The following is an excerpt from the forthcoming book detailing how Polychrome Pictures, Arnie Holland and Geno Taylor screwed up a multimillion dollar deal with National Lampoon.
WARNER BROTHERS AND NATIONAL LAMPOON
Thursday May 19, 2005
I get to Bellavic’s building early and call Jerome Courshon. He is running five minutes late. I decide to go up to the office and wait for him there. Once on the third floor I enter Bellavic’s office door. I’m now standing in a hallway with no receptionist or place for a receptionist.
The office is new and still under construction. I notice a guy behind a desk so I approach him. We shake hands; his name is DANNY RODRIGUEZ, Geno Taylor’s partner. Danny leaves me to tell Geno I arrived. Then Danny tells me to wait in the conference room.
I am left alone for about 10 minutes. I stare out a large picture window in the conference room across the 101 freeway at a view of mountain mansions and dream. I can overhear Geno on the phone in the next office, but I try not to listen.
At 1:03 Geno enters and introduces himself. I tell him Jerome is running late and Geno asks if it is okay for him to make a few calls in the meantime. I accede and continue to take in the view.
A few minutes later Jerome arrives. We push some chairs into Geno’s office. Geno then tells me what he thinks of Kisses and Caroms. He reiterates what Jerome has already told me in confidence. Geno wanted more sex and nudity, but Arnie Holland loved the movie so they are willing to proceed.
I spend most of the meeting listening. Jerome and Geno get started on topics that don’t really involve me. But then Geno refocuses on me. He looks me dead in the eyes as he speaks. He is kind of hard edged. Which isn’t bad, but it isn’t comforting either. He is all business and sort of talks at me.
When it’s finally time to get to the numbers, Geno is a bit taken back. He says, “I usually make deals over the phone. I’m not used to doing it face to face.” I hold up my cell and say, “I can call you if you like.” We laugh.
Finally the numbers are divulged. I will get 25% of Polychrome’s (Bellavic + Lightyear) gross money. The movie will definitely be distributed by Warner Brothers Home Video and we’d be able to use their logo. Most likely Warner will put a suggested retail price of $19.99 and the wholesale is 50%, so $10 each. Then Warner takes 15% as their distribution fee and I will get 25% of the remaining 85%.
Geno says on the low side Polychrome needs to move 35,000 units. But not all units are sold at $10 each. Roughly 20,000 are revenue share (rev share), so we’re talking 15,000 units at $10 each or $150,000. The 20,000 rev share units should provide $115,000 for a total of $265,000 on the low end. Take 15% off the top for Warner’s distribution fee or $39,750 and we have $225,250. Subtract $3,000 for the MPAA rating, $12,000 for Errors and Omissions insurance, and $20,000 (estimated) for advertising and we’re down to $190,250. We get 25% of that which is $47,526.50. This is on the low end.
During the meeting I bring up National Lampoon. Geno looks straight at me and says, “If you get Lampoon I can move 100,000 units.”
At the conclusion of the meeting Geno said he’d email me a deal memo offer, which will include the exact numbers. Those above are just figures we threw around. This deal memo will be sent to me by the end of the day.
Overall I’m stoked. Our little flick has made it to Warner Brothers, the largest home video distributor in the world.
Friday May 20, 2005 LAMPOON DAY 1
I call National Lampoon at 10:50 a.m. and speak with Barry’s assistant Noah. I ask if he liked the cookies I sent, he says they were good. He indicated Barry watched the movie. I tell Noah I have a deal brewing with Warner Brothers and to pass that on to Barry. He says he will and Barry would call me back.
At 11:50 a.m. Barry calls me. He says he has an office filled with people who love cookies and he liked the flowers, but they died on his desk. We exchange a playful banter.
He says the reason it has taken so long to get back to me is because Lampoon is in a transition. They will stop acquiring third party products and just make five features a year.
He says he likes Kisses and Caroms, but there isn’t enough sex and nudity. I reply, “That’s true about a lot of Lampoon flicks.” We disagree a bit and finally I say, “Come on, it’s a good movie!” He laughs and agrees. He then tells me a lot of people in his office liked Kisses and Caroms. So he’s willing to do a license deal with us.
He says, “Typically we get a distribution fee in the low six figures and eight percent of distributor gross.” I say, “So under $500,000?” He responds “More like $150,000.” I ask, “Are the numbers negotiable?” He says, “Everything is negotiable.” I ask, “How many units do you typically move?” He says, “The last two that went out through MGM and First Look moved 290,000 units.”
I’m giddy as a schoolgirl at a boy band concert. The high I’m on can’t be expressed with words or felt with drugs.
12:10: I call Geno’s office and speak with Danny. Geno will be in within an hour. I give Danny all the details.
Yesterday, Geno told me they could move 100,000 units if it was a Lampoon title. So here’s that math.
100,000 units at $10 each is $1 million. Subtract 15% for Warner and 8% for Lampoon that leaves $770,000. Now subtract a $150,000 license fee and we’re down to $620,000. 25% to us is $155,000 for a National Lampoon/Warner Brothers movie.
I call Jerome and leave a message.
I call Deanna to tell her the great news.
Then I call Michael to tell him the great news.
At about 2:30 Jerome calls me back. I give him all the details. I also tell him that I spoke to Ken Hall to get his contact at Ventura. I explain that Lampoon is more important than Warner. I’d love to have both, but if Geno can’t make it happen then I will make Lampoon happen with someone else. Maybe Barnholz who has an output through Lions Gate, or Lighting Entertainment who has a deal with Sony?
