I guess it pays to be in the room where it happens.

Late last week, it was announced that the duel between a group of the original Actors in Hamilton who helped develop it in early readings, workshops, labs, etc. and the Producers of the mega hit who are said to be earning $500k a week had resulted in a settlement, giving those Actors a portion of future profits.

At the center of this debate is the contracts that Actors work under in the “R&D” phase of a musical, usually either the lesser used workshop contract (the legacy of Michael Bennett) which pays Actors a smaller weekly but they share in 1% of the profits, or the “lab” contract, which pays the Actor a much higher weekly but with no piece of profits, and no first right of refusal if the project moves forward.

As I wrote about here, while it may be easy to think that the 1% is the reason Producers don’t opt for the workshop contract more often, I’m a believer that it’s the first right of refusal that’s the issue.  I’d expect that both contracts are going to get a big comb through due to the Hamilton brouhaha, so maybe that’ll get addressed in the process (and I’m still proposing that giving Actors a choice in the matter could help prevent future Hamiltonian-like issues).

I had a feeling this discussion would be settled, but what isn’t settled now is how this will affect the industry in the future.

You see, I expect that there will be new future development agreements that give the Actors who help shape shows a piece of profits, which will probably be less than 1% and should also only kick in after recoupment (the Hamilton issues came about when it was a sure thing that the show would be well into the black).  And as a Producer, I will go on the record to say I’m in favor of it.  Just like Michael Bennett’s A Chorus Line birthed the workshop contract, so will Hamilton birth something similar.

But there could be a backlash.

If the Actors can organize and successfully negotiate an agreement to get something more well after the ink has dried, will we see Producers say, “Hey, quid pro quo . . . in bad times, I want to be able to come back to you all and get a reduction?”

Or will there be a push back to minimums?  In the corporate world, stock options, or a piece of the company are common for higher level employees . . . but they often come with a lower annual salary, since you have bigger potential for upside.

Or will Producers say, “Hey, why are the Investors paying for this . . . if the Actors are helping shape the script, shouldn’t the Authors be the ones cutting the Actors in?”  (And when it is reported that big hits like Matilda only generate 5% profits to their Investors, despite paying lots of royalties?  Not to mention Actors’ salaries, etc.  You can understand why the Investors might be bugged.)

Will other unions want more of a cut of potential profit . . . or what one Producer I know calls, “Bonanza Insurance?”

We’re going to see a lot of debate about the distribution of profits of the mega hit, especially as we continue to play in the land of the $2mm and $3mm weekly grosses.

And again, I’m all for it.  I love everyone getting a piece of the pie . . . when that pie is the size of Texas.

As long as it doesn’t reduce the Investors’ share overall.  See, Investors in the theater don’t do one show. It’s easy to think, “Oh, they are making so much money on INSERT NAME OF MEGA HIT HERE.”  But odds are that’s after those same Investors have funded many a flop.

We should make agreements that allow for the spreading of the wealth, so long as the people that make it possible for all of us to do what we do are thought of as well.

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