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The pay-or-play contract is the most coveted item in the film and TV industry, which is full of exploitation and uncertainties. Likewise, it is also the most dangerous.
In this article, we help you understand the pay-or-play clause. We examine why the clause matters and how you can better protect yourself with (or from) it.
Let’s dive right in.
Most law websites have pay-or-play contract templates that you can review to get a general idea of what they do or look like.
Using these templates or having a legal professional draft one is essential. This may help you avoid running into any trouble later.
Note: There isn't a one-size-fits-all pay-or-play template. They are often individually drawn up according to specific circumstances or negotiations.
A template like our digital startwork can also help you draft a play or pay contract directly in Wrapbook. This is, of course, after getting legal counsel.
Wrapbook is constantly growing to bring its users innovative digital services that make the entertainment onboarding and payroll process more accessible. You can watch the demo here.
A pay or play clause is an item in a contract that guarantees one party will pay the other, even if the latter is released from the contract and their services are not used.
The clause guarantees that someone will get paid even if they don't do the job they were contracted to do. They either get paid or “play” and get “paid.”
The “pay or play clause” is used informally despite its prevalence. This implies that searching for a “pay or play definition” or “guaranteed contract definition” will never return an actual legal definition.
The informal usage of the “pay or play clause” has led to the term's blanket application in various contractual contexts.
Pay-or-play contracts can be useful for independent producers. For example, an independent producer who wants to let his actors know he's serious so they don't run off to another project. He writes a provision that says he'll pay them even if the production gets shut down or doesn't go through.
He does this so it's more attractive for them to stay and not run off to another project.
However, producers also need to be protected. Working with a lawyer is generally recommended.
Major League Baseball pays all players on the team's roster their total contracted salaries, even if they never actually play a single inning for the team. The MLB's policy is so sweeping that they offer a strict guaranteed contract definition directly on their official website.
The definition of a guaranteed contract in the NFL is malleable.
Players are usually guaranteed a variable portion of their salaries under heavy contract restrictions due to the sport's extreme risk of injuries and high turnover rate.
Admittedly, contracted salaries in the NFL are generally huge. However, the difference between the total amounts contracted and the actual payment obligation can often differ depending on the circumstances. This may happen when the player bails out of contract, as in the case of Kaepernick.
Any member of a filmmaking team can be bound to a pay or play clause regardless of their film crew position.
However, with the below-the-line crew, this usually occurs in the simplified form of cancellation fees. Cancellation fees are also known as “cut fees,” “kill fees,” or - in the rare case of advance payment, “hold fees.” These are all paid to replace a rate for a scheduled shooting day that has been canceled.
We're talking about a completely different ball game for the above-the-line talent and crew.
Pay or play clauses in film and TV contracts incentivize major creative talents, particularly actors and directors. The idea is to hold their schedule for a given project well in advance.
Suppose the project falls through or the talent's services are no longer necessary, the talent will still be compensated for the opportunity cost of their scheduled time according to the contract-stipulated rate.
One word creeps a lot in the above definition of the pay or play clause - “guarantee.”
The concept of a guarantee is at the heart of the pay or play clause, and it's precisely what makes the contract item both valuable and risky. It is a legally binding agreement.
Let's illustrate with a hypothetical situation.
Say you work for a central talent agency, and you're negotiating a future deal for heavy-hitter client (and national treasure) Edie Falco.
Calculating the best pay for any actor is complex and full of math. You deal with SAG rates, profit sharing, and television residual pay. All that's on top of the raw fact that- in this hypothetical situation - you're representing Edie Falco.
The hypothetical future deal you're negotiating is for Edie Falco to star in an epic, 12-part television mini-series. The offer currently on the table is a fantastic role, paid at an even better rate.
But there's a catch.
The project hasn't been greenlit yet.
Principal photography will commence in one year and will last approximately six months, not counting potential reshoots. If Edie Falco takes the gig, her commitment to the project would bar her from taking on other roles.
And if the project, in turn, falls through, Falco could be left hanging high and dry with a deserted schedule for the next year and a half.
But she wants the role. And you're her agent. What do you do? How do you guarantee the future value of a national treasure's time?
Through pay or play clause.
A pay-or-play clause never guarantees that the imaginary mini-series will happen. However, it does ensure that Edie Falco will be compensated for her time regardless of the show's fate. While it's not a perfect solution, It is a way to mitigate risk.
Individuals and corporations utilize the legal guarantee provided by pay-or-play clauses to minimize financial risks associated with uncertain future conditions.
In the above case, Edie Falco represents a party contracted to provide future service.
However, pay-or-play clauses are a two-way street.
From the producer's perspective...
Pretend you're the producer, a card-carrying member of the PGA with a solid track record of hits and a hunger to beat your personal best. Your next project is an epic, twelve-part television mini-series that you know is the monumental work people will remember you by.
But there's a hitch.
You're not yet able to greenlight the project.
The trouble is that you're financing the mini-series with a patchwork of partners, and crucially, one of them is refusing to commit. So now the production budget is short of being fully funded.
You want to begin your six-month location shoot one year from now - right in the sweet spot after New Zealand's rainy season.
But this partner has clarified that they will only buy in once you've secured the involvement of the perfect lead actress, Edie Falco. And her reps are understandably skeptical about committing to a project that looks like it won't happen.
There are no fully funded mini-series without Edie Falco, and there is no Edie Falco without a fully funded mini-series.
You're the producer. How do you solve this catch-22? How do you guarantee a living legend that your project will make her risk worthwhile?
From this perspective, the clause boils down to a simple exchange of risks.
You, the hypothetical producer, are offering a portion of the risk (in the form of guaranteed earnings) in exchange for a portion of Edie Falco's risk - time and opportunity.
