How do you determine the appropriate revenue split for a co-production?

1 Define the co-producers

The first step to determine the revenue split is to identify who are the co-producers and what are their roles and responsibilities in the co-production. Co-producers are typically organizations or individuals who share the artistic vision, financial risk, and decision-making authority of the show. They may also contribute to the development, marketing, and management of the show. Depending on the size and scope of the co-production, there may be two or more co-producers involved. You should clarify the expectations and obligations of each co-producer in writing before agreeing on the revenue split.

2 Establish the budget

The next step is to establish the budget of the co-production, which will determine the total revenue potential and the break-even point of the show. The budget should include all the expenses and income related to the co-production, such as production costs, venue fees, royalties, salaries, marketing, ticket sales, sponsorships, grants, and donations. You should also account for any contingencies and reserves that may arise during the production process. The budget will help you to assess how much each co-producer needs to invest and how much they can expect to earn from the co-production.

3 Negotiate the revenue split

The third step is to negotiate the revenue split among the co-producers, based on their contributions and expectations. There is no fixed formula or standard for the revenue split, as it depends on various factors. However, some common methods and principles that can guide the negotiation are percentage-based split, profit-sharing split, and hybrid split. The percentage-based split assigns a fixed percentage of the net revenue to each co-producer after deducting expenses and paying off debts. The profit-sharing split distributes the net revenue according to a predetermined formula that takes into account performance and profitability of the show. The hybrid split combines the two methods, allowing each co-producer to receive a guaranteed minimum amount of revenue and a variable amount based on success of the show. This method can balance risk and reward and accommodate different preferences and scenarios of the co-production.

4 Consider the other stakeholders

The fourth step is to consider the other stakeholders who may have a claim or a stake in the revenue of the co-production, such as the venue, the creative team, and the cast. You should negotiate and agree on the terms and conditions of their compensation and participation in the co-production, such as the fees, royalties, commissions, bonuses, or profit shares that they will receive. You should also ensure that their rights and interests are respected and protected in the co-production contract, and that they are informed and consulted about any changes or issues that may affect the revenue of the show.

5 Review and revise the revenue split

The fifth step is to review and revise the revenue split periodically throughout the co-production process, to ensure that it remains fair, accurate, and realistic. You should monitor and update the budget, the revenue projections, and the performance of the show, and communicate and report any changes or deviations to the co-producers and other stakeholders. You should also be prepared to renegotiate and adjust the revenue split if necessary, to reflect any new developments or circumstances that may affect the co-production, such as changes in the market, the audience, the costs, or the quality of the show.

6 Document and sign the revenue split

The final step is to document and sign the revenue split in a formal and legally binding co-production contract, that outlines the roles, responsibilities, rights, and obligations of each co-producer and other stakeholder in the co-production. The contract should specify the revenue split method, formula, and amount for each party, as well as the terms and conditions of payment, distribution, reporting, auditing, and dispute resolution. The contract should also include any clauses or provisions that may affect the revenue split, such as exclusivity, ownership, intellectual property, taxation, insurance, liability, termination, or force majeure. You should consult a lawyer or a professional advisor before signing the contract, to ensure that it complies with the relevant laws and regulations, and that it protects your interests and assets in the co-production.

7 Here’s what else to consider

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