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TOPIC: HOUSE ALLOWANCE

HOUSE ALLOWANCE 08 Sep 2000 17:35 #16178

  • RICK
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HEY EVERYONE, I HATE TO ADMIT THAT I AM THIS DUMB BUT WHAT IS THE " HOUSE ALLOWANCE" THAT I SEE ON FILM COMPANY STATEMENTS? AND HOW DOES IT AFFECT ME?


THANKS EVERYONE FOR LOTS OF FUN TIME SPENT READING YOUR COMMENTS AND TALK. I CHECK EVERYDAY TO SEE WHAT'S GOING ON.
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Re: HOUSE ALLOWANCE 08 Sep 2000 18:59 #16179

  • Mike
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For our theatre the "house allowance" has never come into play as we have never gotten to the 90/10. We invariably pay the settled percentages. I'd like to hear a good answer to house allowances/90-10's, etc. also. As I understand it... if you filled the house 5 times in a day for a week the 90/10 would kick in. So you'd deduct the "house allowance" which is calculated on seats and overhead from the total gross and then keep 10% and pay 90% rental. I understand the big theatres in cities routinely actually end up paying the 90 so the allowance is a hard fought number. In my case I wish I was fighting over this! Where is your theatre Rick? Good question and good to know you're out there.

Mike Hurley
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Re: HOUSE ALLOWANCE 09 Sep 2000 00:35 #16180

  • RoxyVaudeville
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HOUSE ALLOWANCE

I did this once before and would send you to that post to read...except for the fact that I can't find it. Therefore I will be happy to explain it again.

Every theatre is supposed to have an agreed upon house overhead. It should be what it cost you to run your theatre for a week NOT including film rental and concession supplies.

The stated purpose was that since the studio takes the major risk in fiancing and making the films, that once the theatre has hit the break even point that the studio should recieve the lions share of the revenues.(especially if it's an MGM picture...that's a joke son!)

If an accurate house expense is used then the theatre should be guaranteed a ten percent profit on all revenues above the breakeven point.

Film rental is usually determined on a "whichever is greater" method. The contract might say: 35% versus 90/10 over accepted house expense. If your agreed upon house overhead is $2000 it would appear on your contract or confirmation like this: 70% vs 90/10 over 2000 or 35% vs 90/10 over 2000.
If you are contracted to play a film for four weeks you would probably see: 70, 60, 50, 40% vs 90/10 over 2000. All additional weeks at 35% vs 90/10 over 2000. Whichever garners the higher amount of film rent is what the distributor will get.

Let's say you gross $5000 for the week, and your contract calls for 35% vs 90/10 over 2000. You would subtract your $2000 overhead from the $5000 Box office gross leaving you $3000. You would then take 90% of the remaining $3000 which would be $2700, which is actually 54% of the original $5000. Therefore the distributor will take that amount which would be considerable higher then the straight 35% which would only have been $1750.

Most distributors have a per seat figure that they will accept for newly constructed theatres, but older theatres are at the mercy of whatever you can negotiate. If you take over a theatre that was operated by a chain, you will inherit their house expense that will usually be higher then what it really is. If you take over from an independent it will most likely be lower then the real amount.

I hope this made it clear...if not let me know and I'll try again.
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Re: HOUSE ALLOWANCE 09 Sep 2000 23:18 #16181

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Damn, RoxyVaudeville, you're good! That's about the best explaination i've ever read of how house allowences work. Now, could you explaine what women REALLY want . . . .???
Paul Turner
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Re: HOUSE ALLOWANCE 11 Sep 2000 19:49 #16182

  • Mike
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Roxy; you shouldn't have to write so well twice! In the future you'll be able to do a search under the name of house allowance!

