Behind the Scenes w/ David Brown - My agent said to take a $500,000 loss.

May 8

Behind the Scenes: The $500,000 Advice I'm Glad I Ignored

Ever wonder what really goes on behind the scenes in Hollywood? I'm David Brown, a film producer and entrepreneur, and I'm here to share some stories from my career – the good, the bad, and the unbelievable. In this first installment, I'm going to tell you about the time my agent advised me to take a $500,000 loss. Yes, you read that right.

The High-Roller World of Agency Retainers

Talent agencies. You know, the big three. They represent actors, writers, and directors, and they help them get work. Usually, these agencies get paid through commissions. So, when an actor gets hired, the agency takes about 10% of their salary. But what happens when you're a producer?

As a producer or financier, you're the one hiring the talent and paying the salaries. So there's no commission for the agency to take. That's where retainer agreements come in. These agreements are how agencies make money from producers like me.

What's a Retainer Agreement?

Think of it as a monthly membership fee. You pay the agency a set amount each month, typically between $10,000 and $20,000, to access their resources. The idea is that they'll help you package your scripts with the right actors and directors. They'll also give you feedback and help you sell your film to a studio. The retainer fee can be applied against future commissions from film sales, which are usually 3-5%.

Sounds great, right? You'd think you'd be getting first dibs on all the best scripts. Well, not exactly.

Not Always First Dibs

Here's the catch: when you're paying a hefty retainer, you expect to see the best projects first. But in reality, big production companies owned by A-list actors and directors often get those scripts for free. Companies like Brad Pitt's Plan B. They have first-look deals and get to cherry-pick the best projects before anyone else. As a retainer client, you're often seeing scripts after everyone else has already passed on them. It can be frustrating.

Do I blame the agents? Not really. They're commission-based, so they need to get movies made for their clients. But it highlights a potential conflict of interest.

The $5 Million Budget Dilemma: A Deal Gone Wrong

Let's get into the story about that $500,000 loss. It started with a film project from a writer/director with several successful indie films under their belt. This was back in late 2020. While the director was respected, they weren't a huge box office draw.

My Financing Model

My usual approach to financing movies goes something like this:

Attach a director and actors.
Pre-sell the North American rights to a distributor for a Minimum Guarantee (MG). You can read more about film financing terms like "Minimum Guarantee" here.
Pre-sell the international rights to other distributors.
Utilize tax credits from states like Georgia or New Mexico to increase the budget. FML Lending LLC has more information on film tax credits.

Easy, right?

The Studio Offer

In this case, the agency had sold the film to a studio. The studio offered a $4.5 million MG upon delivery of the finished film. Not bad. However, there was a catch. The contract stated that the film's budget had to be at least $5 million.

Could we do it? Absolutely. Even though the studio was taking worldwide rights for $4.5 million, we could still hit the $5 million budget with tax credits. States like Georgia offer a 30% tax credit on qualified spending. Savannah, Georgia, even offers nearly 40% with the added incentives. With tax credits, we could have easily had a $5.5 to $6 million movie.

The Director's Stance

Here's where things got tricky. The director refused to shoot the film outside of Los Angeles. I get it. Nobody wants to leave home. But the studio wouldn't budge on the $5 million budget requirement without the tax credits.

Making a $4.5 to $5 million movie in Los Angeles without tax credits is tough. We were already short.

The Missing Buffer

Typically, if it wasn't an all-rights deal, I would have pre-sold territories like Germany or Russia for a few hundred thousand dollars. That would have given us the buffer we needed to hit the $5 million budget. But because the studio had all media, all rights worldwide, we couldn't do that.

The Fatal Advice and Walking Away

That's when the agency gave me the advice that made me walk away.

The Agent's Recommendation

"David, you need this film on your resume. Just take the hit."

Let's break that down. They wanted me to cover the $500,000 budget shortfall myself. I would put up my own money, knowing I'd only get $4.5 million back from the studio.

So, they were telling me to pay $500,000 for a credit on IMDb. And for a director who wasn't exactly a box office magnet. It didn't make any sense.

The Real Motivation

It became clear that the agency was prioritizing their relationship with the director over my interests. The director was a bigger client, and they cared more about making money from that client than helping me succeed.

Talk about a conflict of interest!

Walking Away

I refused to take the financial loss. I walked away from the deal and terminated my agreement with the agency. I'm not paying someone $20,000 a month for advice that will cost me half a million dollars.

Can you believe an agency would tell you to lose money for a credit? Absolutely not!

The Lesson

The lesson here is simple: trust your gut. Don't blindly follow advice, especially when your own money is on the line.

The Aftermath: A $31,000 Box Office Bomb

Here's the kicker: the movie came out and made a grand total of $31,000 at the box office.

That's right, $31,000.