04.02.09

Haggling with the Stars

Julia Roberts is getting $15 million to make Eat, Pray, Love, but Scarlett Johansson was only offered $250,000 for Iron Man 2. Kim Masters on the tactics Hollywood is using to  slash salaries.

You’re Scarlett Johansson. You’re pretty and you’re pretty famous, too. And you’ve just been offered the part of the Black Widow in Iron Man 2! That’s got to be some payday, right?

How about $250,000, which is what Marvel Studios offered Johansson and Mickey Rourke to be in the film?

The stars negotiated the number up to something over $400,000. Still, it’s not hard to imagine that even a year ago Johansson could have expected to break seven figures for a role in a big franchise film. It’s a pretty thrifty deal for such a recognizable name.

If an actor balks at the deal, the studios say they will move to another choice immediately. “They’re not fucking around,” says the talent representative. “They know exactly who that next person is. Sometimes they’ll tell you.”

But salaries are being slashed now in Hollywood and even bigger stars are not immune. “Why would anybody pay Julia Roberts $20 million to do Duplicity?” says one producer. “That won’t happen again.” Indeed, this source says Sony Pictures is ponying up $15 million for Roberts to do Eat, Pray, Love and probably already regrets having committed to pay that much.

What the revolution in technology had started, the economy has hurried right along. After years of impotent promises to choke off rich deals with talent, the studios are finally making it happen. They’re hammering on star salaries and perks like private jets, too. “They’ve wanted to go in this direction for a long time and the global financial crisis has given them the lever to do it,” says one veteran talent representative. These changes may cheer up ordinary citizens who can’t understand why a star ever got millions to be in a movie in the first place. But the fact that the studios are finally laying down the law also illustrates the strains they are under as they try to crank out expensive popular entertainment when the model is collapsing. Stars in the middle range—famous names but something well short of, say, Will Smith--are facing the toughest battles. “The studios are going out to actors who have been $10 million players and saying, `Here’s $5 million.’ Here’s two and a half,” says a top agent. “It’s like there are no rules.” If an actor balks at the deal, the studios say they will move to another choice immediately. “They’re not fucking around,” says the talent representative. “They know exactly who that next person is. Sometimes they’ll tell you.”

That clearly seems to have been the case with Johansson and Rourke, says an agent who doesn’t represent either actor. “On certain movies, they feel like whoever they put in a part is fine. Once they lock down Robert Downey, Jr., on Iron Man 2, everything else is fine. I don’t think they give a shit if it’s Mickey Rourke or Scarlett Johansson.”

Tim Connors, COO of Marvel Studios, doesn’t put it exactly that way. "We don't like to be portrayed as being disrespectful to talent, notwithstanding the fact that we are very budget-conscious and can't always meet an actor's initial asking price,” he says. “We say, `We wouldn't normally ask an actor at this level to do this but we'd be thrilled to have them." (And if they say yes, they can not only buff up their images but also look forward to possible future roles in films featuring their characters.)

For really big stars, it isn’t about a reduced salary. For decades, the ultimate status symbol in Hollywood has not been a fast car or a Birkin bag but “dollar-one gross.” That means getting a share of the studio’s gross receipts regardless of whether the studio has earned back its costs. The studios struggled to hold the line on the amount of pure, uncut gross that big-name stars, directors, and producers could reap. (The notorious peak came in 2000, when Universal had more than 30 percent of the profit committed to Jim Carrey, Ron Howard, and others on How the Grinch Stole Christmas. The film grossed more than $340 million worldwide and still wasn’t considered a success.)

The studios seem determined to all but kill off these rich deals, especially on big-budget films (where the risk to the studio is highest). “If a budget is over $100 million, they don’t want to give dollar-one gross to anybody,” says a leading agent. Now, studios insist on recovering their costs before stars dig into the profits. If a star has clout, the studios might offer a bigger-than-usual slice of profit or big bonuses if the film turns out to be a hit. With those, a star could make even more money under the new system than he would have under his old, dollar-one gross deal. (Baiting the hook this way doesn't appeal to the thrifty folks at Marvel, however. Marvel wouldn't give up a lot of profit on a hit movie just to reduce its risk if a movie disappoints. Connors says it in COO-speak: "Giving away a huge amount of upside to protect a downside—that's a strategy that doesn't make sense for us.")

The concept of delaying the talent's payout until the studio recoups is not new. The Pirates of the Caribbean sequels were so expensive that they were made—simultaneously—on this basis and everyone came out ahead. And Clint Eastwood has long made his movies this way, which could be one reason why he controls his budgets with so much discipline. (The cheaper the movie, the sooner the studio gets its money back and the sooner his payday begins.) Insiders say Eastwood raked in the biggest payday of his career on Gran Torino because he got 30 percent of gross once the studio recouped its costs.

But now Hollywood is trying to make this new kind of arrangement the standard. It obviously carries risks to the talent if a movie winds up losing money, and as much as agents and other talent representatives want to insulate their clients from risk, they admit they don’t have much leverage at this point. “There’s no end to the bullshit the studios will play and if you call ‘em on it, there’s no conversation to be had,” the talent representative says. “They don’t deny that they’re doing it. They have the upper hand. The only question is, how long will it continue?”

Kim Masters is the host of The Business, public radio's weekly show about the business of show business. She is also the author of The Keys to the Kingdom: The Rise of Michael Eisner and the Fall of Everybody Else.