Options, Options...

(Writer Joshua James provides a guest blog today on the subject of options. If you enjoyed this article you can visit Josh's website: Joshua James.

Rapping On Writing - Options, We Got Options!
Okay, we’re back to Rapping On Writing!

Among other things, I had a couple screenplays optioned earlier this summer, and another one re-optioned (which means that the current option expired and a new one had to be renegotiated) all around the same time … and I realized I hadn’t really read much regarding options on the internets and thought I’d share what I know for the masses.

Anyone out there more experienced than I, feel free to chime in. But here’s what I’ve learned over time. Let’s begin.

WHAT IS AN OPTION?

Basically it’s a lease-to-own agreement on an intellectual property. Now that property can be a screenplay (and usually is) but can also be a book, a treatment, a newspaper article … a cartoon strip … a person’s life … a blog, too. Basically a person wants to exploit for profit an intellectual property and pays you rent in the form of an option for a specific amount of time to do so. During the period of the option, the person holding the option is the only person who can exploit the property (which usually means they bring in someone else, of course, but that’s the idea).

Once they get financing, they’ll purchase the property outright.

WHY NOT JUST BUY IT OUTRIGHT?

For a number of reasons, one being that perhaps it’s too costly to just purchase, therefore they pay less via an option. Or it needs work and they want to shepherd it to the point of being ready, and then buy it, but if the script can’t be whipped into shape, then they’ve saved money … or it could be that the option-er just doesn’t have the money. I’m sure there are a lot of reasons. Of course, you’d prefer to sell your script, everyone does. But an option is not a bad thing. Why?

Because when the option period runs out, the rights go back to the option-ee, the author, and if the option-er hasn’t been able to do anything, then they don’t get a return on the money they invested. So it’s smarter to invest a smaller amount. Nor is it bad for you, the author, because then it’s possible someone else can option it (I’ve had one script optioned more than once by different people) or purchase it. If they’re unable to do something with it, you get the rights back.

My understanding (and again, I could be wrong) is that most studios simply purchase properties they’re interested in, but not always. But smaller producers can’t afford to do this with every project, so it makes sense to purchase the exclusive rights for a period of time, then approach studios for financial backing.

If they go to the studios without the rights, then why should the studios (or any of the other entities who invest in such) need to deal with the producer? They can buy / option it on their own, without the person who brought it.

So many producers who have working relationships with development people will option a few properties they like, take to to them and see how well it’s liked by those who can get a movie made (which may not only be studio people, it can be a director, it can be a movie star … many people hope for a movie star) but they can’t test the water without showing it, and they can’t show it without obtaining the rights, so it’s a catch-22 for them … what if they buy it and everyone thinks it stinks?

Therefore the idea of the option, a test-drive, to see if someone falls in love with it.

FOR HOW LONG?

It can be whatever length both parties agree to … I think the standard for the screenplays I’ve had optioned is usually 18 months, with another year added on as an optional extension (paid, of course) for the option-er. It really depends, too, on the property … a book can take quite awhile before it comes out, and therefore may need a longer period …

But length of time should also depend on how much one is paid, too. If the option-ee is not making a reasonable amount, then the time period should really be shorter. Which leads us to …

HOW MUCH SHOULD I CHARGE?

That one is more difficult. Again, it can be any number, you can ask for anything, it just depends on whether or not someone wants to pay it. I’m not going to really share my own numbers, because talking about money, I never like to do. It’s a bit untoward.

It can be anything from a dollar (more on that later) to ten to twenty grand, depending on the property. The more infamous the property, the higher the price, I guess you could say. It also depends on who wants to option it, if you have two people trying to option the same property, the competition drives the price up.

But I’d recommend that, if you have a tight indie script, that you’re looking at a grand or two, depending. This is why it’s difficult, it depends on the commercial prospects of the script.

