The Waterfall
They normally look something like this...
- 1.Buyer License fee/MG
- 2.Distributors fees/wire transfer fees.
- 3.Sales Agents Commission (20-35%)
- 4.Sales Agent’s Recoupable Expenses (up to cap)
- 5.Producer’s Representative Fees (If applicable, 5-15%)
- 6.Production Company fees
- 1.Debt
- 2.Equity Investor Investor (Until recoupment+10-20%, then 50% of future profits)
- 3.Crew Deferments
- 4.Producer share
- 1.Individual Sales (Total)
- 2.Buyer’s Commission (20-30%)
- 3.Distributors fees/wire transfer fees.
- 4.Sales Agents Commission (20-35%)
- 5.Sales Agent’s Recoupable Expenses (up to cap)
- 6.Producer’s Representative Fees (If applicable, 5-15%)
- 7.Production Company fees
- 1.Debt
- 2.Investor (Until recoupment+10-20%, then 50% of future profits)
- 3.Crew Deferments
- 4.Producer share
Technically speaking, this "waterfall" refers to the order of repayment of investments in a film financing arrangement.
The waterfall outlines when an investor is set to receive his/her return on their investment(ROI). Typically a film in theatrical release will incur costs concurrent with the release( Prints and Advertising) which must be added to the cost of production to determine the cost of the film for revenue distribution purposes.
Let us assume the ticket cost is one dollar. From that dollar, a portion is retained by the film exhibitor. The exhibitor pays a higher rental fee the earlier to the release date the film is exhibited. Typically that is about 66% of the ticket price. The distributor also earns approximately 35% as its fee for distribution and adds to that number amounts it advanced the producer( such as print and advertising, loans for production, etc) From whatever money is left of the one dollar. That amount needs to be accounted to the film's investors. Typically that investor receives between 110% and 120% of their investment and thereafter the producer and they share the profits of the films revenue stream 50/50.