Percentage of Net Deal (Door Deal)
These are your most typical type of deals for an up and coming band performing at a small club that holds 100 to 500 people. In these types of deals the expenses come off the top, and the artist receives a percentage after expenses and state sales tax. The expenses in these types of deals typically are for the audio engineer, security, and door person (box office). Usually these expenses range from $100 to $400, depending on the venue. For venues in the 100 to 500 capacity range, try to always avoid paying more than $400 for the venue. Usually expenses range $100-$150 for audio engineer, $50-$100 per security guard, and $50-$75 for door person.
In this example, the artist receives 85% of NBOR after $350.00 for expenses and state sales tax.
Guarantee plus Bonuses Deal
In this type of deal, the artist receives a guarantee plus bonuses. These bonuses get paid at specific points based on how many total tickets were sold, or can from time to time also be based on the gross. For example, the artist gets a guarantee plus bonuses at 600, 700, and 800 tickets sold. Try to make sure that the last bonus always reflects a sell out of the venue. This is your sell out bonus.
In this example, the artist receives a $5,000.00 guarantee + $500.00 bonuses at 500, 600, 700, and 800 tickets sold.
Zero Guarantee Versus Percentage of Gross Deal (NBOR)
In these types of deals the promoter and the artist are both taking risk at the show. This type of deal is similar to a partnership in traditional business. Both sides have their own expenses, which they will cover out of their end of the deal. Booking Agents a lot of times try to pull the card that the artists have expenses. The promoter in me says, "nobody is forcing you to tour, but if you want to grow your business like I do, we both have risks." Don't let the booking agents twist your arm promoters.
Guarantee Versus Percentage of Gross Deal (NBOR)
These are usually the best types of deals for artists. You get a guarantee and you get a percentage of the gross NBOR with no expenses being deducted. The only deductions here are state sales tax and any adjustments to the gross. Examples of adjustments include facility fee, charity fee, album download, and Meet & Greet. This type of deal can also be called a greater than deal. The artist either receives the guarantee or the percentage of the NBOR, whichever is greater.
In this example, artist receives a $2,000.00 guarantee versus 65% of gross (NBOR) after 6.5% state sales tax. Deal reverts to 70% at 400 tickets sold.
The Promoter Profit Deal:
At the end of each show the artist settlement is usually the responsibility of the tour manager, tour accountant, artist manager, or the artist themselves. The Promoter Profit Deal is the most common type of deal that’s used by all major promoters. Below is a step by step guide on how to settle a promoter profit deal. In this video the terms are as follows:
In this example, Artist receives a $5,000.00 guarantee + 85% of Net after expenses, 6.5% state sales tax, and $1.00 per ticket Facility Fee (FF).
In this deal example the following tickets were sold:
500 tickets at $20.00
500 tickets at $25.00
Promoter Profit Deal Step by Step Guide:
Step 1: Add up all the ticket sales to find Gross Box Office Receipts (GBOR).
Step 2: Find the total facility fee. This is the total number of tickets sold multiplied by the total facility fee.
Equation: Gross Facility Fee = Facility Fee x Total Tickets Sold
Step 3: Subtract the Gross Facility Fee from the GBOR to find Adjusted Gross.
Equation: Adjusted Gross = GBOR - Gross Facility Fee
Step 4: Deduct State Sales Tax to find Net Box Office Receipts (NBOR). Remember that state sales tax is already included, therefore we have to calculate the inverse and add one in front of the decimal point. Ex. 6.5% state sales tax = 1.065
Equation: NBOR = Adjusted Gross / (State Sales Tax + 1)
*Note - If there is no adjustment, then use the GBOR
Step 5: Add up all your expenses. Remember that the guarantee is an expense.
Step 6: Calculate Promoter Profit Amount. Promoter Profit percentage is given in terms.
Equation: Promoter Profit (PP) = Total Expenses x Promoter Profit Percentage
Step 7: Calculate the Split Point. This is the amount that needs to be reached for there to be a bonus for the artist.
Equation: Split Point = Promoter Profit + Total Expenses
Step 8: Calculate the share amount. This is the amount that’s left over after expenses and promoter profit that the artist and promoter share. The percentage the artist receives is the artist bonus, and is usually given in the terms. In this problem it’s 85%.
Equation: Share Amount = NBOR - Split Point
Step 9: Calculate the Artist Bonus Amount
Equation: Artist Bonus Amount = Share Amount x Artist Bonus Percentage
Step 10: Calculate the Total Artist Pay
Equation: Total Artist Pay = Guarantee + Bonus Amount