What Does ‘Pay or Play’ Really Mean?

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One of the most common, though often misunderstood, terms used by agents and attorneys when making deals is pay or play. Essentially, pay or play is the commitment by a producer—a studio, network, production company, or individual—to pay the artist even if the producer later decides that the artist's services won't be required. In other words, whether or not the production goes forward, and whether or not the artist is ultimately required to render services, he or she will be paid the negotiated fee. This is subject to limited exceptions, typically including the artist's disability, force majeure (an unexpected or uncontrollable event, also known as an "act of God"), and/or the artist's breach of the agreement. The expression is a bit confusing, as it implies that the artist is either "paid" or "played." Obviously, if the artist is played, he or she must also be paid.

A typical pay-or-play provision protects not only the artist but the producer too, as it allows the producer to terminate an artist's services for any reason whatsoever—with or without cause—without the threat of a lawsuit for loss of opportunity or a similar claim, as long as the agreed-upon compensation is paid. The producer doesn't even have to proceed with the production. For the artist, pay or play offers security from loss of compensation if he or she is replaced at the director's whim after the artist took him- or herself off the market in anticipation of the production. It also acts as incentive for the producer to utilize the artist, as the producer must pay him or her anyway. Pay or play is akin to a "run of the play" contract in theatre, which says that if an actor is replaced, he or she will still get paid for as long as the show runs.

Memoirs of a Geisha is an example of a film on which the provision came into play. Several years before it was finally produced and released in 2005 with Rob Marshall directing, the movie was slated to be shot with Steven Spielberg at the helm. At that time, several actors were hired by the studio under pay-or-play deals. When the contracted start date came and went, those actors began receiving their full salary as if they were rendering services.

A related but rarely employed concept is pay and play. This is a commitment by a producer both to pay the artist and to use the artist's services in the production, barring any of the typical contingencies mentioned above. In other words, the producer agrees not to produce the project without the artist's participation. A producer is usually loath to make such a commitment except under exceptional circumstances. It is rumored that Sylvester Stallone would not sell the rights to his screenplay for Rocky unless he was attached to star in it. He was purportedly made pay and play to render acting services in the film.

Because pay-or-play clauses can have a significant financial impact on a producer, most won't deem an actor pay or play until the picture has been green-lighted, a firm start date has been set, and the other principal cast members have been made pay or play. Independently financed pictures often try to avoid pay-or-play provisions altogether or delay them until the start of principal photography, so they can be assured the movie is fully funded and will proceed. Most working actors in film and TV won't consider an offer unless it is pay or play, as they won't tie up their schedule if they aren't certain to be compensated for it. In any event, it is important—on both sides of the bargaining table—to be clear as to what preconditions must be satisfied before the pay-or-play obligations kick in.

Dina Appleton is co-author of 'Hollywood Dealmaking: Negotiating Talent Agreements' and is special counsel in the Entertainment Media and Communications Group at the law firm Sheppard Mullin Richter & Hampton LLP in Los Angeles. She previously headed business and legal affairs at the now defunct talent agency Writers and Artists Agency.

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