I explain that if need be I can get $150,000 within a week. This surprises Jerome. I tell him I know people with money, or I could mortgage my house, but if Polychrome can pay it, then great.
I voice my concern that I haven’t heard from Geno yet. Jerome says he will call Geno and get back to me.
This is a big deal for all of us. I certainly want National Lampoon and Warner on board for myself, but this will be a big deal for Polychrome. It’ll be their biggest movie. It’ll strengthen their relationship with Warner. Also Jerome will score points because he brought them our Lampoon flick. It’s a win/win for everyone.
I suddenly feel powerful. Lampoon is onboard with our movie. The deal doesn’t happen without us. So at this point Polychrome needs us more than we need them.
Lampoon has a built in audience of males 15 to 25. This is the money demographic. By becoming a Lampoon title we’ll secure shelf space in Wal-Mart and Best Buy, not to mention the longevity of shelf space in Blockbuster, Hollywood Video and Movie Gallery. Old Lampoon titles maintain shelf space on the “New Release” rack of video stores for a long time. They rent well, and when they leave that rack they never leave the store. They always stay in the comedy section.
Add to that the ease at which we’ll get played on Showtime. Plus with Lampoon onboard we may even get paid to re-edit for Comedy Central.
Foreign sales should come easier.
Press will be easier. Guy makes a $10,000 movie and then sells it to Warner/Lampoon is newsworthy. This means more exposure and more sales.
We’ll also stand a better chance of getting a good soundtrack CD deal.
And with all this stuff I should be able to land an Agent and secure money for the next feature.
Four years of work has paid off big time. Kisses and Caroms might be my Clerks. Soon I may be moving into Kevin’s neighborhood. Cool!
By nights end Geno never called or sent over the deal memo promised yesterday, so maybe Polychrome doesn’t need me?
Saturday May 21, 2005 LAMPOON DAY 2
I still haven’t gotten a call from Geno. I’m worried.
Jerome calls my cell, He spoke to Geno and the numbers from Warner sound correct. A typical Lampoon title will move about 200,000 units sell-through and another 100,000 revenue share. Geno is committed to making this deal happen and wants to have a conference call with Jerome and I on Sunday at 1 p.m. to discuss how to proceed with Lampoon.
Geno wants to know when Lampoon needs the licensee fee, because Polychrome has cash laid out and wants to make sure they can afford it. Jerome says that Geno did try to call me. Apparently he called the number on our business card twice yesterday which I don’t check often. Argh, couldn’t he see my cell number printed on every page of the press kit?
Later I express my concern to Jerome that Polychrome doesn’t have the funds for A) the $150,000 fee and B) $50,000 for advertising, not to mention an advance for me. Jerome reassures me and attempts to put my mind at ease about Geno and my concerns. I explain that I don’t know Geno, I’ve known him for a couple days and I worry that his hard edge may blow the deal. Jerome again reassures me, expressing that he’s known Geno for two and a half years and feels he can be trusted. I would like to hear it from Geno. But I say over and over “We’ll know tomorrow at 1 p.m.” We hang up.
Sunday May 22, 2005 LAMPOON DAY 3
I’m anxious for 1 p.m. and continually watch the clock. At 12:55 I call Jerome and then call Geno’s office. No one is there. I leave a message and call Geno’s cell. I have conference capability at Breaktime and it seems to work well. Geno answers and I say, “Hey it’s Vince Rocca and I have Jerome Courshon on the other line.” I’m very professional about it. I immediately hear noise in the background and ask if we’re calling at a bad time. He says he’s putting together a scooter for his son, but will take the time to discuss the deal.
The call starts with an awkward silence and then we’re quickly in the thick of things.
First, I give a rundown of my Lampoon call. This is Lampoons last year for third party product, and I caught them at an awkward time, but they like Kisses and Caroms and they’ll do it for around $150,000 license fee, plus 8% of sales.
Geno reaffirms that he called me on Friday, which leads me to believe that Jerome told him I was unhappy when I didn’t hear from him. I figure Jerome is leaking certain things to Geno. I assumed this from day one. When Jerome tells me something in confidence about Geno, I think he’s doing the same with Geno about me.
The conversation bounces around a lot. I don’t want to ask point blank questions for fear of sounding like an asshole. However Geno seems to dance around some issues. So I’m forced to ask the questions to keep the conversation on track.
Geno says Warner confirmed that Dorm Daze moved 190,000 units and Gold Diggers is moving 13,000 a week. He says he’s committed to doing the deal. I ask, “Are you committed to doing it at $150,000 plus 8%?” After some dodging he says, “Does Polychrome have $100,000 to acquire the movie? Yes” to which I shoot back, “But do you have $150,000?” He says, “Yes.” He explains to me that Polychrome has many deals going on and cash all over the place. I use this to say, “I understand that, and I don’t want to strap Polychrome for cash, if you can’t do the deal.” I figured this would touch his ego and he replies, “Polychrome won’t be strapped.”
I then ask, “In addition to the $150,000 do you have $50,000 to put into marketing?” He asks why that matters. I say it matters to me. I want to make sure they can get behind the deal and support it. Not just pay the $150,000 and put the movie on a list. He assures me they will do everything they can to move units. He says the other National Lampoon titles did 200,000 units, he wants to do 500,000 and “No, I’m not going to just put it on a list.”
