Quick Contract Guide for Commercial Theater Productions

Quick Contract Guide for Commercial Theater Productions

Although they never get top billing, contracts form the backbone of commercial live theater productions. By clearly establishing the rights and responsibilities of the major participants, from playwrights to producers to actors to set designers, contracts protect the interests of everyone involved and position shows for success.

When entering into contracts for Broadway plays and musicals, it is critical to obtain experienced legal guidance and have a clear understanding of your rights and obligations. This article offers a broad overview of the key contracts required for a successful commercial theater production and offers guidance regarding what to look for when negotiating each type of agreement.

Producers must execute numerous agreements to get a commercial production off the ground. To start, producers must raise money to fund the show, which often involves forming a separate business entity. The required documents will depend on the type of entity; for instance, forming a limited liability company (LLC) requires articles of organization, which form the LLC, as well as an operating agreement, which outlines the rights and duties of the LLC members. You can find a more detailed discussion of the key requirements of an operating agreement here.

Raising funds from investors also requires several legal documents, such as accredited investor questionaries, offering documents, and subscription agreements. When drafting these documents, compliance with state and federal securities laws is paramount. While production companies can often rely on exemptions from state and federal securities requirements, instruments need to be drafted carefully to achieve compliance.

In many productions, there is more than one producer, which necessitates the execution of a co-production agreement. The contract should define the working relationship between producers, including division of costs, revenues, and profits, the allocation of responsibilities and tasks, and the ownership and licensing of intellectual property (IP) rights. To help ensure that disagreements between co-producers don’t derail the production, it is also essential that agreements include a provision addressing dispute resolution.

Contracts for content creators, including playwrights, composers, and lyricists, largely center on intellectual property (IP) rights. To avoid disputes, contracts must clearly specify what rights are granted, what rights are reserved, and under what specific conditions the licensed content may be used. For instance, a rights agreement should specify the rights granted to producers to perform the play or musical, as well as the number of performances, dates, and venues. It should also address whether the playwright, composer, or lyricist retains ownership of the copyright in the work.

Other key aspects to review closely include termination and approval provisions. For instance, termination provisions should set forth what happens if there is not a production by a specified date. Approval provisions include those addressing the right to be present at castings, rehearsals, and performances; the right to require approval for any script changes; and the right to retain artistic approval over the cast, set design, and other key creative aspects of the production.

Content creators also often execute royalty agreements with producers. Contracts should clearly outline the payment structure for royalties, including any minimum royalty payments that must be paid, whether any advances on royalties must be paid, the method for calculating royalties, whether the producer may use amortization, the producer’s financial reporting obligations (i.e. the provision of profit/loss statements), and payment cycles. Contracts must also clearly define key terms, such as adjusted net profits and gross weekly box office receipts.

In some cases, content creators will collaborate to create a new Broadway show. A collaboration agreement between a playwright, composer and lyricist helps ensure everyone is on the same page by detailing the rights, responsibilities, and expectations of the collaborators. Provisions that should be closely reviewed include those pertaining to each party’s expected contributions to the project, the allocation of royalties and profits, IP rights, and dispute resolution mechanisms. 

One main focus of legal agreements involving directors, choreographers and similar professionals is fees and royalties. In many cases, directors and choreographers are compensated using a mix of contractual fees and royalties. Fees are generally paid upon executing the agreement and then in set installments prior to the first performance. While the amounts and timing may vary, it is imperative that agreements establish what contractual fees will be paid, as well as the schedule for such payments. Many contracts also call for royalty payments to be made to directors and choreographers. To avoid disputes, the contract’s royalty provisions should also be clearly defined.

Of course, it is not all about the money. Legal agreements between producers and directors and choreographers also establish other rights and obligations of the parties. For instance, directors and choreographers are often granted a certain amount of creative control, such as the right to select the cast and dance company. Contracts also often provide that directors and choreographers retain the rights to their direction or choreography while granting the producer a license to use such rights in any stage production covered by the agreement.

Finally, a Broadway show can’t take place without a talented cast and crew, including actors, set designers, and sound technicians. Producers must also execute employment agreements with all members of their creative team and technical crew. While contracts will vary by profession, issues to closely review include the duties of each party, compensation (salary, profit-sharing, benefits, etc.), dispute resolution, billing, postponement or abandonment of the production, and IP rights.

Clear and enforceable legal agreements ensure that your commercial theater production has a solid legal foundation by safeguarding the legal interests of all key players and minimizing the risk of disputes.

Navigating the numerous legal agreements required for a Broadway show or musical can be challenging, particularly given the many legal and financial interests involved. Each production is also unique, which makes it imperative to work with experienced counsel to tailor contracts to protect your best interests.

The attorneys of Scarinci Hollenbeck’s Entertainment & Media Group provide dedicated guidance to producers, potential investors, and other key players in New York City’s theater industry. We understand the myriad of legal issues that can arise when producing theatrical performances. That’s why we’ll work with you every step of the way to minimize risks and position your project for success.