Real-Life Math -- Solution
Deal 1. Moonstone Publishing
First,
the books:
Royalties = $5.5 million + $7 million + ($7 million
x 3)
Royalties = $5.5 million + $7 million + $21 million
Royalties
= $33.5 million
Add in the movie rights:
$1 million
x 5 = $5 million
And the audio percentage:
$24 million
x 0.10 = $2.4 million
Add it all up:
Total = $33.5
million + $5 million + 2.4 million
Total = $40.9 million
Deal
2. W and R Entertainment Industries Inc.
Books:
5
x $6 million = $30 million
Movie rights:
Rights =($60
million x 0.10) x 2
Rights = $6 million x 2
Rights = $12 million
Paperback
percentage:
$120 million x 0.05 = $6 million
Add all
those up:
Total = $30 million + $12 million + $6 million
Total
= $48 million
Deal 3. Big Deal Books
Books:
5
x $2.5 million = $12.5 million
Paperback percentage:
$120
million x 0.05 = $6 million
Overseas publishing fees:
Fees
= ($8 million x 0.05) x 5
Fees = $400,000 x 5
Fees = $2 million
Movie
rights
Rights = ($60 million x 0.15) x 2
Rights = $9 million
x 2
Rights = $18 million
Total = $12.5 million + $6 million
+ $2 million + $18 million
Total = $38.5 million
Deal
2 is the most lucrative for your client. What is your cut?
$48
million x 0.15 = $7.2 million
Your percentage of the
deal works out to be $7.2 million.
Most agents deal with much smaller
numbers -- but the principle remains the same. Deals come in all shapes and
sizes, with royalties and advances and all kinds of things to factor in.