One thing he said that I didn’t like was that he has two titles that will do 200,000 units and he didn’t have to acquire them for $150,000. He said this to try and keep the upper hand, but at the same time it conveys, “Why does he need to pay $150,000 for Kisses and Caroms when he doesn’t for others?” I don’t believe they have two titles that will do 200,000 units. Maybe they do, but I don’t believe it. Anyway, it was a small statement. I let it pass in the conversation.
The conference call ended kind of abruptly and cold, with just a goodbye. There was no, “I look forward to working with you Vince.”
Tomorrow I’m to call Lampoon in the morning and schedule a call with Barry, and then I’ll call Geno to let him know when to expect the call. Geno says he is busy tomorrow, but will work his schedule around the call.
After we hang up, I call Jerome back and we discuss the call for an hour. I express my concerns, but I do feel Geno is committed and can get the money.
Monday May 23, 2005 LAMPOON DAY 4
9:30 a.m.: I call Lampoon and ask to speak with Noah. After a moment of silence, the receptionist asks if I want his voicemail, I accept and in a moment Noah picks up instead. After pleasantries I schedule an 11 a.m. conference call today for Barry, Polychrome, and I to go over the details.
Next I call Geno and give him the time. He says he’ll write it in his book.
11 a.m.: I call Geno’s office and Danny asks if Geno can call me back. Geno is on the other line and is trying to get off. I give Danny my number.
11:08 a.m.: I call Geno’s office and get Danny. I suggest it might be best if I hold for Geno. In a moment Geno picks up. They work their conference and both Danny and Geno are on with me. I put them on hold and dial up Lampoon. In moments we’re connected to Barry and I make introductions. Geno has problems hearing Barry and this worries me. It just doesn’t sound good for Geno to keep repeating, “What?”
Barry suggests we call into the Lampoon conference line. We hang up and call Lampoon back. The receptionist connects us with their conference system.
The negotiations went like this.
Barry wants to know if Polychrome has a Put Deal or an Approval Deal with Warner. Geno confirms a Put Deal. Meaning Warner takes everything Polychrome gives them.
The numbers of $150,000 and 8% are confirmed. Geno jokes that it’s 6%. Barry jokes that it’s $150,000 annually.
Geno wants to know when the $150,000 is due. Barry says upon signature. Geno wants to know if it can be split 25% on signature and 75% on street date? Barry shoots that down but flips it to 75% on signature and 25% on street.
Barry says to make this deal happen he needs to move another movie out of the queue. So this deal has to be worth it. I don’t question this, but I think it means that a lesser movie is canceled to release Kisses and Caroms.
Geno says he wants the movie to hit stores August or September. Barry says that time of year is busy with Lampoon product. Dirty Love releases August 26, Adam and Eve September 9, Barely Legal September 26.
Some questions are exchanged about deliveries from me, but oddly none are actually posed to me. I don’t inject.
Barry next explains to us that National Lampoon must approve all marketing materials that contain their name. Geno wants to know if Lampoon promotes Kisses and Caroms. Barry explains part of the Lampoon machine. It’s more than a name. He explains some of the Lampoon network, their website, college street teams and on campus marketing. He says he’ll send us the information.
Then he explains that he’d be willing to reduce the license fee in exchange for us spending more on marketing. For Barley Legal, he reduced their $200,000 license fee to $150,000 and the producers put $150,000 into marketing.
Barry says he takes credit for Dorm Daze’s success. It did $58,000 theatrically and $14 million dollars on video. Geno says he checked the numbers and Dorm Daze moved 190,000 units. Barry confirms that was sell-through, but they did $12 million dollars in revenue share. Silence strikes the call as the thought of $14 million dollars is absorbed.
Geno says, “I would like to do a deal in the next few days.” Barry says he is in town and ready to make that happen. We end our 30 minute call.
I’m really surprised by the call. I thought this was a call to negotiate the deal. Geno knew it was 8% and $150,000 before the call, yet no attempt was made to negotiate that, except jokingly. They can’t say I dominated the conversation. But I think they dropped the ball and locked themselves into the figures.
I call Geno to touch base. See if there is anything he needs from me. He asks me a few questions and I think he is shell-shocked by the $14 million dollar number. He wants to know how quickly I can deliver the movie. I tell him, under two weeks.
Geno tells me that if he ships 300,000 units and gets 50% returns he’ll be screwed. He says he can deal with 10% returns but not 50%. I ask why he thinks they’ll get that. He says he doesn’t and that’s why he’s doing this deal, but he just wants me to know if he gets that, he’s screwed.
I get a Power Point presentation on Lampoons marketing machine at 11:44 a.m. It is cc’d to Geno.
No further word from Geno. I speak with Jerome and give him all the details. He is blown away by the $14 million dollar figure. I tell him the ball is pretty much in Geno’s court and I’m still waiting for the deal memo from him.
Geno emailed Barry and I at 4:44 p.m. and wrote:
Barry,
Good talking to you this morning. Look forward to reviewing more information regarding the marketing machine you put together. Would love to make this deal happen this week.
