Q: There’s a script I’ve been interested in for a while. I’ve been trying to raise some financing so that I can produce it. I think I’m close to successfully putting some financing together but I just found out that there’s another producer that’s suddenly interested in it. I’m afraid that I’m going to lose it. I want to option it but don’t have the money yet. Anything I can do?
A: If you don’t have the money right now to option it, unfortunately your options are limited. Pun intended (as always).
The thing to keep in mind is that options don’t all have to be the same. I think people tend to think option agreements must all follow the same structure: a certain payment for a 12–18 month option with a potential 12–18 month extension upon an additional payment. If you can convince the screenwriter (or the screenwriter’s agent) that you’re a serious candidate to both (a) raise financing and (b) produce a film that’s worthy of the script, you may be able to play around with the terms of the option in order to buy yourself some time.
Now you’ve probably heard of a “free” option. Even in the cutthroat, money grubbing world of Hollywood, these are fairly common. However, free options are generally only available for properties don’t have much interest at the time of the option. When you first fell in love with the script in this case, you should have tried to option it for “free” (or for something close to free, like a few hundred dollars).
Your ability to do that now, however, is in question because you’ve suddenly got competition. An agent is going to be hesitant to agree to anything “free” if he thinks there’s a potential bidding war brewing. That being said, you could propose something along the following lines:
A free option for a very short initial period of time, let’s say 30–60 days, with a 12–18 month extension upon a payment of “real” money (impossible to tell what the writer/agent would be looking for but you would think it would have to be in the thousands to tens of thousands of dollars). The purchase price would then also be some legitimate number (perhaps a percentage of the budget). The key will be explaining your reasoning behind this. You’ve been interested in the script for a while and have been trying to raise money to produce it. You’re close to securing some financing but at this point, you’re not going to be able to do so without some sort of control over the rights (without at least some sort of option, you may not be able to get the money that’s going to benefit all parties).
The risk isn’t very high for the writer because your free option is for such a short period of time. If you can’t pull off the financing, the option will lapse and the writer will be able to option it to some other party, including the other producer, who almost assuredly will still be in the picture because of the short time frame. The upside is that you’re someone who’s clearly passionate about the project. You’re likely much further along in terms of raising financing than anyone else (including the other producer who just came into the picture). You actually have some money that you may be able to secure in the very near future. If you do secure it, you will be paying an extension price that’s probably much higher than any initial option price that anyone else would be paying.
The lesson is not to get stuck in a box because you feel the need to follow the standard option agreement outline. That outline did not come down from the Hollywood Hills etched into some tablet. Feel free to play with it to match the situation. In this case, it may work in both your and your writer’s favors.
This blog was originally published as part of Legal Ease, Film Independent’s weekly column on legal matters pertaining to the entertainment industry. To see other LEGAL EASE columns please click here.