How Screenwriters Should Negotiate Their Screenplay Options


Congratulations. An agent, manager or film/ TV producer is interested in your screenplay. Woo hoo! What now! You have options. Sorry. I had to throw that in.

A screenplay option agreement grants a movie or TV producer the exclusive right to market your script, secure finance and attach talent. It does not grant them intellectual property rights. They don’t own your film script unless they purchase it outright.

A screenplay option is typically negotiated at around 10% of the purchase price. According to WGA conventions, the purchase price is around 3-5% of the total production budget. However I’ve heard of screenplay options being negotiated for as little as $500 and as high as $50000. For non WGA writers aim for $10000-20000.

It’s a sad fact that over 90% of purchased screenplays are never produced. Therefore it’s important that you structure your option agreement to receive as much money up front.

Get familiar with some of these key terms that you should negotiate in your initial DEAL MEMO (1 page summary) of the key terms of your option contract.

SCREENPLAY OPTION AMOUNT

This is expressed as dollar figure A AGAINST figure B. Figure A is the UPFRONT amount you receive upon signing. Figure B is the BACKEND amount you receive once your screenplay is sold. This is also called the EXERCISE PRICE. As I mentioned earlier, ensure the negotiated upfront amount is as high as possible. So figure A plus figure B equals the PURCHASE PRICE assuming there are no further amendments.

It’s important to know that the backend amount is OFFSET against the upfront amount. Think of the upfront amount as a deposit and the backend as the balance. You are guaranteed the upfront amount, but not the backend. Nor do you have to return the upfront amount if your screenplay isn’t sold.

And finally, NEVER accept a zero or dollar option. I can’t even think of an exceptional circumstance to break this rule. If a production company wants to option your film script, they need skin in the game to show they are serious players. If they can’t offer you any money, what are they chances they can raise financing to purchase your screenplay.

QUIZZ TIME: Is a $100 screenplay option against $100000 a good deal?

OPTION PERIOD

This is the length of time the option period lasts. I’m assuming everyone already worked that one out. I’m also assuming that the answer to the quiz is %#%$#%@&, leaning towards a negative.

Aim for the shortest option period possible. They are typically around 6-12 months. The lowest option period I’ve seen is 3-6 months. The highest I’ve seen is 18 months.

At the end of the option period, there are three possible outcomes: the option lapses and all rights revert to  you, you grant a renewal or an extension, or the screenplay is purchased outright.

OPTION RENEWAL/ EXTENSION

Many option contracts include a renewal clause, especially if they have longer term periods. One company I know with a long option period insists on the right to automatic renewal at their sole discretion. Be wary of companies that demand this clause.

Given the unpredictable nature of the film industry, there are often valid reasons for an option renewal/ extension. Ask for better terms if a film producer asks for it.

At the very least, ask for an option amount and period at least the same as the initial option. You are within your rights to negotiate a higher total amount (especially upfront) and a shorter option period. Never go lower, unless there is really good reason.

APPLICABLE VS NON-APPLICABLE FEE

Be on the lookout for these terms. They are often omitted in option agreements, to the financial detriment of the screenwriter. They become especially relevant when negotiating extensions or renewals.

An applicable option amount refers to the upfront amount that is offset against the backend amount. It is subtracted from the final sales price.

If you renew  or extend your option agreement, ask for a NON-APPLICABLE renewal amount. This ensures that you are not short-changed against the exercise price.

SCREENWRITING CREDIT

The ultimate goal of a screenwriter is to be a produced screenwriter. Ask for the coveted WRITTEN BY credit. This is harder than it sounds. If your screenplay is substantially rewritten after purchase, you may not be entitled to it. WGA credit rules state that a writer must have written at least 33% of a produced screenplay to be awarded a “written by” credit. You counter this, make sure you negotiate a STORY BY credit at least.

Similar rules apply for TV writers. If your have written a TV pilot negotiate a CREATED BY credit. This carries a lot of weight in your screenwriting career.

(RE)WRITING

Given that few screenplays are filmed as is, ask for the right to write the first rewrite. It’s only fair, right?

TV writers should demand the same and ask to write at least one episode of their TV series per season.

You should not be doing any rewrites during the option period unless they are paid. You may not have that much bargaining power if a producer has no intention of hiring you for any rewrites or polishes. These clauses are geared more for hiring screenwriters.

PAYMENT SCHEDULE

This is important because many unscrupulous producers don’t feel that screenwriters need to paid in a timely fashion. As professionals we do. Once you negotiate the amounts ask that they be paid 1-2 weeks after you submit the deliverables. If they don’t like it or change their mind about a project, too bad. You still need to be paid. State the currency and method of payment, usually a bank check or direct deposit into a bank account.

When you sell a script ask for 50% of the scheduled fees upfront and the rest upon delivery if you’re hired to do a rewrite.

So there you have it. A neat intro to navigating your first option agreement. Know your worth, but also be mindful of the realities of the industry. If you are a big budget movie or TV writer, a producer may not be able to secure development and production finance unless a more experienced screenwriter is hired. However, a more experienced screenwriter has a higher QUOTE and costs more, so don’t be afraid to bargain hard.

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