Advances to Talent

Agreements for the services of talent, such as actors, directors, producers, writers and so forth, frequently provide that the talent is entitled to a combination of fixed compensation in the year the services are rendered plus contingent compensation, if earned out, typically in later years. The contingent compensation is usually payable on the occurrence of one or more events, perhaps the film achieving certain levels of box office receipts, the studio reaching certain financial targets or other specified occurrences. The structure of the contingent payments vary widely, and might be styled as a fixed amount, a percentage of net profits or adjusted gross, or otherwise.