ASK & DISCUSS INDEX

11 years, 8 months ago - Dan Selakovich

After spewing all this out, I did a little search on SAG and found this interesting article. It mentions the "lien" and SAG having that power on the life of the film (your copyright).

http://www.breitbart.com/Big-Hollywood/2009/10/29/Bullying-Screen-Actors-Guild-Does-More-Harm-Than-Good

11 years, 8 months ago - Paddy Robinson-Griffin

Dan, this ULB contract makes such a strong argument for non-union filming! How can any body claiming to represent the interests of the talent feel the only way to do so is by killing off the upcoming producers?

Nena, forget that, come and shoot in Blighty. People will negotiate rates. I'll even throw in a tax credit if we co-pro. Bring your actress by all means if you cast the rest locally you'll still come out ahead, and your actress and coproducer will work under a fair (as in fair both ways) non-union deal!

11 years, 8 months ago - Dan Selakovich

Hi again, Nena. I thought I'd let others chime in, but no takers? With any SAG agreement, if you sell to a distributor, in your contract make sure that they take over the residuals. It's called a "distributor's assumption agreement" (or something like that. It's been awhile and my brain doesn't work like it used to). If they won't, you're really, really screwed. If you sell to a major, there won't be much of a problem. If you sell to a small distributor, they will try to get out of assuming the signatory. I promise you that. DO NOT sign any deal that leaves you the signatory. Period.

SAG works on gross. NOT how much a producer (the sag signatory) collects from the distributor in France or Turkey, (or wherever).

Let's say you've sold your film to some savvy distributor that sells the thing all over Europe to TV, cable, DVD, etc., and it makes $2,000,000 gross. SAG sees those grosses, and they'll want their 4.5 percent of gross. They look to see who the signatory is. It's you. You now owe SAG 90,000 dollars. They won't care that the distributor screwed you and didn't pay you a dime. Or that you sold the film outright for 50,000 dollars. YOU are the signatory, and they want that money. And if SAG doesn't know the grosses, they'll estimate them, and you pay on that estimate.

Now, what may be good news: I haven't gone through the contract with a fine tooth comb since the ULB was first in existence. Maybe there have been some changes (but I doubt it) that are kinder to ULB producers. Ask SAG about this. Possibly they've changed things that let the producer pay on his/her gross. But I can't imagine that's the case. Make sure you read the entire agreement, not just some vague description of the contract on their website. That means the ULB and the standard contract. You are signing both.

Look, I know you're reading this contract and thinking "well, that can't be right. If I make any money at all, I could be in the hole." Yes, it's right. You can be easily screwed. It's that darned "gross" clause.

Let me tell you a little story: years ago, I was working on this bad, small, picture (long before there was a ULB agreement). I met this really good guy there that was the producer's assistant. He really wanted to produce movies. He was young, I thought smart, and had a amazing desire to produce. One day, the producer/company president came to him and said, "I know how much you want to be a producer. You can be a credited producer on this film. All you have to do is sign here." So this guy signed. In the contract, deep inside the contract in some legal-eeze, was a clause that made him the producer of record, and the sag signatory. He had no idea. He should have gotten a lawyer to read the contract, but didn't. Some months later, he got a letter from SAG informing him that they were suing him for 120,000 dollars for unpaid residuals. There was nothing he could do. He was going to lose. He fled the country, last I heard.

I can't believe how many young filmmakers sign this contract without knowing, or believing the ramifications. They think that just because they're small that they are invisible to SAG. They are not.

Talk to SAG with any questions. They are pretty straight forward, depending on who you talk to. I've had a few that talk in circles to make their position seem like it's no big deal, and it's hard to pin them down. Once you have all the answers from SAG, talk to a lawyer.

11 years, 8 months ago - Daniel Cormack

Good grief! What an appalling deal. So a film makes $200,000 GROSS at the box office, but the distributor has already paid out that amount in P&A. Before they can even think about getting a fee or recouping their overheads, they have to pay out $9,000 of money they haven't even made. And if the producer is on the line for this instead of the distributor they are in an even less favourable position in the waterfall of recoupment!

I'm surprised any independent films are made at all in the States, let alone distributed! That said, I'd argue that an independent film is necessarily also independent of union agreements.

I have no doubt that Equity and BECTU would be licking their lips with glee if their were even the faintest hope they could enforce similar agreements. They wouldn't cry any tears over losing most of the ultra-low budget films in the UK and the entrepreneurial culture among new filmmakers which creates them as they're already on record as being against these sorts of films.

11 years, 8 months ago - Dan Selakovich

Paddy and Daniel; it can all be fine as long as the distributor takes over the residuals, but smaller distributors will try to burn you at every turn on that.

The big problem is that they simply modified the standard agreement for the ULB agreement. I can see SAGs issues with the studios. Given their "accounting" methods, a film can make 300 million profit, but studios claim they are still in the red. So SAG said, fuck that. We'll take residuals based on gross. A completely understandable position. There's a lot wrong with SAG from the actors POV AND the producer's POV. They do not understand this new paradigm. They are used to television and big feature film production. And for those things the contract largely works. It's the same with the WGA. Most of the members are writers for TV shows. And for them, the WGA contract works well. It doesn't work well for feature film writers.