Regards,
Geno
OK, let me dream for a moment…
What if we did Dorm Daze’s numbers? We should be able to, we have Ginger Lynn and she is a bigger star than any of the people in Dorm Daze. So if we did $14,000,000, take 15% off the top for Warner’s distribution fee or $2.1 million, and 8% for Lampoon’s fee or 1.12 million, and we have $10.78 million left. Subtract $3,000 for the MPAA rating, $12,000 for Errors and Omissions insurance, $150,000 for license fee, and $50,000 for advertising and we’re down to $10,565,000. 75% of that goes to Polychrome at $7,923,750 and 25% comes my way at $2,641,250.
Pretty great for a $10,000 movie! I’m getting closer to joining Kevin in the Hollywood Hills.
Okay, coming back down to earth, let’s say we only do a third of Dorm Daze’s revenues, we’d still get $880,328.62. That is a nice hunk of scratch. Of course I won’t keep it all. I intend to split it up five ways. 20% for me, 20% for Michael, 20% for Jay, 20% for Poverty Works to make the next movie, and 20% to be split between cast, crew and others who have helped Kisses and Caroms along it’s journey.
Tuesday May 24, 2005 LAMPOON DAY 5
I haven’t heard from Geno all day. At 11:34 p.m. I get an email from Jerome saying he spoke to Geno at 9 p.m. Geno called Lampoon today and was waiting for information on Lampoon’s marketing machine. I email Jerome back and tell him that I got the information shortly after the Lampoon call. It had been cc’d to Geno as well.
Wednesday May 25, 2005 LAMPOON DAY 6
I wake up and eagerly check email to see if Geno sent me the deal memo. At 9:53 a.m. Geno sent me the following:
Vince,
What’s the word from Berry?
Geno
At 10:59 I respond with:
Geno-
I haven’t spoken to him since our conference call. I believe, as it was left, he is waiting for word from us.
The only correspondence I got was the press materials that were also cc’d to you on Monday at 11:44 AM.
I downloaded the 16mb press materials Power Point doc, zip’d it, and reuploaded it to my server here:
[LINK OMITTED]
-Vince
Geno calls my cell. He wants me to forward him the actual email. I tell him the email doesn’t have any other information except the attachment that I already sent him. I do tell him that in an hour I’ll be at an email terminal and I’ll forward him the text. Geno says he wants to get an offer out to Lampoon today and one out to me. He wants to wrap this up.
At 11:57 a.m. I forward Geno the email.
For the rest of the day I check email every 15 minutes, but get nothing from Geno.
Friday May 27, 2005 LAMPOON DAY 8
I get an email cc’d to me from Danny. The email is to Barry and says the following:
We had a good conversation with the partners of the company, we will be in touch with you on Tuesday….what a good time to call you?
Monday is Memorial Day. So it seems I won’t know anything until Tuesday.
Tuesday May 31, 2005 LAMPOON DAY 12
I get an email from Danny saying they have a call scheduled for Noon with Barry. I immediately call Danny and get his voicemail. I ask if I am to be included in the call and to let me know. I also send an email asking if I am part of this noon conversation.
By the end of the day I call Geno’s cell. He answers and I learn Geno is just off a plane from Mexico with his kids. I tell him I just wanted to touch base about their call today.
He says he wasn’t going to be part of the call because of his Mexico trip and he put Arnie and Danny in charge of it. They attempted twice but didn’t manage to connect up with Barry. Geno makes it sound like Arnie and Danny are to blame for not making the call happen. He then says the call is rescheduled for Thursday.
Geno then asks if Danny has sent me anything. I say, “I haven’t received ANYTHING.” He says he has a theatrical meeting with Danny tonight at 9 p.m. and will make it clear to get the deal memo offer to me.
I get home and there is an email from Danny, it was sent at 7:59 p.m. and states:
The call will have Geno and Arnie to go over their licensing fee..
It has only been 11 days. I guess things are progressing. I’m just so anxious to get it done.
Wednesday June 1, 2005 LAMPOON DAY 13
I call Geno at 3:06 p.m. I still haven’t received anything from Polychrome. Danny answers and I say, “I’m just checking in. Geno said he’d speak with me today and he’d have you send over the deal memo offer.” Danny claims, “Geno and I haven’t seen each other much to speak about it.” I say, “Geno told me that he saw you last night for a theatrical meeting and was going to tell you.” Danny responds, “Oh, I saw him but he didn’t mention it.” He then asks if I want to speak with Geno so that Geno can tell him what to do. “Sure.” He puts me on hold, then picks up a moment later and asks if I could call back in five minutes as Geno just got on a call.
After five minutes I call Bellavic Entertainment. Geno answers and says that he and Danny are just going over what to send me, and the problem is they are running blind without knowing what the Lampoon deal is. He says they will conference with Lampoon tomorrow at 9:30 a.m. I say, “I’m okay to wait, I just haven’t received anything and you keep saying you’ll send something, but I don’t get anything. I’ve been left in the dark, but if you tell me you don’t want to make an offer until the numbers are down, then I can wait and we can talk tomorrow at noon.”
Then I ask, “Am I to be part of the Lampoon call?” Geno says, “No, it isn’t for you, but between Lampoon and Arnie and me.”
Thursday June 2, 2005 LAMPOON DAY 14
I call Geno at 12:53 p.m. and he says, “The Lampoon call went well, Arnie is drafting up an agreement for Lampoon today and also the deal memo for you.” I happily reply, “Great, when should I expect something?” He says, “Today.” I say, “Great I’m away from email all afternoon, but I look forward to getting it tonight.”
