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TOPIC: How does the 90-10 work again?

How does the 90-10 work again? 08 Nov 2001 17:15 #23057

  • Mike
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90 10 .....are there two numbers that cause more confusion? I'll admit it up front: The 90-10 has been at best obscure to me and I have not ever clearly understood it except to think that it has rarely if ever applied to me. I know we talked about it here at length but could not search it out. So... Today I fuguired out the house allowance for a theatre and we settled on about 11.00 per seat and with Harry scaring up a 60% aggregate rental the 90/10 looks like it might apply. Can you help?

Mike Hurley
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Re: How does the 90-10 work again? 09 Nov 2001 01:22 #23058

  • RoxyVaudeville
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I don't understand why this is so hard to comprehend. I found where I posted this before and pasted it here so I wouldn't have to type it all again, and that was the 2nd time I had explained it as you will see.

It was under: 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: How does the 90-10 work again? 09 Nov 2001 15:52 #23059

  • Mike
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Just the answer I was looking for! From the guy who knows. In negotiating the house allowance we had 2 theatres: one with 188 and one with 96 seats / the allowance was 2250.00 per screen and we agreed to lower the the one. Another theatre has a much higher house allowance on a per seat basis. What is a fair for the theatre per seat house allowance? In mine one was @11.97 per seat and another was 7.80 per seat? How do you truly debate this seat allowance? I uderstand the 90-10 it's how do you divine the proper allowance?

How often does the 90-10 come into play when you have paid film rental?

Best/ Mike

Mike Hurley www.bigscreenbiz.com

[This message has been edited by Mike (edited November 10, 2001).]
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Re: How does the 90-10 work again? 09 Nov 2001 21:15 #23060

  • Avalon
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Thanks, Roxy. You have a way of making that make sense. Have you thought about writing a book?
Paul Turner
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