Why Producers lose negotiations and how you can avoid it.

I was embroiled in a tricky negotiation about a show a while ago . . . when I had a revelation.

The other party in said negotiation asked for something ridiculous, something absurd, something that didn’t make any sense.  And I couldn’t understand why.  Certainly they knew I was never going to accept such a thing.  So why did they do it?

Because they could.  They had zero risk.  No downside.

Let me explain.

If an agent asks for the moon and the stars and the solar system, what’s the worst case . . . I walk away, right?  I say, “No, I’m not going to produce that show,” and screeeeeech, I’m Audi 5000.

But here’s the thing . . . if I really wanted to produce that show (and Producers usually do), if the agent calls me back a few days later and says, “Listen, we talked to our client, and we’d like to work this out,” I’m going to work it out.

Why?

Because Producers are passionate about their projects.  And the irony is that passion is a necessary characteristic that all Producers must have to be successful . . . but it’s that same passion that puts us at a disadvantage during a negotiation.  We just want to close the deal and get on with what we want to do . . . create theater.

And agents know that.  So the more manipulative ones ask for outrageous things, because they know they’ll always be able to go back to you at a lower number and you’ll jump to sign . . . even if you’ve walked away.  Same is true for a Director you want, or an Actor you want.  If the show/Director/Actor is your first choice, then they know you’ll always come back to the table.

So what can you do about it?

As hard as it is, you have to treat your shows like you’re supposed to treat stocks . . . with no emotion.  During the negotiating process, you must try to replace the passion for the show with the passion you have for your investors.  See, it’s easy for many people to think that Producers are negotiating for their own pockets.  But they are not. They are negotiating for their investors’ pockets.  Sure, if a show recoups, Producers make money, but we all know there’s only a 20% chance of that happening . . . so I find that most Producers, myself included, negotiate to get to recoupment.  Producers are trying to create economic models that allow their investors to get their money back . . . so that their investors will do another show and another show and another show, which benefits everyone in the theater.  Should our recoupment rate ever fall below its already low 20%, then theater will quickly be up against the ropes . . . and Producers must protect against that.

I know we all want shows to happen . . . we all want the perfect person . . . but the perfect show, the perfect person, also means a perfect fit with the show’s economics . . . or you must walk away.  It’s not easy.  It ain’t fun.  And it may go against every fiber of your being.  But you have to.  Because the wrong deal can kill a show, no matter how good the show is.

We’re passionate people, us Producers, but the challenge of what we do makes it imperative that we throttle that passion up and down into both areas of art and commerce throughout the process of producing a show.

 

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Comments
  • Noelle says:

    Ken,
    An appropriate photo to depict losing negotiations. But I’d better stop here….

  • Marion says:

    It’s further complicated by the snowball impact on future negotiations.

    Let’s say the creative person asks for XYZ, and the producer says “yes” – knowing that it’s highly unlikely that they’ll have to implement the requested term or perk.

    The creative person’s agent, at future negotiations says “We got XYZ on our last show! We want it on this show!”

    Regardless that XYZ was never implemented in the first agreement, the concept becomes SOP for that creative’s terms.

  • John David says:

    Ken,
    Another brilliant column.
    Thank you.
    Lots of wisdom packed into a few lines.
    John

  • Ilene Argento says:

    And your investors appreciate you looking out for them!

    With ANYTHING in life, the hardest thing for a GOOD person to do, is to stand their ground, especially when to do so would result in a broken heart (personally or creatively). GOOD people want to believe that everyone proceeds with the best of intentions and fairness, and that greed and dishonesty would never come into play. Sadly, my friend, we are in the minority ?

    I’m keeping my fingers crossed that goodness and fairness will prevail! If not, the Karma Gods will have to take care of things!

  • Barry McNabb says:

    The sad thing on many productions is that the producers are locked on the talent they chose because of what their most recent hit or production was. EVERYBODY is replaceable, and I think often time the talent chosen is the wrong person for the show being done, BUT they have a hit in their pocket. A really smart producer would let the “talent” know they are replaceable, because they ARE. There is so much talent in this town, and quite honestly, the tiers that talent lays in are all artificial.

  • Katie Jane says:

    Ken-

    This topic has been at the forefront of my neophyte producing thinking and although you haven’t answered my questions directly, you have started a better direction of thought process for me. One thing that I see as an issue in the arts is that very few people are able to truly embrace it as a business endeavor. In show business, there is the show and there is business, one can not exist without the other. So how do you draw that line and how do you walk in between the two conveying confidence to both teams. How do you speak both languages to ultimately produce successfully and let the two stay separate but support each other? The idea of “protecting the show” by wearing the business hat is a much better way to approach the thought process. Thanks for sharing!

  • Peter Saxe says:

    I don’t know..
    if an actors’ agent wants to play games, and demand something outrageous, and unrealistic, I would move on to plan-B right away (there should always be a plan-B). Chances are that agent’s client will be furious with them. Never let an agent have the upper hand.

  • This mirrors what I have thought and said about negotiations from the actors side as well. The recent Equity negotiation concerning 99-seat theaters in LA is a perfect example. Actors just wanted to perform and not let money get in the way, so they were fighting against $7.25 minimum wage or any pay at all in some cases, all while people flipping hamburgers at McDonalds are picketing for $15/hour. It made no sense to me. Their emotions had clouded their judgement, and they were afraid that theater as they knew it would end, even though Equity was fighting for them.

    Conversely, I think SETA is a prime example of Equity caving in based on hopes it would help recapture the touring marketing. Fifty percent of all tours are still non-Equity, while only 10-20% of these tours are non-IATSE. This difference could very well have to do with emotions in negotiating. I’ve heard from Equity officials that they’d rather work to have more contracts at a lower rate than less contracts at a higher rate. In other words, quantity over quality. The message it sends: actors just wanna perform, so we’ll take whatever we can get to keep doing what we love.

    You’re right, Ken, once your heart is on the table, then the other side knows you’ll do anything to keep it.

  • Rich Mc says:

    Advice: be less passionate, walk away. Investors want less a passionate producer as a producer that will recoup for them.

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Ken Davenport
Ken Davenport

Tony Award-Winning Broadway Producer

I'm on a mission to help 5000 shows get produced by 2025.

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