EC

THE BLOCKBUSTER

Confidential Role Information for Rock Roll

You are Rock Roll, one of the movie industry’s top box office draws for the past five years. You were recently asked by Millennial Productions, a leading movie studio, to star in a new production entitle “The Lost Holiday,” a romantic/action movie in which the star is accidentally stranded on what first appears to be a deserted South Pacific island but turns out to be the home of a lost colony of adventurers. You like the script, and have indicated an interest in appearing in the movie if you and the studio can reach a mutually satisfactory agreement over the terms of the contract.

Six issues must be decided: Your salary, the percentage of the movie’s box office revenue (if any) you will receive, the location of the movie’s filming, the length of time filming will take, who will have the right to select the director, and the number of publicity tours you will be obligated to participate in to promote the movie.

(1) Salary: The minimum amount of money that the studio would pay a star of your caliber is $3 million. You don’t believe that there is any chance that the studio would insult you by offering less than this. However, you would prefer a higher salary. $3.25 million would be nice, $3.5 million better, $3.75 million even better, and $4 million would be extremely satisfactory.

(2) Percentage of Revenues: Often, but now always, major stars of your caliber will negotiate for a percentage of the movie’s revenues, therby having a portion of their compensation dependent on the movie’s success. You are confident that you will continue to be a major box-office draw, and are eager to capture a percentage of the revenue. The more the better of course, although you realize that studios never give away more than 5% of the box office receipts to a star performer.

(3) Production Location: The studio is considering four locations for filming: Los Angeles, Hawaii, Australia, and Thailand. You live in L.A., and would prefer to film the movie there so that you can live at home while filming. Hawaii would be a less preferable but acceptable location, because your family could easily visit him there during part or all of the filming. Australia would be your third choice. You have a distant cousin who lives there. Finally, Thailand is very far from home and undesirable.

(4) Filming Schedule: You generally prefer a longer filming schedule to a shorter one. The fastest the movie could possibly be filmed is four weeks. This schedule is undesirable because it would mean 7-day weeks and 14-hour days. You feel tired just thinking about that. A six-week schedule would be more humane, and an eight-week schedule downright pleasant. A ten-week schedule, the longest possible, would be undesirable because it would cut into time you have set aside for another project.

(5) Choice of Director: You have had some bad experiences with directors in the past, so you are hesitant to give the studio complete authority over selecting the director of the movie. You would feel much more comfortable if both you and the studio had joint authority over selecting a director, which each having to approve the ultimate selection. It would be even better if you could convince the studio to give you absolute authority over the decision.

(6) Publicity Tours: You understand that these are necessary, but they are draining. Stars of movies are expected to do them, but the fewer the better. More than a handful would be excruciating.

You have many opportunities to star in major motion pictures. If you choose to make “The Lost Holiday,” you will have to forego making another movie. Consequently, you only want to make the movie on acceptable terms. On the other hand, you like the script of “The Lost Holiday” quite a lot, think Millennial is a good studio, and believe that the movie will be a hit. Therefore, you are willing to agree to make the movie if you can negotiate a contract that provides at least close to half of the package of terms you desire.

Based on this information, you have constructed the attached chart that lists the possible contract terms related to each issue and assigns a number of points to each possible term that coincides (as best you can estimate) with your relative preferences. You should study this chart carefully before negotiating with Millennial’s owner. You may refer to the chart during the negotiations, but you may not show it to Millenial’s owner. You should attempt to negotiate a contract that gives you as many points as possible – every additional point will make you happier with the contract. You should not agree to any deal that give you less than 4000 points (in the absence of such a deal, you will make a different movie instead).

Information Sheet for Rock Roll:

Issue Options Points

Salary $3 million 0

$3.25 million 400

$3.5 million 800

$3.75 million 1200

$4 million 1600

Box Office Percentage 1% 0

2% 1000

3% 2000

4% 3000

5% 4000

Filming Location Thailand 0

Australia 200

Hawaii 400

L.A. 600

Filming Schedule 4 weeks 800

6 weeks 2400

8 weeks 3200

10 weeks 1600

Director Control Millennial 0

Joint Control 600

Rock (you) 1200

Publicity Tours 1 tour 2400

2 tours 1800

3 tours 1200

4 tours 600

5 tours 0

Maximum Possible 13000