Is profit-sharing beneficial or flawed for Bollywood filmmakers?

Prem Ratan Dhan Payo

If rumours are to be believed, Salman Khan didn't charge a penny for 'Prem Ratan Dhan Payo'. Wait, there's a catch. But he did allegedly claim rights on the satellite telecast rights and a percentage on the profits.

Salman Khan and Sonam Kapoor in a still from 'Prem Ratan Dhan Payo'

The filmmaking business of Bollywood has witnessed several changes in the last decade - be it the amount of money being spent on marketing, or restructuring the business module. The scales have become bigger and better.

Also read: After 'Bajrangi Bhaijaan', Salman's 'Prem Ratan Dhan Payo' strikes gold

The year 2015 saw a number of hits at the box office like 'Baby', 'Prem Ratan Dhan Payo', 'Tanu Weds Manu Returns', 'Dilwale', 'Bajirao Mastaani', but the industry did struggle to rake in the moolah. Today, an actor's role in a film is no longer limited to acting, as far as the Bollywood biggies are concerned.

In 2014, when 'Lingaa' did not fare well, Rajnikanth refunded one-third of the loss incurred by distributors and exhibitors. He apparently paid them Rs 10 crore

Also read: 'Lingaa' distributors may protest again

While A-list actors want to share the profits their films make, loss is the producers' problem.

According to a source, "Since the last two or three years many actors demand for profit-sharing component, apart from their remuneration. But, in most cases, only the producers bear the losses. In fact, Rajinikanth is the only actor who helps the producer when a film faces loss."

Anees Bazmee

Akshaye Rathi, an exhibitor and distributor, feels the system is flawed. "Easy availability of money (courtesy the studios), coupled with negligible accountability for returns has led to serious deterioration in the quality of films. Many actors demand a remuneration that is even higher than the average theatrical returns of their films. Producers/studios are paying it because there is a shortage of talent. Taking the bull by the horns and turning it around by making actors and directors genuine stakeholders in profits and losses is critical for the fraternity to secure its future."

Producer Ashwin Varde, on the other hand, believes that a producer will always have to take a larger risk. "It's his film after all. Name one film that's been a success and the producer hasn't earned profits. Yes, the producer bears the risk of losses, but that's a risk he willingly takes. Nobody is holding a gun to his head and asking him to produce a film. The actor and director are merely talent that he has hired. So, the onus of risk and responsibility lies on him."

Sharing it
In a situation where the actor, director and producer are co-producers, the risk is eqaully shared. Actors and directors take a share of the profit. "Usually, this is the case when they are charging lesser than their market fees, or are doing the film for free. This, in turn, is a good arrangement, as the overall cost of the project is reduced, making the film more viable. If the producer wants to keep all the profit, all the risk is his alone. If he wants to minimise the risk, he must share the profits. Nothing wrong in it at all," Varde explains.

Director Anees Bazmee, who has delivered many hits at the box office such as 'Welcome', 'Welcome Back', 'No Entry', opines that profit sharing brings down the pressure on the producer. "Producers encouraged profit-sharing because they could not afford big directors and actors. A big chunk of the investment gets eliminated and the total cost of the project goes down considerably," says Bazmee, adding that this eases the process of kickstarting a venture. "A fixed percentage is paid to the big actors/directors, only if a film makes profit. This is usually a clause in their contract. To add to that, one must understand that a flop is a loss for actors and directors, as their reputation and market price goes for a toss. A business deal is a private process. This applies to any industry," Bazmee explains.

Also read: Box office - 'Welcome Back' mints Rs.14.35 crore on day one

"It all boils down to the agreement between two people. Rumours can only be speculated upon. A lot of minute terms and conditions are considered before deciding the percentage. The producer, who is a better businessman than actors and directors, should take the onus of this. It's unfair to get creative people involved in money matters. That's a classic recipe for disaster," concludes Bazmee.

Module at work
Girish Johar from Zee Studios says this is how the film business is modelled. "The producer bears the loss, but the profit has many stakeholders. A few changes can be made in the system whereby the cost of the film, director and actor's fee can be reduced," he says, adding that in most cases, the loss is borne by the producers and the technicians walk away with a fixed base price. "I don't see it changing in the future, but it is likely that partnerships and joint ventures between producers or corporates or technicians will mitigate the risk," Johar says.