Gross Receipt Definition
Contractual specification of which revenue streams and deductions apply when calculating gross receipts for profit participation.
Definition
The precise contractual language that defines what revenues are included in gross receipts calculations and what deductions are permitted before calculating profit participation payments. These definitions significantly impact backend compensation and can vary substantially between deals.
Gross receipt definitions determine whether revenue streams like merchandising, soundtrack sales, or product placement fees are included, and specify which distribution costs and fees may be deducted before calculating participant shares.
Why It Matters
Gross receipt definitions directly impact profit participation calculations and can mean the difference between receiving backend payments or earning nothing despite film success. Understanding these definitions is crucial for meaningful participation negotiations.
Ambiguous or overly broad gross receipt definitions can allow distributors to exclude significant revenue streams or include excessive deductions, substantially reducing participant payments even from highly successful films.
Examples in Practice
Some definitions exclude merchandising and soundtrack revenues from gross receipts calculations, significantly reducing total revenue available for profit participation even when these ancillary streams generate substantial income.
Distribution fee definitions may allow deduction of sales agent commissions, delivery costs, and marketing expenses before calculating gross receipts, substantially reducing the base for profit participation calculations.
Streaming deal gross receipt definitions often exclude subscription revenue and include only performance-based bonuses, limiting profit participation opportunities compared to traditional theatrical revenue streams.