Avoid Gambling Away Profit Points In Your Movie Like Casino Chips Or You Will Go Bust

I think there is a gambling streak in indie filmmakers and movie producers. Not even close to a streak like in one of my favorite gambling movies made – The Gambler (1974). Making movies is not exactly the safest bet, but the action is a rush, and payoffs can be in the millions. Not to mention making one hit indie movie can lead to studio deals where the sky is the limit. Like with professional gamblers, you have to play smart and not take avoidable risks.

I’ve read a few articles and books that have suggested one way to save money on an indie budget is to offer actors and crew members “points” (percent of movie profits) instead of giving them a paycheck, or the preferred form in the indie scene – cold hard cash. They sacrifice being paid upfront for a potential share of any profits the movie makes. On the surface this sounds appealing because hard money doesn’t have to be raised and spent to hire people.

Below the surface there are issues that make giving out points to actors and crew problematic. For many aspiring filmmakers “points” won’t feel like real money they’re dealing with.

It’s similar to people gambling with casino chips. When they’re playing with casino chips it doesn’t feel like real money, even though casino chips do represent real dollar amounts. Casino chips only become real to many people when it’s time cash them in for real money or they have to spend real money to get more.

This same attitude can be seen when giving out “points”. A person can think, “I’m making a movie now (gambling). I’ll worry about cashing out “points” (casino chips) later.

A filmmaker that’s financially shortsighted is more open to offer “points” like Halloween candy to actors and crew. When it does come time to cash in those “points” a filmmaker realizes they’ve shot themselves in the foot if their indie film is successful. Between “points” paid out to actors, crew and film investors (who always get points), they’ll be lucky to earn anything off their own creative talents and sweat equity.

What if you do end up with a hit indie movie on your hands? It nets (money the filmmaker actually receives) one million dollars in profits through some of these potential outlets.

• Theatrical Release
• Domestic DVD and Video Sales
• Sale of Foreign Distribution Rights
• VOD (video on demand) Sales
• Cable/Satellite Television Rights
• Internet Outlets

Just to illustrate the point, here is a clear-cut example. Say there is an actor or crewmember that normally might have been paid $1,000 for their work cashes in their “points.” Even one single point would be worth $10,000. Imagine repeating giving away that much of your movie’s profits on “points” given out.

A filmmaker could be in a position where the only way to get their movie done is to offer “points” to actors or crew, but be judicious when deciding how many “points” to hand out to an actor or key crewmember. Always leave meat on the bone so you can eat too.

Film investors that put up money to make a movie always receive “points.” That’s how a movie investor sees a return on their money, like in another financial investment. Enough “points” will belong to investors that put up money to produce a film without including actor and crew “points” you have to pay out too.

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