Daniel, you're exactly right. Even if you're distributing the film yourself, and pour a shit load into P and A, that isn't taken into consideration. You still have to pay based on gross. BUT the good thing is that you don't have to pay residuals on "initial exploitation." Meaning if you show it in a theater, you're ok. If you sell your film to HBO, on the other hand, you pay from dollar one. Anything that is NOT a theater. Each download, each DVD sale, etc., residuals kick in.

I did a lot of work for a distributor back in the day called International Releasing Corporation. The guy that ran it had an excellent reputation for honoring the distribution contract (IRC closed when Sandy retired). Think about that a second; he honored the deal you made. What that means is that distributors are notorious for NOT honoring the deal you made. Everybody I know that produced a feature has a distributor horror story. Especially if you're a "one off." You don't have a production slate of 3 films a year, but you've managed to make one film. Distributors know that. They'll screw you, and say, "Yes, we screwed you. So sue us." They know you don't have the money to sue them, so they have no incentive to act honorably. And that is why SAG is so ruthless. A distributor may assume residuals, but getting them to pay is another story. SAG makes no distinction between Nena and a distributor that's screwed them before.

But knowing why SAG acts they way they do doesn't make it any easier on us little people.

I have no issue at all paying residuals. It's an important part of making a living as an actor or writer. But there are things in ULB agreement that make it difficult for no budget people. For example, the 100 bucks a day is for an 8 hour day. If you shoot 12, you have to pay overtime. That's 175 bucks for that 4 hours. Over 12 it goes into golden overtime. Expensive. It's better to go with, I think, the SAG Modified Low Budget agreement. Its daily rate is higher ($268), BUT it allows you to pay a flat rate without overtime. For example, if an actor works for 10 days, you can pay them a flat rate of 2,680. (I'm doing this from memory, so the rates may be off or higher now). You can also get better or at least more experienced actors with the modified agreement. Agents tend to shy away from the ULB agreement.

OK, I WANT AN "OUT" FOR THE STATEMENTS BELOW. I READ THE ULB IN 2005. I'm going by memory and my impressions of the contract at that time, so don't take my statements as an absolute. Talk to a lawyer!

Some other pitfalls of the ULB agreement:

An actor can leave your project for a better paying one. Yikes!

You have to pay an additional 15 percent above the salary to SAG for pension and healthcare.

Like all businesses in the U.S., there are withholdings like social security. Nothing to do with SAG, but young filmmakers don't think of things like this. Best to hire a payroll company.

If you're showing on the web, there's a 3.6 percent licensing fee payable to SAG.

You really should have one person in charge on your film that deals with all of the WEEKLY requirements of SAG (hours worked, taxes, etc.). That mean no hiring a film student as your 2nd AD.

Before production, you must supply SAG with a cast list. If this list is late, you will be fined.

Now here is a scary one:

Security Interest First. Now what the hell is that? As SAG puts it (I pulled this from a '05 copy. May or may not be still valid):

"The Guild, at its sole discretion, may require producer to execute documents necessary to grant the Guild a first position Security Interest in the Picture and related rights to protect professional performers and the Guild against any default in the performance of obligations under this Agreement. Producer shall provide the Guild with all chain of title documents relating to the Picture."

OK, what all that bullshit means is SAG gets first money. Before the investors. Before you, the writer/director/producer. It also gives them right to seizure. You know, like if you stop paying your car loan, they come and take your car. In other words, they have a lien on your film, because the contract allows them to take a "security deposit." In other words, on your 200,000 dollar picture, they may require you to pay 100,000 up front to insure against future earnings of the film. It may be 10,000 dollars. Who knows. The amount isn't based on your budget. It's based on whatever they hell they want it to be. (To be clear, this isn't the Bond Deposit you must pay SAG. That is 40 percent, I think, of estimated payroll that is refundable after principle photography). Let's say that SAG asks for no money up front to cover future earnings, which is often the case under the ULB agreement. They will just put some amount into the ULB contract. It can be anything. It can be 400K if they want. OK, here's where it gets weird: SAG considers this debt. As in loaning you money type of debt. It's based on future possible earnings. (Which means ANY deal with a distributor better include taking that lien off your back. There are a lot of filmmakers out there that take a bad deal just to get out from under SAG).

If SAG has a lien on your film, they have a lot of power on how you can distribute your film, right? If you're a go it alone type, as Nena is considering, I'd be very careful. It is legally within their power to seize your film if you find yourself in a financial bind to SAGs "loan" (you know, the "debt" of future possible earnings because they graciously didn't ask for cash up front) if the website you're distributing from doesn't make a whole lot of cash.

There are a lot of hidden costs in the SAG agreement, all under legal jargon that's hard to understand. These are just a few scary ones.

The best advice I can give Nena is to read and fully understand the SAG BASIC agreement AND the ULB agreement. Go through it, and have SAG explain anything you don't understand. Then take what you've learned to a lawyer to make sure they are telling you the whole truth. Sadly, you can very easily find yourself in an "upside down mortgage" to SAG on money they "lent" you.

Surely there's some lawyer out there that wrote a book that breaks the SAG contracts down in plain English.