For those who are interested in how this business works, an email I sent this week. Canada is full of small-time producers who are always making offers like the one referred to in my letter; in this case, the producer wanted an option on the film rights to one of my novels for Cdn$2,000 for two years -- and, even at that low level, they didn't want to have to pay it until six months down the road, and then only if they could get a government grant.
Many thanks for your draft option proposal and purchase agreement.
I have a reputation -- which irritates my Hollywood agents, I'm sure -- for bending over backwards to make deals work on a Canadian scale. I've done options with individual scriptwriters and directors without any studio or corporate backing -- and even those have been substantially better in financial terms than what you're offering. I understand you're just testing the waters here, and that's fine; no offense taken.
Still, there's a cost of doing business at my end that has to be borne, and free options -- which is what you're asking for, for the initial six-month period -- simply don't cover that. My agents work on a 15% commission; I can't ask them to trawl through pages of legalese for the mere hope that six months down the road they might receive a Cdn$300 commission.
More: this sort of free option, which converts to a payment only if you're successful with Telefilm or another funding body amounts to this:
I've got a lottery ticket; you want me to hand it to you so you can hold onto it until such time as the drawing is held. If it's a loser, well, then you'll give it back to me. And if it's a winner, then you'll make a small payment to me.
Sorry, but I've been burned by such offers in the past (the very last time I agreed to do such a thing, the guy I'd given the free option to simply failed to get a proposal into Telefilm related to my property by the funding deadline -- because, of course, he had to concentrate his efforts on the properties he HAD paid money to option, since that money would be lost if he didn't get those proposals in).
Also, frankly, even when I used to allow such options, I had a really hard time selling my US agent on them, since the totally non-entrepreneurial nature of them is literally foreign to their American sensibilities: no cash of your own will be risked, only sure-thing government money, and then only once it's in hand -- but I'm to turn down any firm offers that do show up during the six-month period. Sorry, but I can't do this.
Now, yes, you want to minimize your risk, and I understand that. Minimizing is fine, but eliminating all your risk while I take on a considerable risk, namely that I have to turn down firm offers of immediate cash in case you might possibly get funding, just won't do.
But I'm willing to give you a break. Whatever first-year option fee we agree on, you can pay 1/3 now, and 2/3 at the six-month mark (normally we'd require the entire year up front; and sorry, but we don't do two-year option periods, at least not for the kind of money we're talking about here; twelve-month chunks are appropriate on this scale).
We also always require option fees to rise at each renewal; this is industry-standard, as I'm sure you know. And on purchase price, we look for 2%, not the 1% you've offered; again, that's industry-standard.
And speaking of money, what you're offering for the option is coffee money: Cdn$2.75 a day (Cdn$2,000 divided by the 730 days in two years). Sorry, but that's not going to cut it.
So, where do we go from here?
Well, here are the numbers I'd like to see; they're typical of the deals I've done with small Canadian producers:
Twelve-month option periods:
Initial Option Period: Cdn$XXXXX, applicable
First Additional Option Period: Cdn$XXXXX, non-applicable
Second Additional Option Period: Cdn$XXXXX, non-applicable
Purchase price: 2% of budget with a floor of Cdn$XXXXXXX.
Also, please note that we never authorize novelizations. The real money for you guys is in the sales of the actual film; the real money for an author can be in the boost a film gives to sales of his or her actual book -- and allowing a novelization by someone else does us out of that.
There will be other terms that will have to be discussed, of course, but, again, on the faint promise of Cdn$300 in commission sometime this autumn, I can't even begin to ask my people to spend any time on this.
All best wishes.