Percentage shares of a film's profits negotiated as part of compensation agreements – typically given to talent, directors, and producers as incentive compensation, calculated either from gross receipts (more valuable) or net profits (after deductions), with each point representing one percent.
What are Points?
Points are percentages of a film's profits negotiated as part of compensation. One point equals one percent, with the calculation basis (Gross vs. Net) massively influencing the actual value.
Basic Principle
| Aspect | Description |
|---|---|
| Definition | 1 Point = 1% |
| Basis | Gross or Net |
| Recipient | Talent, Producers |
| Purpose | Incentive Compensation |
Types of Points
| Type | Description |
|---|---|
| Gross Points | From Gross Revenue |
| Net Points | From Net Profit |
| Adjusted Gross | Hybrid Model |
| First Dollar Gross | From the First Dollar |
Gross vs. Net Points
| Aspect | Gross | Net |
|---|---|---|
| Value | Higher | Often Low |
| Availability | Stars, A-List | More Frequent |
| Risk | Lower | Hollywood Accounting |
| Slang | "Real Money" | "Monkey Points" |
First Dollar Gross
| Aspect | Description |
|---|---|
| Definition | From the First Dollar of Revenue |
| No Deductions | Before Costs |
| Rare | Only for Top Stars |
| Valuable | Guaranteed Payment |
Adjusted Gross Points
| Deductions | Description |
|---|---|
| Distribution Fee | Deducted |
| P&A | Deducted |
| Production Cost | Mostly Not |
| Definition | Negotiated |
Net Points – The Problem
| Aspect | Description |
|---|---|
| Deductions | All Costs |
| Interest | Financing Costs |
| Overhead | Studio Overhead |
| Result | Often No "Profit" |
Hollywood Accounting
| Practice | Description |
|---|---|
| Definition | Creative Bookkeeping |
| Effect | Films Show No Profit |
| Examples | Forrest Gump, Harry Potter |
| Criticism | Widespread |
Who Gets Points?
| Role | Typical |
|---|---|
| A-List Stars | Gross Points |
| Star Director | Gross or Adjusted |
| Producer | Net or Adjusted |
| Writer | Rarely, Mostly Net |
Typical Deals
| Star Level | Points |
|---|---|
| A-List | 5-10% Gross |
| Major Star | 3-5% Gross |
| Emerging | 1-2% Adjusted |
| Standard | Net Points |
Break-Even Calculation
| Element | Example |
|---|---|
| Negative Cost | Budget |
| + P&A | Marketing |
| + Interest | Financing |
| + Overhead | Studio Costs |
| = Break-Even | Often 2.5x Budget |
Example Calculation
| Film Revenue | $200M |
|---|---|
| Budget | $50M |
| + P&A | $40M |
| + Overhead (15%) | $7.5M |
| + Interest | $5M |
| Break-Even | $102.5M |
| Net Profit | $97.5M |
| 5 Net Points | $4.875M |
Pools
| Pool Type | Description |
|---|---|
| Bonus Pool | Fixed Sum Upon Success |
| Profit Pool | Shared Percentage |
| Participation Pool | For All Participants |
| Deferral Pool | Deferred Payments |
Negotiation Tactics
| Strategy | Description |
|---|---|
| Check Definition | What exactly are "Profits"? |
| Audit Rights | Ability to Inspect Books |
| Floor | Minimum Participation |
| Cap | Maximum Participation |
Audit Rights
| Aspect | Description |
|---|---|
| Right | To Inspect Books |
| Frequency | Annually Typical |
| Cost | Borne by the Auditing Party |
| Outcome | Often Additional Payments |
Contractual Aspects
| Element | Importance |
|---|---|
| Definition | Critical |
| Calculation Basis | Precisely Defined |
| Reporting | Frequency |
| Audit | Secure Rights |
Historical Examples
| Film | Notable Deal |
|---|---|
| Star Wars | Lucas Retained Merchandising |
| Forrest Gump | Net Points = $0 |
| Spider-Man | Maguire's Gross Points |
| The Matrix | Keanu's Backend Deal |
Best Practices
| Practice | Reason |
|---|---|
| Hire a Lawyer | Complex Contracts |
| Prefer Gross | Secure Value |
| Check Definitions | No Surprises |
| Audit Rights | Control |
Today
Points remain an important element of Hollywood compensation, especially for top talent. The streaming era has brought new challenges, as traditional box-office models are no longer applicable. Transparency in streaming numbers and new deal structures are continuously evolving, while Net Points continue to be viewed with skepticism.