Maybe this deal will finally be done tomorrow?
At 2:44 p.m. Jerome calls me to see if I’ve spoken to Geno. I tell him I did and relay the details of the call. Jerome says he too spoke to Geno. I ask if he knew the Lampoon numbers. He says he believes they got them down to a total of $200,000 for licensing and marketing. He says Barry won’t budge on the percentage.
Then Jerome drops the hammer. He says Geno is taking Lampoon’s 8% out of my 25% cut. I blow a fuse. That insults the shit out of me. Who the fuck does this prick think he his? Jerome is taken aback by my anger.
I explain that I brought the movie to the table. I brought Lampoon to the table. To offer less is insulting. I tell Jerome that I will shelve the movie and let the deal go before I let some distributor screw me. Jerome says he too doesn’t agree with it, but says because Geno is laying out so much cash that he needs to recover it.
Jerome mentioned to Geno that maybe we could put the percentage on a sliding scale so once Polychrome recovered their money the percentage would go up. I say I’m open to something like that.
I went on to express my anger at Geno. When I finally calm down I say, “Well, none of this matters anyway. I have to see the numbers tonight, and go from there.”
We hung up.
8:55 p.m.: I check email. Guess what? Nothing from Geno, Danny or Arnie.
Friday June 3, 2005 LAMPOON DAY 15
11:34 a.m.: I check email, and nothing from Geno, but I did get an email from Kevin Smith. He congratulated me on Lampoon and recommended Jackie Eckhouse or John Sloss for an attorney. This is good, now when I call Sloss I can say Kevin referred me.
At 3 p.m. I decide to call Geno’s office. I get the machine. At 3:45 Danny calls me to say that he has everything together and ready to send over. He apologizes for not sending it last night, he says something about family issues. He says Geno will be in within the next 30 minutes and he will look over the offer. After He approves it, Danny will send it to me.
At 6:24 p.m. I get this from Danny:
Geno read, made a couple of changes but before it goes to you it has to go through arnie……he’ll give us the ok on Monday
Have a good weekend
Can you believe this? I’m a neurotic psychotic that is stressed out like a motherfucker and now I have to wait until Monday.
Monday June 6, 2005 LAMPOON DAY 18
9:43 a.m.: I check email and the deal memo has finally arrived. I print it out so I can ponder it in ink.
To: Vince Rocca
Kisses and Caroms Productions Inc.
[address omitted]
Cc:
From: Polychrome Pictures, a jv between Bellavic Entertainment & Lightyear Entertainment
Date: June 3, 2005,
Re: Distribution agreement for “Kisses and Caroms”
Titles: “Kisses and Caroms”
Advance National Lampoon Trade Mark Licensing and marketing fee (not to exceed $150,000)
Term: 10 years
Territory: USA/Canada
Languages: English/Spanish/French (as available)
Rights: Home Video, VOD, Internet, all forms of TV, for North America
Royalty: 15% of Gross Receipts to producer and 8% of gross receipts to National Lampoon
75% of this rate when SRP drops below $15, and 50% of this rate when it drops below $10. Subject to recoupment of advance/guarantee Other Recoupables: DVD authoring, dubs/editing, publicity, graphics,
Quarterly Accountings for first 3 years; semi-annual thereafter
Delivery Materials: Trailer, art work, special features for DVD, Digibeta Master, E&O, close caption and MPAA rating
THE ABOVE TERMS ARE AGREED AND ACCEPTED, SUBJECT TO CONTRACT
POLYCHROME PICTURES, LLC Kisses and Caroms Productions Inc.
By:By:
(Authorized Officer)(Authorized Officer)
By:
(Authorized Officer)
I’m not completely clear what it all means, but I’ll find out shortly.
Chad Leslie at Shoreline sent me an email to pass on Kisses and Caroms. They handle world rights and feel they can’t really do numbers with the movie. He did write I can call if I have any questions.
So I call Chad and give him the whole spiel. He thinks the deal is good, but feels the percentage can be brought up to 20 or 25%.
It’s nice to get a second opinion.
11:41 a.m.: I call Polychrome to confirm dollar amounts for some of their recoupable’s. I speak to Danny. He asks me if he can call me back, he has someone on the other line. I never get the feeling I’m important to these people at all. There always seems to be someone else they need to speak with.
Before we hang up I ask him some quick questions. He gives me these numbers:
How much is DVD authoring? $4,500
How much are dubs and editing? $300
How much will graphics cost? $2,500
Danny then says he’ll call me right back.
4:22: Danny calls me back. He apologizes about it taking so long. I ask him the questions I need answers to and the deal improves, but not by much.
I calculate the numbers based on what Danny told me, then I fax Polychrome a letter with the numbers/math broken down as I understand them, and ask if this is correct:
Units 100000
Wholesale $10.
GROSS $1,000,000.
Warner Bros 15% $150,000.
DISTRIBUTOR GROSS $850,000.
(National Lampoon) Advance $150,000.
DVD Authoring $4500.
Dubs $300.
Graphics $2500.
DigiBeta Master $8000.
E&O Insurance $12,000.
MPAA $3000.
DISTRIBUTOR ADJ GROSS $669,700.
Lampoon 8% $53,576.
FilmMaker Cut $100,455.
Net to Distributor $515,669.
