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Studios toe the $20 mil line

Studios are digging in their heels on star salaries: $20 million is as high as it gets.

Their determination has sparked debate in Hollywood over their ability to hold the line. Indeed, some argue that the $20 million barrier has already been crossed, but studios have made cosmetic adjustments to conceal that reality.

The whole issue is taking on growing importance, because Hollywood wants to prove to bankers and investors alike that the cost spiral can be contained and fiscal accountability restored.

Accountability has become a hot button in view of such events as the tumult at Sony, the Time Warner-Turner consolidation and huge debt burdens on companies like Viacom.

There is so much intrigue surrounding the $20 million barrier that Hollywood is regularly awash with rumors that a Mel Gibson or an Arnold Schwarzenegger has managed to make a breakthrough. While the rumors are emphatically denied by the studios themselves, and by the agents, talks persists that special accommodations have been made – such as a $5 million guarantee against future revenues from merchandising.

When you bid upon a star

But by and large, agents seem to be more responsive to the studios’ desire to hold the line. “I know they have a point to prove and I’m going to help them to the degree I can,” says one top agent. His out: If a rival star breaks the barrier, he will be the first to demand parity.

Following the well-publicized deal for Jim Carrey in “The Cable Guy” and a three-picture arrangement for Sylvester Stallone at Universal, no one wants to be pegged as the culprit who pushes the bar higher.

The wild cards, the outside indie players who put pressure on salaries in the past, are gone.

“There’s no one out there in the studios with that mindset,” said one studio exec. “There’s also no Carolco, no Savoy, no Dino.”

Even more, following Carrey’s $20 million payday, and the inevitable price escalation for other A list stars, there may have been a backlash against such hefty sums, with stars forced to defend their worth and the studios grousing that they can hardly turn a profit on their core business. As they have in sports, the media zeroed in, even comparing their paydays to performance at the box office.

“I don’t know if you can break it,” says one agent. “It’s a question of responsibility, a question of good business sense.”

The $20 million men

Nabbing $20 million paydays have been Tom Cruise, Sylvester Stallone, Jim Carrey, Arnold Schwarzenegger, Mel Gibson and Harrison Ford, with speculation that Kevin Costner, Brad Pitt and John Travolta are not too far behind. There were reports that Travolta was offered $21 million for a pic, but it never happened.

“Literally, we look at movies and wonder whether we can make any money,” says a studio exec. The exec notes that there has been more of an awareness that there should be a collaborative effort to control costs.

The $20 million figure is somewhat of a psychological barrier in the minds of studio heads. Agents’ eyes have been on the $25 million figure, but “no one wants to be the first one to break the barrier,” says one agent.

The current standoff is over Bruce Willis’ fee for “Die Hard 4.” Sources say he asked for $25 million, but the studio balked at surpassing the $20 million mark.

He is not the only one. Schwarzenegger, Carrey and Gibson have asked for $25 million, only to be turned down, sources say.

“All of the studios say no,” says one agent. “There has been a retrenchment. It seems to be a watershed point of not wanting to go beyond that figure.”

The highest payment agents and execs expect to see is a whopping $20 million against 15%-20% of the film’s gross, such as Carrey’s reported take on New Line’s “The Secret Life of Walter Mitty.”

On “Conspiracy Theory,” studio sources say that although efforts were made to defer upfront compensation because of the presence of two major leads, Gibson ended up with $20 million and 15% of the gross, while Julia Roberts got $11 million.

The gross factor

To be sure, salary talk has largely focused on the upfront fees, but A list stars are commanding as high as 20% of the gross, potentially even more damaging to a studio’s results.

And there has been wide speculation that studios and agents are finding more and more complicated scenarios, with backend scales and percentages set at certain levels of box office take, or giving advances against ancillaries, to assure leading stars that their paydays will in the end set them beyond the $20 million mark. Add to that perks, such as producer fees, production company overhead, personal trainers, cars and the use of the corporate jet, and paydays get even higher.

Even as execs hold the line at $20 million, one exec notes that it isn’t exactly something to be proud of. After all, it is $20 million.

But stars such as Stallone, with “Copland” and a deal last week to star in “Yellow Handkerchief,” and Willis have shown their willingness to reduce or even waive their upfront fee in exchange for greater pieces of the backend.

Earlier this year, Sandra Bullock agreed to take less than her usual $11 million fee for 20th Century Fox’s “Speed 2” in exchange for more of the backend. Her payment also was tied in to her starring in another picture, the comedy “Hope Floats.”

Homevideo royalties?

Agents also are making greater demands on studios to tap into a greater piece of homevideo, considered the studios’ sacred turf. Deals include bonuses against the video sales.

But studios have been protective of the video loot. On “Mission: Impossible,” Tom Cruise asked for a substantial portion of the video, but didn’t get it. As the producer on the movie, he waived his upfront fee for a big part of the backend.

Says one agent: “There are all kinds of way to skin a cat.”

And those in the salary game have long argued that the hefty salaries paid to the middle echelon, to the Kurt Russells and the Chris Farleys, carry more risk.

“The center has always been the problem,” says one producer. “That’s where the business has been ripped apart.”

The debate still continues on who is responsible for stimulating the escalation of fees.

Much blame has been put on players such as Savoy and Carolco, as well as on U’s $60 million three-picture deal for Stallone, and Mark Canton when he was chairman of the Columbia TriStar, for paying Carrey $20 million for “The Cable Guy.” But people familiar with the U deal say that it doesn’t contain the $20 million upfront fee that everyone thinks, but rather includes many contingencies.

It was happening anyway

Those close to the Carrey deal for “Cable Guy” say that they unfairly got the blame for raising the bar, and that salaries such as Stallone’s were heading in that direction anyway. The movie also carried a $48 million price tag, peanuts compared to others in the marketplace at the time.

Even other studio execs at the time admitted that they would have made the same deal. They say they would have just found a better way to mask it.

“At some point they will want someone bad enough, important enough, to camouflage it in some way,” says one agent.

And even with a more sobering view to costs, there are still doubts that the salaries will hold for much longer.

Although the salaries are steady so far, what might change the equation are co-financing arrangements, bringing new players in the game.

“It would be very possible, especially as movies are put together with alternative financing,” the agent said.

And as Hollywood continues its search for the sure bet, who knows? Maybe the right $20 million-plus price will get Stallone to do “Rocky 6” or Gibson to do “Lethal Weapon 4,” or Arnold to do another “Terminator.”

“It will be broken,” says another agent. “Someday it will be.”

(Anita M. Busch and John Brodie contributed to this report.)

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