Protecting Your Dreams

How a Lawyer Beat Darth Vader

Added on by Gamal Hennessy.

By Gamal Hennessy

Star Wars is one of the most well-known franchises in modern entertainment. Return of the Jedi holds a special place in the mythology of the Jedi saga. But the film that gave us Darth Vader’s last moment of redemption is also the film that continues to disappoint at least one actor.

Several news sites reported on a recent interview with David Prowse, the actor inside the Darth Vader suit for Return. According to letters received from Lucasfilm to Mr. Prowse, Return of the Jedi has never made enough money to trigger a net royalty payment for his performance. In spite of the film making more than five hundred and seventy million dollars in the box office since its initial release over thirty years ago, Mr. Prowse, and actors like him, are not in a position to get paid beyond their initial salary for the project.

Gross vs Net

While the story is notable for the popularity of the character and the prestige of the film, the elements of it are fairly common in contracts of all types, not just entertainment related ones. The difference between gross and net in the calculation of revenues can be the difference between being paid indefinitely and not being paid at all.

A while back, I wrote a piece about the difference between gross and net payments in creative contracts (See Your Slice of the Pie: Part 1). I explained Gross revenue or gross profits as the pure income that a product or service generates while Net revenue or net profits is the income that a product or service generates minus certain expenses. Taking a very simple example, if you acted in a film and were promised a cut of the gross revenue, you’d get paid based on how much money the movie made. If you agree to take a cut of the net revenue, you get paid based on how much is left after all the expenses for the film are paid. If the expenses of the film are never paid off, then you never get any royalty, even if you are the most dread Sith in the galaxy.

Hollywood Accounting

The film industry is often blamed for manipulating accounting methods to avoid paying artists. The term “Hollywood accounting” refers to concepts like using net profits instead of gross to pay creatives and then extending expenses out forever to ensure a film never gets to a stage where royalties need to be paid. Hollywood might use these tactics in the most spectacular ways, but they are by no means the only entertainment industry with this practice. In fact, it is not just the entertainment industry. Any type of contract where payments are based on future earnings can be manipulated by the gross vs. net concept.

Eyes Wide Shut

People may mock actors like Mr. Prowse who agree to net profits, but these deals have to be considered in context to be understood. In many cases, a creative person is so eager to cash in on his big break that they agree to bad terms just to get the deal done (See You Signed the Contract, but Do You Know What It Says?). In other instances, an artist often doesn’t have the negotiating power to push for the best terms. (See David and Goliath in Contract Negotiations) Sometimes, an artist doesn’t have any legal advice when signing a contract. This often leads to situations far worse than Mr. Prowse (See Why Artists Need Lawyers)

One word or concept can make a world of difference to a contract. If you’re not trained to find it, not even The Force will be able to help you.

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Have fun.

Gamal