Danny says this is correct, but is quick to explain that Polychrome still needs to pay expenses out of their $500,000. He’s trying to justify it.
Around 7 p.m. Jerome calls me to explain how the Lampoon draw is calculated. 8% of the gross is applied to the $150,000, which means that we need to do $1.8 million before Lampoon sees a bonus above the $150,000. That works out better for Polychrome and my end.
Also, Jerome says that Lampoon has a lot of product in September, which I knew, but that we’re looking at a January 2006 to a February 2006 release date.
Tuesday June 7, 2005 LAMPOON DAY 19
At 10:30 I call Sloss Law. I tell the receptionist, I was referred by Kevin Smith and I’d like to speak with Jackie or John. He puts me on hold then another guy picks up. “Hi Vince!” I am surprised that he knows my name, because I haven’t given it. I then say, “Sloss came highly recommended,” the guy says, “Yeah you’re the one Kevin emailed about.” I am like, “Huh, he did?” He responds, “I think it was you.” This guy tells me John is leaving for China on Thursday, but he’ll take a message and have Jackie or John call me back.
About an hour later Jackie calls me. I explain my situation to her. She asks me to fax over what I have and she’ll look it over. We determine it will be hourly billing and she bills at $375 an hour. She says she might have one of her assistants handle it to save me money, but she doesn’t know how much. She tells me, “Someone will get back to you today.”
I fax her Polychrome’s deal memo along with the spreadsheet I worked up and sent to Polychrome.
At 3:30 p.m. I get a call from Jackie. She has my faxes and wants to discuss them. I explain what the faxes mean and how the deal has blossomed to this point. We then go over what I want out of the deal.
We discuss how she’ll handle negotiations. Jackie says that 15% is an okay deal. 20% is good and 25% is great. Anything over 25% is fantastic. I tell her to shoot for 35%. I explain that I brought Lampoon on board and that alone increased our numbers exponentially. We also discuss the possibility of doing a split deal where I get a higher percentage after a certain dollar amount, or that I get 17% of sell through and 25% of VOD and Rev Share.
She agrees on keeping TV and Internet, we should make it a seven year deal, not 10 and to remove the whole discount stuff if the Suggested Retail Price (SRP) drops below $15.
We hang up so she can call Polychrome and negotiate.
Thursday June 9, 2005 LAMPOON DAY 21
Jackie forwards me the revised Deal Memo from Polychrome. The only deal points that changed are: Internet is removed, and our cut is raised to 20% after 100,000 units ship. It also states that I have to pay out of my pocket for the MPAA rating, E&O insurance, and the DigiBeta master.
2:20 p.m.: Jackie calls me. tells me about her conversation with Geno and that he didn’t seem like he cared about the deal much and that this second offer is pretty much his best offer. She says she is willing to argue but doesn’t want to lose the deal for us.
This is ridiculous, I’m really annoyed with Polychrome.
3:26: I call the Lampoon office and get Barry on the phone. As soon as he picks up, he gets another call and asks me for my number to call me right back.
Barry calls me back. My first question, “Is Lampoon only on board with this Polychrome/Warner deal or if I go somewhere else will you still be onboard?” He says, “Lampoon is on board no matter where you take the movie.” I then ask, “I know you’ve done deals with Ventura, Maverick, and Lightning before, can you recommend someone for me to talk to?” He says, “I’ve worked with those companies, but they won’t front the kind of money that Lampoon requires to do Kisses and Caroms.” I ask, “Is there anyone else that you know of that can do a similar deal?” He says something like his feeling is that Polychrome is my best avenue.
I outline the particulars of my Polychrome deal.
He says, “I can’t council you, but if I were being offered that deal, I’d pass.” He recommends I say, “I’ve brought you something that will only sweeten the deal, why am I being decreased for it?”
I ask, “Does the Lampoon deal include TV, like HBO?” He says, “Yes.” I ask, “Does the Lampoon deal have a term?” He says, “No.” I ask, “My Polychrome deal is for 10 years. What happens in the eleventh? Is Kisses and Caroms always a Lampoon movie?” He says, “Yes, and that is why the deal should be between Lampoon and Vince Rocca, not Lampoon and Polychrome.”
Then he started crunching numbers. He says, “I’ll work on the numbers and see how I can make it work for you,” and he’ll call me back in a bit.
Great! I don’t know what that means. I’m not sure if he’s making a call to another distributor to see if they want to deal on Kisses and Caroms or if he’s going to give us a backend kickback? I really have no idea what “how I can make it work for you” means so I wait.
Friday June 10, 2005 LAMPOON DAY 22
11:50 a.m.: I call Polychrome and speak to Danny. I ask him if there is a time today that I can have a 15 minute conversation with Geno. He says they just got into a meeting and for me to call back in 30 minutes.
Why does this company always brush me off? Do they really have more important things to do than our multimillion dollar flick? Maybe they’re looking at paint chips for the new office?
12:25 p.m.: I call Polychrome, Jesse answers. First time I’ve heard of a Jesse. I ask for Geno and get him. I tell Geno that I need to have a 15 minute conversation with him to go over some things and ask if this is a good time. He says, “Call me back at one.” I accept and hang up.
Hmm, is he looking at carpet samples now?
1:04 p.m.: I call Polychrome. Geno is not in. He’s picking up his kids and will be in momentarily. I leave a message.