In her book KILLER INSTINCT Jane Hamshur writes about optioned a script from a then-unknown Quentin Tarantino for ten grand. While QT wasn’t famous, at that time, he had sold a spec and had a rep around LA. So she had to pay. But bear in mind, they viewed that script (NATURAL BORN KILLERS) as an independent genre film … it only became a big studio movie when they got a big name attached (Stone, Oliver) and because Jane and her partner held the exclusive rights, they were attached to the movie as producers.

it’s likely that if people thought NATURAL BORN KILLERS was a studio movie at all, it wouldn’t have been optioned, it would have just been sent by QT’s reps to the studios (who all turned it down when Jane first sent it, it only became big after RESERVOIR DOGS hit and Oliver got interested … but for more on that, read her book) and sold.

But it was viewed as an indie, so it was optioned. So it depends on the property … if the project is a quirky dark independent drama, with limited appeal, the option price is likely to be a lot less than a high concept thriller that reads like a studio movie.

In my experience, in NYC, usually screenplays would get anywhere from a grand on up … If someone offers you 1,500 for a year for your indie comedy, that’s about average (again, it depends on the script and genre) …

I will say this. No one will really get rich off of options, they’re usually modest amounts. You’re not going to be able to quit your day job because you got an option (and you shouldn’t) … of course, all monies taken in by writers are welcome, modest or not, but it’s important to know that the real money happens when a project is sold or made.

Now that being said, that brings us to …

DOLLAR OPTIONS

Which is a phrase that, if you’re writing screenplays, you’re going to hear many times.

Basically it’s an option for no money (usually a symbolic dollar, hence the name, Dollar Options) because the option-er can’t afford to pay a regular option fee to the option-ee, therefore they offer a dollar. Basically they want the same rights for nothing.

My advice is, 95 percent of the time, don’t do it. Don’t option your script for nothing. It is, 95 percent of the time, a bad idea.

It’s like you own a beach house, and someone wants to pay you a dollar to live there for a year. And while they’re living there, they’re going to have parties and invite all their friends over to stay with them.

From a business perspective, it doesn’t make sense, either. If someone pays nothing for your script, they have little incentive to make it happen. It takes a lot of energy and persistence to get a movie made, almost everyone says NO (every great script out there that was made into a great movie, was usually turned down a few times by someone else) and if an option-er knows their time is running out and they’ll get nothing on their investment (the option fee), they’ll bust a nut to make it happen.

If they risk a dollar, they can shrug and go, “Eh, maybe next script will be the one.” Because it’s just a dollar.

They’re playing Lotto with scripts rather than trying to produce them. Not good business for the option-ee. Great for the option-er, who probably has a stack of a hundred scripts they can throw out that cost them a buck apiece.

So I usually say, DON’T.

Plus, if someone wanted to option your script for a dollar, someone else who you HAVEN’T met yet may love it as well and pay you market price. On one of my first scripts, I had someone offer me a dollar option … I turned it down, and two months later, I got an offer for more from another person.

So it never hurts to say NO to a deal you don’t like, but more on that later on another post.

If the first, dollar-person shows it around to everyone (and does a bad job of it) then the opportunity is lost. So I say, 9.5 times out of 10, SAY NO to the dollar option. I’ve done it a few times, and nothing good as come from it, at least not yet.

But that doesn’t mean you should say no every single time … just 9.5 times out of 10.

WHEN SHOULDN’T I SAY NO TO A DOLLAR OPTION?

Well, it depends … there can be a lot of reasons … Let’s say you want to attach yourself as director, but that’s a hard sell. You got a producer willing to run the gauntlet for you as director, and you reward them by not charging them.

Or …

Let’s say you live in Podunk, Iowa … and you know ONE person in Los Angeles, but that person is a real producer with contacts … and you have no contacts whatsoever … then it may not be a bad idea to let him or her have the option for a short period of time while you work on your next script (and there should always be a next script, okay? Always.) … You can write a query letter to others, stating that such-and-such optioned your script, etc. Make sure you have another script ready to go. That’s something.

