Stan Lee suing Marvel over movie profits

http://www.cnn.com/2002/SHOWBIZ/11/13/comic.creator.lawsuit.ap/index.html

Apparently, Stan managed a deal to get 10% of all ‘profits’. So far, Marvel says that’s $0.

While it’s easy to root for the little guy who actually created so much cool stuff, he should probably sue his lawyer or hire someone to kick his own ass if he didn’t have one negotiate this contract. Movies with profit sharing never have a ‘profit’.

It reminds me of my 3 days in ‘the industry’ working as a temp at the Samuel Goldwyn Jr headquarters. I was manually adding up receipts for The Care Bears movie so they could calculate a current value to use as collateral. I had to get some stuff out of storage and in nosing around came across a copy of the contract they had with the screenwriter for Mystic Pizza. It had a clause like, “STUDIO may also hire WRITER to direct the film, unless they feel like hiring someone else instead.” I wonder if she had actually gotten excited about the possibility of directing, or managing to get them to agree to that in the contract.

Well, maybe Stan’s contract is pretty old, long before any movie deals were imminent. If it’s recent, Marvel probably didn’t have to offer a thing, though if that was their intention it would be pretty crummy to go through with a contract and hope he dies before figuring out it’s worthless.

The article says he’s still seeking a cut of ‘profits’ on future movies which would indicate he still doesn’t get it.

Yeah, one thing I learned from the new Mario Puzo books is that you always negotiate based on Gross take, not Net :-D I think he’s bitter that he got screwed out of some money maybe?

It is recent (from 1998). I don’t know what Stan’s entitlements were to the properties he created, but the contract was created in connection with the reorganization of Marvel (which allowed him to work for companies other than Marvel). Apparently Marvel was pretty annoyed at the “Stan Lee presents” series he promptly did for DC, so maybe they are being petty.

Even though you can manipulate “profits” substantially, if he actually is entitled to a percentage of profits on a project basis, it’s pretty damn aggressive of Marvel to say there were no profits on a movie that made over $800 million (and unlike the X-men movie, Marvel had a sweet licensing fee arrangement on Spider-man).

Poor Stan - definitely not the greatest business guy.

The article says he’s still seeking a cut of ‘profits’ on future movies which would indicate he still doesn’t get it.

Okay, I will look dumb and ask the important question: how does a movie that made so much money not make a profit? That just seems incredible to me. Is this something all you Hollywood types already know about and you just expect the rest of us nerds to also know?

NO HOLLYWOOD MOVIE EVER MAKES A PROFIT. That’s just the way they keep their books. Very similiar to the movie industry. If people ever acknowledge profits, they have to give more money away.

I guess it is a Hollywood thing, Tim.

Studios spend a lot of money on marketing. The general figure is the cost of the movie spent over again. They can jigger* the books so that a movie’s budget combined with its marketing expenses is more than whatever the movie made. I don’t know how they work this with shareholders and taxes, but it’s standard operating procedure out here.

 -Tom
  • I’m pretty sure this isn’t a racial slur or even a real word, but if I’ve offended anyone of any nationality, I apologize and will enroll myself in the appropriate sensitivity training class.

Basically they add up all the actors salaries, the costs of production, and the cuts of gross the pay out. Lets say for Spiderman that was 200 mill. Then they say…hmm we have to cover another 600 mill here guys. So they throw in marketing - lets call it a cool 250 mill - no one audits this. Ok only 450 to go…Alright how much depreciation can we claim this year, how much is the CEO’s salary, whats the taxes paid on the studio lot in Hollywood where none of the film was produced etc…by the end of the accounting spin they will show Spiderman last half a billion…

Guest misunderstands my point – All that crap is irrelevant, from Marvel’s perspective – it’s not “Marvel’s movie” – all Marvel is entitled to is a royalty from the use of its intellectual property.

It’s essentially impossible to shield a massive royalty payment by not characterizing it as net revenue/profit, unless they’re deducting goofy things like the cost of ink for the past 40 years.

Wow, that’s pretty awesome Tom. I wonder if there is any other industry that does this sort of thing? The last few months I have been interested in how different businesses work, so this is particularly fascinating subject for me right now. This is like the dysfunctional family buisness model. :)

The way studios eliminate individual film profits is by charging “studio overhead” – property costs, lot salaries, security, electricity, generic marketing, you name it – to the successful films. So Spider-Man pays the rent, power, and phone bills for Sony Pictures Studios this year. That way they can avoid showing profits.

In this case, though, Marvel just got a $$$ cut of Spider-Man’s take. And they’re somehow trying to tell Stan that that money is just covering expenses of the licensing. Very disingenuous.

Stan gets $1M a year for allowing them to put “Stan Lee Presents” on the first page of a bunch of comic books. This isn’t really as much about the money as it is about ego. And the money. :)

Can’t find the link right now, but I was also under the impression they have fun little things like the production houses get to stomp on the percentage of profits before anyone else. But at that point it is not called profits but something returns (I forget the word) or something.

So if a movie is made by mucho studios and new line cinema. After hard costs like salaries directly related to the film, materials used etc, mucho studios gets to get their percentage, the new line takes their percentage and then the ad money gets taken out etc - leaving nothing for anyone who is getting a net %. Basically the production companies take a percentage of profits but call it some kind of operating expense. That is why every idiot who has some level of success gets their own production company.

Chet

One of the slang terms for net profit points is “sucker points.” Kind of says it all. There are lots of articles around discussing the methods the studios use to reduce or eliminate net profit, like this one: http://www.hollywoodnetwork.com/Law/Hart/columns/

The most famous case was Art Buchwald suing Paramount over his sucker points in Coming to America. The movie cost $40 million to make, brought in $140 million in revenue, but Paramount said it was unprofitable.

Good example, and Buchwald first had to sue to get any rights for Coming To America - he had given the studio a script he thought was similar, but was not involved whatsoever in the deals producing the movie. He won in court, but was apparently rewarded a percentage of profits, which somehow worked out to $0. I remember reading about some of the film’s claimed expenses - it included Brewster’s Millions type entries for chauffeurs and various personal assistants for actors, directors, and then some.

I wonder if this flavor of “creative accounting” will eventually result in a lot of jail time per the current trend.

I’m usually pretty easy-going but this makes me want to go down to my local gun-shop, walk away with an Uzi, fly to Hollywood, and start rampaging.

uh, huh.