2:04: I call Polychrome. The guy who answered says, “Geno is on the phone, has he called you back?” I answer “No.” He then says, “Geno got your earlier message and I’ll tell him you called again.”
2:13: Geno calls me back. First topic is TV. As far as TV goes Polychrome is in the process of assembling a Television division that will solely work on all avenues of TV. Geno has a rep that he can pay to do it, and he’s not opposed to that, but because they already have movies that are in need of TV, it makes sense that they add a TV division.
Next conversation addresses the fronting of E&O and MPAA fees. Geno claims that he never committed to that. I remind him of the things we did discuss and how E&O and MPAA were brought up, but apparently there was confusion. This is why I should have gotten the original Deal Memo before calling Lampoon. Live and learn…
Geno puts me on hold for two minutes. I wonder if he’s picking out window coverings?
Next we explore the possibility of Polychrome getting billed for E&O and MPAA. Geno will have to discuss it with his partners, but based on what Jackie sent him, he and Danny constructed what would be their best offer.
We went on to discuss the SRP reduction clause. Geno says that is Arnie’s doing and it is because they had a video that did not ship what they expected and when they get down to the five dollar and under wholesale price they aren’t making enough money to justify the risk of returns.
I state my case that I am okay with applying this 75/50 to DVD and VHS, but it is unfair to apply it to new technologies that can possibly debut at a SRP lower than $10. He says we can make it pertain to DVD and VHS only.
The next topic is about percentage. I state that we originally discussed 25% and that Lampoon’s 8% was being subtracted from me which will leave 17%. How about we just go for a straight 17%? Long silence then Geno says he needs to figure something out. He puts me on hold then comes back on a second later and says they can do that.
We went back to the E&O/MPAA conversation. I propose that if I front the money, can it be placed in a recoupable/reimbursable slot so I don’t have to pull it out of my 17%. Geno offers this. They have an offer to Lampoon now with a structure that pays Lampoon $50,000 when I deliver, $50,000 two months before shipment and $50,000 right after street date. If Lampoon accepts that deal then they can front the MPAA/E&O/DigiBeta costs.
We exchange pleasantries, Geno apologizes for it taking so long, he has a lot of responsibilities and it’s not that he doesn’t care. He says, “I do care. I’m a straight shooter. I tell it like it is and like it isn’t.” He feels the bigger challenge is getting this deal done through National Lampoon. “What is the obstacle? If they say no to the 50/50/50 breakdown, are we still up against a challenge?” He says, “It’s always a challenge, we have to try to get them to agree to something, but, either way we’ll get it done.”
We end our 20 minute call. I don’t understand the 50/50/50 offer because on June 2nd Geno told me Arnie was drafting an agreement, meaning a deal was struck, but now it’s an offer? Why did he say, “It’s always a challenge?” I’m worried, but he did say, “either way we’ll get it done.” So I feel good about that and yesterday Barry said he was onboard with my flick, so I guess I just need to let this play out.
Monday June 13, 2005 LAMPOON DAY 25
Today marks three weeks from the day we had our conference call with Lampoon. In that call Geno said he wanted to wrap the deal up that week, yet here we are with no deal.
Tuesday June 14, 2005 LAMPOON DAY 26
I am attending Deanna’s grandfather’s funeral today.
At about 11:30 during the service, my cell phone silently vibrates. After the service at 12:30 I check voicemail to learn it was Geno requesting I call him. I promptly do.
Geno says, “Arnie has been trying to deal with Lampoon and Barry doesn’t seem willing to deal. We usually acquire finished films with complete deals and we just did this as a courtesy.” He’s forwarding me the emails to see if there is anything I can do. I tell him that I’ll be with family all day and I’ll tend to it tomorrow.
I get off the phone and marvel how it is dropped in my lap. Geno assured me they could do a $150,000 and 8% deal, but now they can’t? What happened to that phone deal they came to with Barry on June 2nd? The call that didn’t include me because it was for Lampoon, Arnie and Geno to discuss alone.
Geno has been saying that he wants to wrap this deal up each week, and they negotiate without me, but now he says they usually acquire finished products and it’s my problem??
At about 5 p.m. I sneak over to my Father-in-law’s computer and check email. I am floored.
Here is the email exchange:
—–Original Message—–
From: Barry Layne
Sent: Monday, June 13, 2005 1:27 AM
To: Arnie Holland
Cc: Geno Taylor; Danny Rodriguez
Subject: Re: Kisses and Caroms
Arnie ˜ Thanks for your detailed note. Rather than go off on a long document, I’ll just make brief notes below in CAPS. Speak to you next week…
/bl
On 6/11/05 3:36 PM, “Arnie Holland” wrote:
Hi, Barry,
It was good to meet you over the phone the other day.
[bl] YOU TOO
We appreciate your interest in working with us, and we really like the idea of partnering with National Lampoon. We understand the value of the brand, and want to see if we can apply it to Kisses and Caroms. We’d also like to partake in your marketing — it seems to us that if we are doing this, we need to do it properly. Our biggest issue with your initial proposal is cash flow. We aren’t in a position to write you a huge check now, when we haven’t closed our deal with the producer, haven’t had delivery of materials, haven’t engaged in the authoring, rating, and other technical stuff we need to do, and haven’t dealt with the long lead times we have to juggle to get a release date from Warner Home Video.
[bl] I UNDERSTAND
If we can move quickly enough on all fronts, this might be a Valentine’s Day release for 2006. Which means we won’t be seeing cash from it until maybe April at the earliest.