What DO women want? Paul/Avalon: have you been to Paris?
Michael Hurley
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Re: HOUSE ALLOWANCE 22 Sep 2000 09:41 #16183

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Women REALLY want a trip to Paris. More when the jet lag wears off . . . .
Paul Turner
Avalon Cinema
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Re: HOUSE ALLOWANCE 14 Feb 2001 20:12 #16184

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I recently got slammed with this 90/10 house allowance mumbo jumbo. I called the studio on it and got their explanation and have read Mike and Roxy's too. Mike said, ". . . if you filled the house 5 times a day for a week the house allowance would kick in." I have, unfortunately, NEVER filled my house for even one show. The studio rep was kind enough to tell me that my $1400 house allowance might be too low and I should submit a proposal to increase the limit (which would be retroactive). She said to include a list of all my expenses. This sounds simple enough, but I want to make sure that figure is high enough so the 90/10 never comes into play again. Another concern I have is, I am eliminating over 50 seats in my auditorium soon. (Seating Guy--how soon????) and want to know how the number of seats affects the allowance.
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Re: HOUSE ALLOWANCE 15 Feb 2001 17:26 #16185

  • RoxyVaudeville
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Burney:

Whether you fill your house or not has nothing to do with a 90/10 deal. Naturally if you did fill your house for every show you would end up paying 90/10, but you would actually hit the 90/10 long before that. It really has nothing to do with the number of seats sold and everything to do with your deductable house overhead. Let's face it, your house overhead should be what it costs you to run your theatre minus film rental and concession supplies. However, I agree you should try to get it as high as you can, as much over the real overhead as possible because the distributors will try to get it as low as possible... lower then what your real costs are. They don't know what your costs are and they don't care. If you were building a new theatre they have a formula based on a per seat cost, but that doesn't come into play at existing theatres. It's whatever you can negotiate. I got screwed big time a few years back by Fox because my house expense was way too low, and when I requested to have it raised, they said that it is there policy not to increase it more then 10% during any one year. That would have kept me about 20% below my real expenses.I invited them to send someone to my office and check my books... look at all the actual bills and invoices, see my checkbook...whatever and anything that they would want to see. They weren't interested. It didn't matter what my real costs were, they didn't want to know. They stuck to their guns and I still have a 20% deficient, and how I don't do anything to help promote business for the first week of a film as I would like to keep the grosses down as not to pay the 90/10.

It sounds like you may have someone willing to look at your real expenses so go ahead and submit them, but don't forget anything. Goodluck! Let us know how you make out.
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Re: HOUSE ALLOWANCE 28 Apr 2001 01:10 #16186

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I am finally ready to submit my expense statement and have included the following:
rent, utilities (which could go up 40 friggin' percent), insurance, salaries (mine included even though I have never got one), payroll taxes, accounting services, advertising, dues & subscriptions, maintenance & repairs, freight, and equipment upgrades (dts & seats). Did I forget anything?

Also, usually my theatre is only open Friday thru Sunday. In the summer I add Mondays. Occassionally (maybe twice a year) I get a new movie and play it every day for two weeks. That is what happened when I got the 90/10 fee. The movie wasn't brand new, but it was #1 for several weeks. Anyway, my expenses obviously will go up when I am open every day. How is that taken into account?
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Re: HOUSE ALLOWANCE 29 Apr 2001 19:01 #16187

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My experience is that I have never gotten to the 90/10 even when a lot of sell outs occur. It's always ended up beiong settled straight %'s. Myself I would not get too worked up. Mike

Mike Hurley
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Re: HOUSE ALLOWANCE 30 Apr 2001 01:20 #16188

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I am only worked up because they made me pay the 90/10 for "Grinch". It didn't sell out. I just played it for a few extra days. And if you all remember, that was the movie that started all my static problems. If I don't get that allowance jacked up I will be paying the 90/10 for "The Mummy Returns" too--if I get it before July!
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Re: HOUSE ALLOWANCE 18 May 2001 02:46 #16189

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Universal upped my house allowance by over 100% today. Yea! Think they might read this forum. And the other good news is I have Mummy Returns coming in two weeks--long before July.
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Re: HOUSE ALLOWANCE 18 May 2001 19:46 #16190

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Hi! How many seats do you have? Maybe we never hit the 90/10 because we're only 3 screens with 160 seats each? Has anyone else had experience in this regard?
Michael Hurley
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Re: HOUSE ALLOWANCE 21 May 2001 00:42 #16191

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I have one lonely screen with 252 brand new seats. At the time of "Grinch" I had 317 seats. My allowance was also increased for "Shrek" this week.
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Re: HOUSE ALLOWANCE 05 Feb 2002 18:24 #16192

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Just bumping this back to top.
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