The SAG Ultra Low Budget Agreement
Is SAG's Agreement Good News or Bad News for Independent Filmmakers?
Jun 12, 2009
Independent filmmakers were excited when they first heard about SAG’s attempt to cross the street and work with them. Actors for a hundred bucks a day, relaxation of all those silly rules and regulations, no first class airplane tickets for actors and more – heck the Ultra Low Budget Agreement unveiled in July 2005 seemed like a fantastic idea for productions budgeted less than 200K.
“SAGIndie,” as they’ve chosen to re-cast themselves, has even gone so far as to stage monthly contract workshops to cleverly explain the wonders of this new agreement to all comers.
With SAG, as always, the devil is in the details.
What the Agreement Says
Paragraph 1 of the Ultra Low Budget agreement says, in part:
“It, (the Ultra Low agreement) is not intended for pictures produced for television broadcast, cable use, video/DVD markets or otherwise produced primarily for commercial exploitation.”
Translation: Go ahead and make your movie but you’re not supposed to make any money.
Well, that’s just great if you’re making movies only to give a free copy to Uncle Harvey. It’s what SAG doesn’t tell you in those oh-so informative workshops that’s most important.
However, you will benefit from this agreement if you meet all of the following conditions:
- The production must cost less than $200,000.00.
- It must be financed and shot entirely in the U.S.
- No animation or a music videos.
- You can only exhibit the picture, (sell tickets, make money) in mainstream “commercial” movie theaters.
- You're not interested in making money.
Ask yourself: When was the l time you heard about a film that cost less than 200K with no big stars that was picked up by a major studio and opened in 3,000 movie theaters?
Sorry, the so called “art theaters” don’t count. SAG has a list! Go ahead, try and convince a major theater chain to show your unheard of movie without stars, a hundred million in prints, PR and paid ads.
Here’s more:
“Should the initial release not be in the theatrical market, the picture shall remain a ‘theatrical motion picture’ for all purposes of the Basic Agreement…”
Translation: You must pay residuals to the actors, (before you or your investors) from the very first dollar that comes in.
How it Really Works
The Ultra Low Budget Agreement, (and all the other low budget agreements) are simply modifications of the “Basic Agreement.” The Basic Agreement, (which you must sign in addition to the Low Budget Agreement) is a 2 to 3” thick, complex, conflicting and all but indecipherable rule book that was written years ago for the exclusive benefit of SAG and the major studios.
In the Basic Agreement, the producer or studio must first pay the actor for a days work. In exchange for the actor’s services the studio gets to make all the money it can from theatrical exhibition, (i.e., movie theaters). Even movie theaters in foreign countries are included in the package! (That’s why some studio films remain in some movie theater, somewhere, for a long, long time.) All of the money they make in the movie theaters is free money. They don’t owe the actors a penny in residuals for those showings. This is called the Initial Exploitation.
But after television came along and those old, previously worthless movies starting making money all over again, SAG came up with residuals. They said, “Go ahead and make all the money you want in the theaters but now we want a piece of that tasty TV pie!” Everything after the initial theatrical showing was now considered a secondary income source, or residual income.
SAG Owns a Piece of Your Film Forever
This means that unless your low budget masterpiece has a genuine theatrical release, you owe SAG money for every TV or cable showing, every Internet download, every foreign sale and every DVD you ever hope to sell – from day one.
SAG owns a piece of your film forever – and the part that they now own is superior to yours. Like the difference between preferred and common stock in a company. Only you've got the bad stuff.
That’s why the Ultra Low Budget Agreement, (and the other low budget agreements) say, “…and shall not be reclassified as a ‘Made for Pay’ or ‘Free Television’ motion picture.” Otherwise, you’d be able to make some money for the salary you paid the actors because video would be your production’s initial, "free money" exposure.
Of course, SAG would never want THAT to happen! Why? Because it would benefit the independent producer at the expense of their most important clients: the major studios. Remember, it was SAG and the studios who wrote the book of rules we must all follow, (i,e., the "Basic Agreement").
They never asked us and it's doubtful they ever will.
