Hello everyone,

Today we will talk about different types of deals in filmmaking — how films are financed, how distribution is secured, and what legal pitfalls filmmakers need to watch out for. On October 6th, 2025 at 12:00 p.m., I will be speaking on a panel at the Hollywood Park Film Festival, answering questions from filmmakers and industry professionals about these very issues.

As an intellectual property attorney based in Los Angeles, I regularly advise on film, entertainment, and media transactions. My goal here is to demystify the business and legal structures behind films so that when you hear terms like “equity deal,” “minimum guarantee,” or “pay-or-play”, you understand not just the label but the substance.

What Is a Film?

Legally, a film is not just the movie you see on screen. It is a bundle of intellectual property rights — intangible property interests that can be licensed, sold, mortgaged, or exploited across different markets.

Most of these rights (copyright, trademarks) are governed by federal law in the United States. The right of publicity — the right to control one’s name, image, and likeness — varies from state to state, which complicates nationwide and international exploitation.

⚖️ Deal Names vs. Contract Content

A critical warning: the name of the deal is not a legal determination.

– A “Pay-or-Play” deal may be drafted so loosely that payment isn’t truly guaranteed.

– A “Minimum Guarantee” distribution contract may contain so many deductions that nothing beyond the MG is ever paid.

– Even a simple “Equity Agreement” may be structured like debt if the investor demands repayment priority.

The actual contract language — not the label — determines rights and obligations. Filmmakers must look beyond titles and marketing phrases and focus on substance.

Types of Deals in Film

1. Equity Investment

How it works: Private investors contribute money in exchange for ownership or profit participation.

Industry practice: Equity investors are often friends, family, high-net-worth individuals, or boutique funds looking for upside in independent film. Some bring more than money — they provide connections to distribution, access to talent, or credibility to attract further financing.

Upside:

– Flexible terms compared to banks.

– No repayment obligation if the film underperforms.

– Can attract prestige investors who add credibility to the project.

Downside:

– Investors often demand creative input or oversight rights.

– Equity dilutes the producer’s control and share of backend profits.

Legal considerations:

– Always define a recoupment waterfall — who gets paid first, and in what order (investors vs. producers vs. talent).

– Clarify voting rights, creative approval rights, and exit strategies.

2. Debt Financing and Loans

How it works: Producers borrow money, usually against collateral such as pre-sales contracts, tax rebates, or MGs.

Industry practice:

– Banks specializing in entertainment (and private lenders) provide loans if there’s a reliable source of repayment.

– Lenders may insist on completion bonds to ensure delivery.

Upside:

– Provides significant cash flow.

– Lets producers retain more ownership compared to equity.

Downside:

– Loans must be repaid regardless of film performance.

– High interest rates and lender control over production.

– Risk of foreclosure on rights if repayment fails.

Legal considerations:

– Review default clauses carefully — lenders may seize distribution rights if delivery deadlines are missed.

– Ensure collateral is clearly defined (rebates, MGs, pre-sales).

3. Pre-Sales

How it works: Distribution rights are sold in advance to foreign or domestic distributors, based on script, cast, and marketability.

Industry practice:

– Common in Europe and Asia, where buyers commit early to fill their pipelines.

– Pre-sale contracts are often discounted by banks to raise cash.

Upside:

– Generates upfront capital without giving away equity.

-:Demonstrates market confidence in the film.

Downside:

– Locks in low prices; film may be undervalued if it becomes a hit.

-:Loss of flexibility in negotiating later with bigger distributors or platforms.

Legal considerations:

– Delivery guarantees are strict — failure to deliver equals breach.

– Beware of “cross-collateralization” clauses tying multiple territories together.

4. Tax Incentives and Rebates

How it works: Governments offer rebates or credits to attract film productions.

Industry practice:

– Georgia, New Mexico, Canada, Ireland, and the UK are popular for rebates.

– Rebates can be assigned to lenders to secure loans.

Upside:

– Can cover 20–40% of eligible production costs.

– Reliable source of financing that doesn’t dilute ownership.

Downside:

– Bureaucratic compliance with local spending and labor rules.

– Payments may take months or even years.

Legal considerations:

– Incentive must be transferable if being used as loan collateral.

– Producers must track and audit all qualifying expenses carefully.

5. Grants and Public Funding

How it works: Filmmakers apply for funding from arts councils, film boards, or private foundations.

Industry practice:

– Independent and art-house films often rely on grants.

– U.S. options are limited compared to Europe and Canada.

Upside:

– Non-dilutive — no repayment or equity.

-:Adds prestige and credibility to the project.

Downside:

– Extremely competitive.

– May come with content restrictions or cultural requirements.

Legal considerations:

– Ensure compliance with reporting and spending obligations.

