Dramatists Guild Advising Rejection of NY Musical Theatre Fest Contract

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A storm may be brewing. An email blast from the Dramatists Guild that went out late last week, provided to the Clyde Fitch Report by an anonymous blogger, is advising members not to sign contracts with the New York Musical Theatre Festival this year.

You can tell from the wording of the email advisement there is something of a heated standoff going on — and the Dramatist Guild has elected to play hardball (or curve ball, if you prefer). Challenging NYMF in this direct and all rather memorable manner (to me, anyway) suggests that the sides may be intractable and the rest of this drama may be played out in public.

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The bottom line is that NYMF’s response, which we have also published below, may be insufficient to refute the charges and/or accusations at hand. That said, there is nothing to stop NYMF from looking for ways to circumvent the Dramatist Guild’s long professional reach.

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If the DG chooses to continue to make its case, my advice would be to do more than state that NYMF is being “resolute in maintaining the financial terms of their contract which allow them benefits superior to those reserved for LORT, commercial Off-Broadway, and, in at least some instances, first-class/Broadway producers.” Keep the specifics coming in terms of the numbers. Educate the community. All the information is right there.

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Below, again, we are reprinting the text of the email from the Dramatists Guild and the response from NYMF. Decide for yourself and let us know what you think.

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Dear Guild members,

You may have heard that there is considerable controversy surrounding the 2010 NYMF contract. After analyzing it, it is clear to us that NYMF has made significant modifications to its contract this year, to minimize the risk and cost to them of presenting your self-produced production in their festival while maximizing their control and revenue. It appears that NYMF has adopted a philosophy in taking for itself financial terms that are more appropriate for a LORT or commercial Off-Broadway producer actually paying to produce your play. While the Guild has spoken with the NYMF administration, they have only conceded that they might adjust their contract with respect to script and creative approval. They appear, though, to be resolute in maintaining the financial terms of their contract which allow them benefits superior to those reserved for LORT, commercial Off-Broadway, and, in at least some instances, first-class/Broadway producers.

The Guild considers this contract substandard and advises against signing it for the following reasons.

The Applicant’s (who is most likely the Author) present costs are considerable, making the Author a self-producer as with any typical festival:

a. $500 participation fee;
b. $575 for insurance;
c. $1,000-$2,250 as a venue fee (priced at their discretion)
d. $1,000-$4,000 as a sound fee (priced at their discretion)
e. $100 per performance [what was this for?]
f. additional $100 for a sound engineer fee.

Per paragraph 4(B)(iii) and everything in Schedule B, there may be additional unforeseen fees, as well. This puts your out-of-pocket present costs at a minimum range of $3,275-$7,525, plus the significant bite from the box office given over to NYMF. This, of course, doesn’t include the costs of actually producing the show (cast, crew, sets, props, etc.), which are the sole responsibility of the applicant to the festival.

The potential present income for NYMF is also significant, allowing them to receive the rewards of producing while maintaining the risks of a presenter. This is epitomized by NYMF’s take of the Box Office:

i. NYMF takes the first $1,500 of box office receipts; then
ii. NYMF takes 60% of the gross up to half the maximum possible receipts for the entire festival; then
iii. NYMF takes 50% of balance.

Typically, co-producers would split the gross either 50/50 or proportionally according to their respective outlay for initial capitalization. Even the NY Fringe takes only about 1/3 of the box office receipts. Moreover, NYMF is allowed to give away up to 25% of all tickets to anybody it wants (“members of the press, sponsors, patrons, staff, and NYMF partners”). It can also discount 100% of the tickets. These factors can cut deep into the box office before you have a chance to claim any percentage of it for your own efforts.

Merchandise is likewise used as an opportunity for NYMF to over reach. It requires 20% of gross from all merchandise, plus as-yet undetermined royalties to the Merchandise Venues, which is decided exclusively between NYMF and the Venue.

NYMF now also requires payments from the author and applicant’s future income:

a. 2% of the Applicant’s gross on all income received from the play in excess of $20,000 over ten years, PLUS
b. 2% of the Author’s gross on all income received from the play in excess of $20,000 over ten years.

First of all, the $20,000 trigger is no more than lip service to the “windfall” idea. The Public Theater has just agreed to a $75,000 windfall waiver, where they do not receive any subsidiary rights participation on the author’s first $75,000 of income, and that’s when they’ve spent a lot of money to actually produce a work. The Roundabout and Lincoln Center take no sub rights on their off-Broadway productions. Manhattan Theatre Club gets 5%, and most large main stage LORT around the country get 5% of sub rights for five years. And these participations are based on actual productions, usually at least 21 paid public performances that they have fully financed and marketed, and for which they have paid authors an advance and gross royalties. How many performances does NYMF guarantee? Six? What advance are they paying? What minimum royalty guarantee? Oh, wait. No. YOU pay THEM.