The reasoning behind a pay-or-play provision may vary across different circumstances. However, the broad strokes will always remain the same. The clause represents an exchange of risks performed so that one party will gain some form of leverage or assurance they would not have had otherwise.
The pay-or-play clause always leads to a win-win in a perfect world. The epic, 12-hour mini-series gets made on schedule, with a Hollywood icon leading the charge. And you get your Emmys and appreciation.
While the cases below demonstrate some elements of pay or play clauses, the exact details of the contracts are private.
The analyses are only speculations meant to illuminate pay or play clauses.
Silence (2016) was decades in the making. The historical epic began as a passion project for Martin Scorsese in the early '90s. But the film slowly evolved into a financial nightmare, as events forced him to push the project further and further back in his schedule.
Scorsese reportedly agreed to shoot Silence as far back as 1997. An attached production company had decided to invest over $750,000 in the project. But he could not shoot the movie then and gradually pushed the project further and further.
In 2012, the original company filed a lawsuit against Mr. Scorsese. The company alleged that he had breached a contract citing the initial delay.
This example demonstrates the potential complexity that can arise when one party violates a pay-or-play clause.
The production company claimed that to avoid a lawsuit, Scorsese would have to pay millions to the company in compensation. The requested amount exceeded what they had invested initially. So Scorsese made a series of deals to mitigate this.
We cannot verify these claims, and Scorsese's representatives actively refuted them. But we do know that the production company at least felt they had enough legal grounds to take him to court.
The lawsuit was settled in early 2014, and Silence premiered to critical acclaim only a few years later.
In 2012, the U.S. adaptation of Simon Cowell's hit series The X Factor was entering its second season.
British singer Cheryl Cole had been slated to star on the show's panel of celebrity judges. However, she was released from her two-year employment contract early due to fears that American audiences wouldn't understand her Newcastle accent.
She briefly appeared in The X Factor's American pilot, after which the show was done with her.
Cheryl Cole, however, was not done with the show.
Cole had a pay-or-play clause in her employment contract. She was guaranteed pay for starring in the two full seasons. She was paid for part of the first season but took the show's producers to court over payment for the second season.
Cole was pursuing more than $2 million in lost wages. The suit was settled out of court a year later, with the production company paying an undisclosed sum.
Always seek an entertainment lawyer's opinion when drafting pay or play clauses.
An entertainment lawyer will help you tailor the contract to the specific situation. Only a qualified legal professional can perform that task within the bounds of the law and a reasonable margin of error.
Without the input of a lawyer, your pay-or-play clause could leave you vulnerable to a world of financial hurt.
So, how do you draft pay or play clauses for yourself?
Choose to lawyer up before you're left with no choice but to lawyer up.
And once you do, if you have a Wrapbook account, you can add that contract directly to the software to disseminate it to the actor(s) you are working with. Add mandatory signatures, including a signature for a party's representative, if needed.
Contact us for a live walkthrough or watch a demo.
The pay or play clause lists the parties involved, the offer terms, the agreement to those terms, and the specific goods or services exchanged in consideration of the contract.
However, a few unique details in a pay-or-play contract are worth watching.
The default payment clause details what will happen if either party in the pay or play contract violates the agreement. It describes a course of action if one party defaults and guides the necessary action.
A well-written default clause streamlines a pay or play contract's enforceability. However, a poorly written default clause could lead to years of litigation if the contract is brought to court.
Conditions precedent describes any events that need to occur before a pay-or-play contract kicks in. That could mean anything from passing a specific date on the calendar to passing a criminal background check.
Conditions precedent are of particular note to producers in the pay-or-play equation. They can be used to further mitigate risk by placing requirements upon the opposite party and preventing them from sly derelictions of contracted duties.
Exceptions are any events or conditions that might null and void a contract.
The most common examples of exceptions are those described as force majeure. Force majeure implies events that prevent a contract from being fulfilled but are outside the control of either party. An example of this could be a natural disaster or a sudden change in the law.
However, other exceptions may be written into the contract as deemed necessary. In this way, exceptions are an antithesis to conditions precedent.
Pay or play clauses can be powerful and beneficial under the right circumstances. However, it's important to remember that they also carry substantial risks to all parties involved.
Always seek guidance from a qualified entertainment lawyer before entering a pay-or-play contract.
In the meantime, if you're interested in learning more about contracts in film and television, be sure to check out our blog's guide to film production agreements.
Pay or play is a commitment by a producer—a studio, network, production company, or individual—to pay an actor even if the producer later decides that the actor's services won't be required.
The pay or play clause lists the parties involved, the offer terms, the agreement to those terms, and the specific goods or services exchanged in consideration of the contract. It should also include exceptions, conditions, precedents, and a default payment clause.
Yes. Pay or play agreements often have limited exceptions, such as instances of the performer's inability to fulfill contractual obligations due to disability, force majeure (unforeseeable circumstances beyond anyone's control, also known as an “act of God”).
Yes. However, it is advisable to seek the guidance of an entertainment lawyer conversing with the contract laws to help you draft an error-proof contract. Free online templates like Wrapbook can help you draft a pay-of-play contract hassle-free.
No. There isn't a one-size-fits-all pay-or-play template. They are often individually drawn up according to specific circumstances or negotiations.
At Wrapbook, we pride ourselves on providing outstanding free resources to producers and their crews, but this post is for informational purposes only as of the date above. The content on our website is not intended to provide and should not be relied on for legal, accounting, or tax advice. You should consult with your own legal, accounting, or tax advisors to determine how this general information may apply to your specific circumstances.
The Wrapbook Team consists of individuals who are thrilled about building modern software tools for creators. We’re a team of compassionate and curious people dedicated to solving complex problems with sophisticated solutions. You can find us across the U.S. and Canada.
