It probably happens in all industries, but when theatre meets the cinema tears usually follow over creative input and more importantly, creative accounting practices. According to a report in yesterday’s New York Times, Martin Richards — who produced the original 1975 stage version of Chicago and for which he sold an option to the movie rights to Miramax in 1994, who subsequently turned it into an Oscar-winning hit — is now suing them for his estimated $10million share in the film’s profits that he claims are owing.
In papers filed at Manhattan’s State Supreme Court, he is charging that he has been cheated by the system of contingency payments that are made to a movie’s participants that gives the studios an incentive to under-report revenues. Under this system, it is alleged that “the worse a movie performs financially, the better off the studio is.” And Richards claimed in an interview after the suit was filed, “I hve never seen a nickel of the profits” — for a film which generated gross receipts of about $300 million, including $170 million during its initial domestic release and many more millions from DVD, video and foreign distribution.
In the complicated ways the accounting is structured, there are two types of deal on the contingency accounts: some participants are awarded ‘gross deals’, based on the gross receipts for the film, but others receive ‘net profit deals’ in which it is alleged, “the studios typically decrease revenue and increase costs and expenses attributed to the movie.” Actor Eddie Murphy is quoted in the suit as saying that these net deals are “monkey points” — “only a monkey would expect them to actually result in any payment to the talent.”
Also cited in the suit is one Louise Ciccone — aka Madonna — as witness to the signatures on the deal between Richards and Miramax.
But signature or not, the wake-up call of this story is that even when vast sums of money are made, those that hold the books and information therein also hold the ace card on future distributions from them. No wonder investors are wary of putting their money into theatrical endeavours: the first people to put their money in, they are invariably the last to get their money back out again.