As to the amount of their participation, typically, an Equity Showcase producer garners EITHER 3% of the Author’s net subsidiary revenues earned within two years of closing OR a percentage of the box office (sometimes in the range of 0.5% to 2.0% of the GWBOR) from any commercial productions in the US within two years. By requiring both the Applicant and Author to pay a future royalty, they are essentially enjoying the benefits of BOTH subsidiary rights from the Author AND future participation from the producer. And if you are the one producing your show in their festival and are producing the subsequent productions as well, you may be paying 4%, not just 2%. What is more, they are requesting 2% from the Author’s gross, not net, so there is no adjustment for agent commissions or any other third party obligations.

With regard to the duration and scope of their participation, they are requiring this subsidiary rights participation for ten years, a length of time typically reserved for commercial off-Broadway producers, who are a far cry from being Showcase festival co-presenters. Keep in mind that they are requiring their participation from all performances, including foreign territories, which commercial producers don’t always share in. Frankly, a Broadway producer doesn’t even share in foreign territories after seven years. In other words, the NYMF administration seems to be suggesting that the value they add to shows is in many ways superior to that of Broadway producers.

Control is also at issue in this contract. In Paragraph 1(B), NYMF claims “final, sole discretion” over “all decisions and approvals.” While this is probably not a sinister plot for NYMF to rearrange any dialogue, the contract should specifically limit any script or creative approvals to the Author. And they have expressed to us their willingness to revise the contract to so specify. More broadly, however, under their contract they have control over the venue, schedule, ticket pricing and marketing without ever having to bear the risk that a producer would have to bear in order to obtain such broad control over such elements of a production.

They also take for themselves the right to “equitable relief” in an arbitration against you, but they bar you from any similar right. Further, they make all the authors “jointly AND SEVERALLY LIABLE” for any breaches, which can make one author fully liable for their collaborator’s plagiarism (for example). The industry standard is for all authors to be solely liable for their own contributions.

A festival is meant to be an opportunity where people can pool their resources and produce their own work at a significantly reduced price. Hopefully, that production will pay for itself and lead to other opportunities. NYMF subsidizes this process and, in so doing, fulfills the charitable purpose for which they receive tax-exempt non-profit status and, therefore, the ability to receive grants, subsidies, donations and underwriting. But NYMF has its hand out for more, grabbing more than the industry standard at every juncture of the event. It costs $5,000 just to participate. But, then they take subsidiary rights and future participation analogous to what actual producers might receive, take well above even a standard co-producer’s share, take an indefinite merchandising royalty, and reserve the right to give away 25% of the seating capacity while discounting the rest. Additionally, their contract could be read to impose greater liability on the authors than it does on them, and all this at the expense of those they’ve received tax-exempt status to help.

Shows like Next to Normal, [title of show] and Altar Boyz were featured at NYMF before reaching significant success. With a track record like that, it is easy to see why a playwright would desire the exposure provided by inclusion in NYMF. Nevertheless, the Guild encourages all of its members to be aware of the standard terms for such a festival and act accordingly. Certainly, NYMF is not adding value to your work that is superior to what is added by the Roundabout, the Public, and Lincoln Center. So, why should they receive superior, or even equivalent, terms, especially considering that they are not, in fact, producing your show?

This organization is taking the position that they deserve the prerogatives, controls and compensation of a PRODUCER, but with the minimal obligations of a PRESENTER. Of course, the Guild cannot prohibit its members from signing such a contract. However, we hope that with this notice, our members feel fully educated as to its nature.

Once again, a hat tip to the anonymous blogger for forwarding NYMF’s response, below, to the CFR.

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Statement on Writers’ Contract by Executive Director and Producer Isaac Robert Hurwitz

NYMF is a non-profit organization founded by artists that serves artists — and we struggle to do our work in financially difficult times.

Musicals — even on a NYMF level — are expensive, and we spend as much as $30,000 on each show in the festival. That’s more than some individual producers raise or spend on their own shows. And it’s not counting donated equipment and services from festival sponsors, or the additional assistance NYMF gives to writers to help them raise money.

Writers are the core beneficiaries of NYMF. Our goal is for NYMF shows to have future life, and for as many of our writers as possible to have their work produced again after the festival.

We specifically chose not to demand income from future third-party producers, as many other theater companies do, because doing so would encumber the project — making it less likely to be optioned or produced. Instead, we carefully structured our contract so that if — and only if — writers benefit substantially from NYMF’s support, they give back a small percentage so that we can provide similar opportunities to future generations of writers.

We think that’s fair.

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