So here’s what we propose:
1. we agree on deal points by email until we have a deal (or not). But we don’t go to contract until we’ve got the deal with the producer of the film signed. then we move quickly to contract with you.
[bl] NOT SURE IF WE CAN DO THAT, BUT I UNDERSTAND.
2. we propose to pay you $150,000 for a complete package — the branding and a marketing package. With good emphasis on your campus TV network. We ask that you come back to us with details of what that marketing package will include, and hope you’ll include everything we’d ever want.
[bl] OK…
3. we propose the following payment schedule: $10,000 on signing. $40,000 when the pre-release marketing kicks in (is that 30 days prior to release?). $50,000 within 60 days after release. $50,000 within 6 months after release. All recoupable from royalties.
[bl] CANNOT WORK ON THIS TIMETABLE.
4. Your royalty would be 8% of Gross Receipts, but a 75% rate when the price is reduced to under $15, and a 50% rate when it is reduced to under $10.
[bl] HOW ABOUT THIS THOUGHT…YOU ONLY PAY $100K…BUT NOT FOR THE BRANDING…FOR THE MARKETING…PERHAPS THAT’S WHERE THE REAL VALUE IS FOR YOU IN THIS PROJECT…?
Please let us have your thoughts.
best,
arnie holland
——————–
On 6/13/05 7:34 AM, “Arnie Holland” wrote:
Barry,
thanks for the quick response.
The marketing without the branding would not make sense for us. Barry, I’ve been a deal-maker for 30 years and usually I can find a way. My philosophy is to try and understand the needs and motivating factors influencing the other guy, while being honest and open with ours.
There’s something I don’t quite understand here… since you guys don’t have to do any work or spend any money (other than the marketing stuff upon release or just prior to it), why do you have a problem with a payment schedule that makes it smooth for us? What am I missing here? Once we sign our deal you could book all the revenue in 2004 for P&L purposes. The delay is just cash flow. Please explain what is driving your decision…
Can you come back with a revised schedule that works for you?
thanks,
arnie
——————–
From: Barry Layne
Sent: Monday, June 13, 2005 12:23 PM
To: Arnie Holland
Cc: Geno Taylor; Danny Rodriguez
Subject: Re: Kisses and Caroms
Arnie ˜ Simply put, we have never delayed payment on a trademark royalty in the way you are suggesting. Traditionally, here are our payment terms: 100% of TM upon signing and then marketing on an agreed upon schedule, always to come before the release. We cannot make this kind of revolutionary change on your title.
I hope you can understand.
/bl
——————–
On 6/13/05 9:47 AM, “Arnie Holland” wrote:
Ok…i’m paying attention…and I’ve spoken with Geno.
how about this…
we get the deal ready to sign, and we sign it by Labor Day, and pay you $75,000 then, by Sept. 15. that will give us time to get delivery of the film and do the authoring and artwork and stuff, and secure our release date.
We pay you the other $75,000 on January 3, when your marketing should kick in for a late January “Valentine’s” release.
We are not permitted to release the title if you are not fully paid.
Does that feel better?
arnie
——————–
From: Barry Layne
Sent: Monday, June 13, 2005 3:08 PM
To: Arnie Holland
Cc: Geno Taylor; Danny Rodriguez
Subject: Re: Kisses and Caroms
Arnie ˜ Let’s put this down for a bit and readdress when you’ve got all your ducks in a row and we have a better handle on our ‘06 release schedule
Thanks
——————–
On 6/13/05 12:39 PM, “Arnie Holland” wrote:
i feel like i’m negotiating with myself. trying to meet your needs but it keeps going backwards.
no, i don’t want to put this down. i want an understanding with you before we close our deal with the producer, because the deal points we agree to with you will greatly affect what we do with him.
surely you see the reason for this. If Sept. 15 is no good, how about early August? It’s already mid-June. By the time we have a contract it will be July.
arnie
——————–
From: Barry Layne
Sent: Monday, June 13, 2005 7:45 PM
To: Arnie Holland
Subject: Re: Kisses and Caroms
Sorry you feel that way. At this moment, let’s just take a breather. I really need to see what’s happening in Q1 ‘06 and make sure there is room. Don’t want to make a commitment to you that we can’t live up to.
——————–
Re: Kisses and Caroms
Geno,
I’m not getting anywhere here. This is a non-motivated dealmaker. Throwing the ball back to you guys.
Arnie
——————–
Why is Arnie trying to deal over email, when I had believed they already came to terms on the phone? The deal he is proposing I don’t think is what they talked about. It isn’t the 50/50/50 deal Geno told me it was. It feels like they are trying to screw up my deal.
The first email says it all. It’s been 26 days and they are just now starting to negotiate? What have they been doing and why are they lying to me?
Second, Arnie saying, “Our biggest issue with your initial proposal is cash flow”. Geno assured me in our first conversation they could do $150,000 and 8%, now at this late stage I find out they can’t? Why lie to me?
Third, Arnie’s “payment plan” proposal to National Lampoon is even worse then the one Geno told me about on Friday.
I’m shocked at Arnie’s overly aggressive attitude towards Barry. Arnie says Barry is an unmotivated Dealmaker. DUH!! Of course Barry is unmotivated. He has to move another movie out of the queue for us. He doesn’t need us. We need him.