s not on the Forbes list. You have to volunteer your information.)
The world is buying Bruce Willis’ fame, not his movies. He just happens to stand in the kinds of movies that they expect Bruce Willis to be in.
Just because you watch movies/entertainment doesn’t mean you know how the business works. Here’s a wild curve ball. if you’ve had cable TV, the basic package since 2009, you’ve sent Oprah money, every month that you’ve paid your bill, every month. lol
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Kyle Phoenix is a teacher, certified adult educator, sexologist, sex coach and sexuality educator with over two decades of intensive experience. He studied at the University at Buffalo, SUNY, New York University, and Columbia University. He has worked, consulted and taught individuals and focused professional developments for the CDC, Department of Education, Gay Men's Health Crisis, New York City Department of Health, non-profits, Fortune 500 companies and unions. He began his career facilitating on-campus workshops addressing a wide range of sexuality and sexual health issues and then moved on to teaching at universities, non-profits, private groups and clients, hosting The Kyle Phoenix Show on television and multiple online webinars, including YouTube and Sclipo and writing extensively through his blog, Special Reports, articles and other print and E books in the Kyle Phoenix Series on relationships, finance, education, spirituality and culture. He lives in New York with his family.
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