– Failure to meet conditions may trigger repayment or loss of rights.

6. Minimum Guarantee (MG) Deals

How it works: Distributor pays a guaranteed minimum fee for rights, regardless of ultimate performance.

Industry practice:

– MGs are rare for independent films unless star talent or strong festival buzz is attached.

– Common in output deals with major distributors.

Upside:

– Bankable security; can be used to raise financing.

– Ensures some level of return.

Downside:

– Distributors recoup their MG first.

– Backend profit is rare after deductions.

Legal considerations:

– Negotiate caps on P&A deductions.

– Always secure audit rights to verify distributor’s expenses.

7. Pay-or-Play Agreements

How it works: Talent gets paid whether or not the project proceeds.

Industry practice:

– Used to secure star actors or directors.

– Attracts investors by attaching bankable names.

Upside:

– Makes the package more attractive and “financeable.”

– Shows talent commitment, which reassures lenders.

Downside:

– Producer may owe millions even if the film collapses.

– Risky without full financing in place.

Legal considerations:

– Tie payment to financing milestones.

– Avoid disguised pay-or-play terms — contracts may look conditional but function as unconditional guarantees.

8. Output and Service Deals

How it works: Distributor agrees to take multiple films (output) or distribute a single film for a fee (service).

Industry practice:

– Output deals common with production companies supplying networks or streamers.

– Service deals used by independents to retain ownership but access distribution.

Upside:

– Provides predictability in distribution.

– Lets producers keep ownership in service models.

Downside:

– Output deals limit freedom; you may be forced to accept lower terms.

– Service deals are expensive; producers bear marketing costs.

Legal considerations:

– Clarify who pays for marketing and delivery.

– Service deals often shift heavy expenses to the producer.

9. Streaming and Platform Deals

How it works: Streamers acquire rights through buyouts or licenses.

Industry practice:

– Netflix, Amazon, and Hulu often buy worldwide rights outright.

– Some platforms prefer licenses for 3–5 years.

Upside:

– Global reach; instant audience.

– Provides upfront certainty.

Downside:

– Usually no backend participation.

– May lose control over windowing and secondary rights.

Legal considerations:

– Define clearly whether rights revert after license term.

– Protect theatrical or ancillary rights if possible.

10. Completion Bonds

How it works: An insurer guarantees the film will be completed and delivered.

Industry practice:

– Required for films financed by banks or international pre-sales.

– Bond company monitors production closely.

Upside:

– Reassures investors and distributors.

– Ensures delivery to buyers.

Downside:

– Expensive (2–3% of budget).

– Bond company can take over production.

Legal considerations:

– Producers must cooperate with audits and production oversight.

– Losing control to a bond company is a real risk if schedules slip.

Pre-Sales and Minimum Guarantees in Filmmaking

In film financing, two of the most talked-about deal structures are pre-sales and minimum guarantees (MGs). They are not the same, but they often overlap in practice. A pre-sale is when a distributor in a specific territory agrees to buy the rights to a film before it is made. Payment usually comes after delivery, though the signed contract can sometimes be discounted at a bank for early financing. By contrast, a minimum guarantee is a distributor’s promise to pay a fixed minimum sum for rights regardless of how the film performs in the marketplace, giving producers and lenders a degree of security. The two models often combine — for example, a distributor may commit to a pre-sale that also carries an MG, or a sales agent may guarantee a worldwide MG and then cover it through multiple territorial pre-sales. Producers like these hybrid structures because they provide bankable security, attract investors, and demonstrate market demand. The key is to read beyond the label: whether called a “pre-sale” or “MG,” the actual contract language controls payment timing, deductions, delivery obligations, and rights granted. A smart producer treats these deals as complementary tools in the larger mosaic of film financing.

Red Flags in Film Contracts

– “Net profits” definitions: Often manipulated so there are never any net profits.

– Cross-collateralization: Losses in one market offset profits elsewhere.

– Excessive term lengths: 20–25 years or perpetuity deals tie up rights forever.

– Rights creep: Broad grants cover sequels, spin-offs, and merchandise.

-;Lack of audit rights: Without them, producers can’t verify distributor’s accounting.

Conclusion

A film is not just art — it is a bundle of intellectual property rights, and every financing or distribution agreement is a negotiation over those rights.

The deal’s name does not protect you — the contract language does. Whether you are negotiating a pay-or-play talent agreement, an MG distribution deal, or a pre-sale contract, the content of the contract determines your risks and rewards.

On October 6th at the Hollywood Park Film Festival, I will expand on these points, share examples from practice, and answer questions from filmmakers about how to avoid the traps hidden in many film contracts.

As an an Entertainment  snd IP attorney, my mission is to help creative professionals protect their rights, secure financing, and build sustainable careers in this rapidly evolving industry.