THEATRE PRODUCTION AGREEMENTS
There are several different paths for theatrical production in the U.S. Most Broadway and touring productions, and some Off-Broadway productions, are for-profit ventures, often with a pool of investors. Smaller theatre productions in New York and most theatre productions outside of New York are done by nonprofit theatre companies, which range in size from large regional theatres with year around schedules (such as the Guthrie Theatre in Minneapolis and the Goodman Theatre in Chicago) to small companies that only stage one or two shows a year and that have very limited funding. Privately owned for-profit theatre companies make up a third path. These companies may operate in a single location, or they may put together touring shows that travel in a region or nationwide. Their shows tend to have broad audience appeal; some companies stage new work with a local flavor, while others stick with tried-and-true favorites, such as Tony & Tina’s Wedding.
Regardless of the size of the theatre company or the size of the production, the playwright and the theatre should always have an agreement for the production of the play. Some of the issues that should be addressed in a theatre production agreement are discussed below:
Grant of Production Rights
The theatre will typically want the exclusive right to produce and present the play, at least for the geographic territory in which the theatre is located, and will want to prohibit the playwright from granting production rights to another theatre in that territory for at least 90 - 120 days before and after the theatre’s production. If the theatre is presenting the “world premiere” of the play, it will want assurances that the playwright will not grant rights for any production of the play in any territory prior to the theatre’s production. If the theatre is only capable of staging the play at a certain level (e.g., in a particular metropolitan area or in a house of no more than 200 seats), the playwright should limit the grant of rights to that level, and should reserve rights for all other levels of production.
Deadline for Production
The playwright will want a deadline by which the theatre must produce and present the play. If the theatre fails to open its production by that deadline, it will lose production rights. The theatre will ask that the production deadline automatically be extended if there is any delay caused by events beyond the theatre’s control, but the playwright may want to put a limit on the length of any extension.
Advance
The playwright will usually receive a nonrefundable advance that is at least equal to one week’s estimated royalties. If the theatre stages the play, the advance will be applied against royalties earned, and the theatre will not be obligated to make any additional payments to the playwright until the advance has been earned out. However, the playwright will always get to keep the advance, regardless of whether the theatre stages the play or not, and regardless of how much the play earns.
Royalties
Royalties are usually calculated as a percentage of gross weekly box office receipts (GWBOR), after deducting credit card fees, sales taxes, and fees to ticket sales services, such as Ticketmaster. (Some smaller theatres may calculate and pay royalties only once, at the end of the run. This may be acceptable to the playwright, provided the run is not longer than 4 - 6 weeks, and provided the theatre is financially solvent.) The playwright should make sure that an allocable portion of the theatre’s season ticket subscriptions is included in the gross box office receipts. Royalty rates generally range from 5% - 8%, although rates may be higher or lower, depending on the playwright’s reputation, the demand for the play, the size of the theatre and the theatre’s ability to pay.
Changes and Additions; Staging
The theatre is usually not permitted to make any changes to the text of the play without the consent of the playwright, and the agreement should state that any approved changes become the property of the playwright. The theatre will usually want control over its staging of the play, and all rights in the costumes, scenery and director’s staging will belong to the theatre or the individual contributors rather than to the playwright. However, the playwright may be able to retain a right of approval over the cast, the director and other creative personnel involved in the staging of the play.
Subsidiary Rights
If the theatre is the first theatre to produce the play, it will often ask for a share of the playwright’s net royalties from future productions, in recognition of the theatre’s contribution to the market value of the play. The percentage of royalties awarded to the theatre and the time period during which the theatre’s claim to that percentage remains in effect will depend on the impact which the theatre’s production can reasonably be expected to have on the value of the play. For a small theatre production, the theatre may only be entitled to 2% - 3% of the royalties from any future production which is contracted for within 1 or 2 years after the theatre’s production. For a larger regional theatre production, the theatre may seek 5% or more of future royalties, for 5 or more years after the close of its initial production. The theatre should never receive a share of future royalties unless it has presented at least 21 performances of the play. The Agreement should clearly specify whether the theatre’s claim to a share of subsidiary rights income covers only live production rights, or whether it also extends to any movie, tv, cast album or merchandise deals. The Agreement should also specify whether the theatre’s claim applies only to deals in the United States, or whether it extends to other countries or worldwide.
Representations, Warranties and Indemnification
The theatre will require the playwright to make certain representations with respect to the play. Specifically, the theatre will require the playwright to represent that he or she is the only author of the play, that no portion of the play was copied from any previously existing copyrighted work, that no other theatre currently has the right to produce the play, and that nothing in the play is defamatory or is in violation of any person’s right of privacy. The theatre will also require the playwright to reimburse the theatre for any court judgments or other costs it incurs if any of these representations proves to be untrue. The playwright should require the theatre to indemnify the playwright against any court judgments or other costs which the playwright incurs as a result of the theatre’s staging of the play, to the extent such judgements or costs are attributable to actions of the theatre rather than the playwright.
Billing and Credit
The playwright will always want to be credited in all advertising and publicity for the theatre’s production of the play, and may also want to specify the size and placement of all credits. The theatre will want to make sure that any inadvertent omission of credit will not constitute a breach of the agreement, provided the theatre takes reasonable steps to rectify the problem. Reasonable steps will typically mean providing inserts with the corrected credit, rather than being forced to reprint programs. If the theatre is the first theatre to produce the play, it may ask to be credited as the original producer in programs for subsequent productions of the play, and it may ask that its role as the first producing theatre be acknowledged if the play is ever published.