Other reasons? You have a relationship with someone you like, and you want to give them a chance … it’s a script you’re not really selling or optioning, its challenging material, so you’re going to let a person try and get it going.

Basically, if you know someone will bust a nut to get it made, it may be something to consider … but bear in mind, everyone will SWEAR that THAT is what they will do, when in reality they’ll probably drop you like a hot rock when the next cool thing comes along.

So it’s a real judgment call. Maybe your friend who’s dying to produce your script will be like Lawrence Bender, who was giving dance lessons and had never produced before when QT gave him a shot with RESERVOIR DOGS, and he moved heaven and earth to get the right elements attached. And succeeded.

It also depends on the material … if the script is a hard sell (tough subject, not commercial) like RESERVOIR DOGS at the time it was made, perhaps it’s something to consider. If you like them, they have good credits and a passion for it that you believe, then think about it.

But the reality is, most of the time they won’t be Lawrence Bender (sometimes he isn’t, either) so keep that in mind.

To sum up, it depends on the property and the person. But my scale still holds … 9.5 times out of 10, it’s better to say no.

If you DO agree to a dollar option, make sure it’s for a short period of time (six months, nine at the most) … they’ll kick and scream, but if they can’t do it in six months, it’s doubtful they can do it. Make that your non-negotiable point.

Trust me, you don’t want to get stuck in a bad deal for two years for a dollar. I’ve done that. It’s not fun.

Which brings us to

GET A LAWYER

My advice is, if someone asks you to option a script, is to get an entertainment lawyer to negotiate for you. They are expensive, and maybe you’ll end up paying more to the lawyer than you’ll even get for the option, but it’s worth it in the end.

Agents and Managers do know contracts, and can help, but this is what lawyers do for a living, after all. And actually, it’s a lot simpler to find a good lawyer than a good agent or manager … they bill by the hour, they’ll take your calls. While other writers may be loathe to introduce you to their agent, usually they have no problem recommending a good entertainment lawyer.

It’s especially important when negotiating the purchase price … some option contracts call for that, some do not. What that means is, if they get the property set up, they’ll know in advance what to pay for it. And you should, too. You should never agree to accept less than WGA scale (available at the WGA website) and if the option contract is going to that place, negotiating purchase price, I’d say you should get a lawyer. Soon.

But sometimes they are fairly simple things, just says the option-er is holding the exclusive rights to exploit the property for X months from option-ee …

If you’re not going to get a lawyer (and you should) then at least make sure you read everything in anything you sign very closely … you can make your demands to the option-er, and they’ll agree to them, then send a contract that says the opposite … this has happened to me (and, unfortunately, not so long ago …) and it’s on you to read the fine print.

I’ve had that happen … I’ve had offers, requested changes in the contract, the guy agreed, sent a contract and it was the exact opposite of what I asked for. I called him up and said, “Hey, this is exactly what I didn’t want,” real friendly-like, and he was like, “Oh, I’m so sorry, must of been a mistake, I’ll send another draft” and I NEVER heard from that guy again about it.

He was trying to slip it by me. It happens. That was from before I used a lawyer, of course. I think a lawyer is very necessary.

If I’d have signed without noticing, then found out about it later, he would have claimed that A) I never made that claim or B) the contract was what I agreed to, etc. That’s happened to me, too. From someone that I thought was a friend. I had emails proving otherwise, but it didn’t matter, I’d signed.

It’s especially important to have a clear, concise contract when in business with friends (as a mentor taught me). Don’t give someone the temptation of choosing between a million dollars or screwing you over … most will take the million and figure they’ll make new friends. Make the contract strong so they won’t have to make that choice. And you’ll stay friends.

So be careful when signing, but there’s no reason to be scared or nervous or paranoid … everyone wants to get the best deal for themselves that they can, and all you’re doing is coming to an accord … it’s why, in the end, it’s called an agreement.

You’ll either agree or you won’t, but don’t take it personal, either way.