guarantee

In filmmaking, a guarantee is a term of an actor or director's contract that guarantees remuneration if –through no fault of their own– the artist is released from the contract. Such an arrangement is known informally as a “play-or-pay” contract.

Many stars insist on guarantees in their contract due to the major time commitment agreeing to appear in a film can mean. For example, Kurt Russell's decision to appear in the film Soldier –for which he was paid $15 million– was a total commitment of 18 months, during which he was not able to appear in another film. If the film were cancelled, or if he were replaced (but not if he withdrew of his own accord), Russell would be paid $15 million, or a large part of that fee, to compensate him for clearing his schedule.

Studios are reluctant to agree to guarantees but accept them as part of the deal for signing major talent. It has the advantage of enabling a studio to simply remove a player under such a contract with few legal complications.

Examples of “Play-or-Pay”

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• Director Guy Hamilton originally agreed to direct Superman when it was due to film at Cinecittà Studios in Rome, Italy. When the producers realized that they could save millions by filming in Britain, Hamilton –a tax exile who lives in the Caribbean– had to withdraw. He insisted he was paid his $1 million fee in full.

• Director Brian De Palma had originally wanted his Greetings star Robert DeNiro to play Al Capone in his film The Untouchables. When DeNiro turned him down, De Palma cast British actor Bob Hoskins. However, De Palma and producer Art Linson were determined to get DeNiro, and when he agreed after all, Hoskins was released from his contract. Later, Hoskins received a cheque through the mail for $200,000. He rang De Palma up and asked if he had “any other films you don't want me to appear in”.

• In 1991, celebrity couple Julia Roberts and Kiefer Sutherland were supposed to appear together in a Western called Renegades. When Roberts called off their engagement, Sutherland was paid $3 million to leave the project. For a while, producers kept Roberts on the project as they tried to pair her up with Mel Gibson.

• Arnold Schwarzenegger agreed to appear in a mega-budget historical adventure called Crusades for Mario Kassar's company Carolco Pictures. When the projected budget went past $200 million, financing collapsed, despite pre-production expenditure of $20 million. Instead of collecting his “play-or-pay” $15 million, Schwarzenegger asked for all rights to the script in the hope that one day he could get it made.

• Another example of a star turning down his guarantee was on Oliver Stone's proposed Manuel Noriega biopic. When the project collapsed, star Al Pacino decided not to increase Stone's misery and asked for no money.

• One such example is Billy Dee Williams's contract when he agreed to play Harvey Dent in the film Batman. Williams hoped that this contract would help guarantee a starring role in a sequel to the film when his character became the villain, Two-Face. However, when Tim Burton declined to direct Batman Forever, the new director, Joel Schumacher, decided to pay Williams' penalty fee to cast Tommy Lee Jones instead.

Similar clauses outside of filmmaking

Additionally, elements of guarantee clauses can be found in other industries, under different names. In the sports world, standard player/coach contracts are guaranteed for the life of the deal, regardless of whether the player or coach actually works for the full duration; hence the name for such contracts being guaranteed contracts. In another example, if a baseball player is signed to a 5-year, $30 million deal but is cut by his team after year 3, the team will still owe the player the balance of the $12 million due, regardless of whether the player is performing services for that team or another team. For example, in 1996, when Kirby Puckett suffered a career-ending glaucoma in his right eye, he was only two years into a five-year, $15 million contract; he was then paid for the subsequent three years. The balance owed can be mitigated if the player signs with another team, with the amount paid by the new team subtracted from the balance owed by the cutting team. A notable exception to this rule is in the NFL, where only the bonuses outlined in player contracts are guaranteed. NFL players are not guaranteed the salaries outlined in their contracts; they are only paid the salaries outlined while they are actually still employed by their team.

In the business world, high-level executives are often guaranteed to receive their salary for a specified period of time outlined in their contract, regardless of whether the company continues to employ them or not; a so-called golden parachute. Similar clauses are often negotiated during mergers and acquisitions to protect the management team that is being merged or acquired into the new company.

Criticism

Contract terms like these are often seen as elitist. With other workers in the industries concerned (often entertainment, but any large business) who hold positions lower down in the organisation, not getting the same rights of remuneration cover for loss of employment beyond their control; being paid only for work actually completed. Increasingly, the additional costs associated with such terms is often seen as unsustainable, with fewer organisations willing to accept them. Furthermore, when they often come to light when reported in the press, when associated with bad company performance, they have been the cause of much public derision for their unfairness.

References

• Navigating The "Pay Or Play" Minefield, The Business Of Film October - November 1997.