Management contracts ....!!!

[kudzu]

This year has been a busy year ... I've ended up having to get a manager to front negotiations for me. He has drawn up a contract between us ... all the pionts covered are pretty straight forward apart from one main one, which says ...."Upon termination of the agreement the management will continue to receive 20% commision for 10years and 10% thereafter in perpituity ... now as a musician/songwriter/producer/engineer there are many different streams of income.... I don't feel very comfortable with this arrangement ... any slutz out there shed any light on this b4 I call a lawyer ?

[Jules]

1) is the manager asking for a percentage of royalties or just advances?

2) If the manager is asking for a percentage AFTER HIS INVOLVEMENT HAS CEASED - the you have to decide if that managers effort and assistance before such termination -is WORTH PAYING FOR way down the line in future. (it might well be)

So before anyone screams FOUL! - here is the scenario...

Doing OK
Meet manager
Start to do very well and begin to get far bigger jobs, jobs that lead to even BIGGER jobs
Make a LOT of money & have successfully established career..

Again it depends how much you feel the manager can do for you.

I would suggest your lawyer builds into the agreement "success attainment clauses"

1) If manager doesn't assist you reach X earning target within 1 / 2 / or 3 years - then future earnings deal is off

2) If manager doesn't get you x number of major label projects within 1 / 2 / or 3 years - then future earnings deal is off

Also bear in mind most agreements START heavy and can be lightened via negotiation

I think far more common are producer managers that earn only from ADVANCES.. that has been my experience with the 3 and a half producer managers that handled me as a producer..

You would be crazy to sign anything without specialist music industry legal advice. ~So in your case that might mean a London lawyer, fee's for this could run into.. hmmmmm £600 - £800 + UK pounds... (approx $1,500) perhaps even double.

I think the terms are too severe.. but again, if you feel this could be a good career move - negotiate!!! to get the terms more in your favor.

[kudzu]

Thanks Jules ... I think the "success attainment clauses" are key... I'm all for giving people incentives but as a musician I've only ever given it to other musicians and it has benfited the performances/attitudes greatly ... I've just never really thot of managers in the same light ... till now !!!!
I also realise that contract negotiations always start a bit heavy on one side but I feel that there should be some incentives for me to sign the agreement also ... I get a bit pissed off when people think it makes them look strong starting off in this way ... sometimes its just an insult !!! I'll get in touch with a lawyer nxt wk, c how it goes ...

On a side note, had some great meetings with some London music biz accountants recently ?????... no really it was great !
Discussions on the impact of iTunes/iPod, retailers (f*cking @ it 2 B honest), DVD/CD profit margins, LLP's, tax issues ... very interesting ... would it be a good idea to have a gearslutz discussion forum on these matters ? I think they are important....
If not, do you know of any forums that discuss these ? I think it would be helpful to all

[Fletcher]

I have had half a dozen managers throughout my career... from when I was a full time musician to when I was a good measure hotter as an engineer [before I turned to pimping]... "Mercenary Audio" grew out of a collaborative of engineers who managed each other... and I have done management for engineers, producers, session players, and even crew guys.

The one thing I have found is that the only way a management relationship works is if the deal is on a handshake.

Period.

The manager negotiates for you... gets you what you want [or more] and gets his [or her] cut. End of story. If there is an ongoing royalty situation [like a record that actually sells] then you jot down the specifics [like the manager gets 20% of all monies received from ____ until you stop receiving money]... real informal shit that outlines the "broad strokes" of the deal.

Anytime a manager starts to work like ball and chain... anytime they start to get their teeth into you for shit they either didn't bring to you or negotiate for you then you are in deep shit.

My last management deal was that my manager got 20% for work he brought to me and negotiated and 15% for anywork that came to me directly that he negotiated. The payment for my services came directly to me and he got his cut within the week of receipt of payment. The relationship worked like a well oiled Swiss watch for several years until I wasn't earning enough to make a big enough difference to his annual income. We are friends to this day and he'll still negotiate for me any time I ask.

In my mind, and from my experience, that is the ONLY way to work with a manager. The only times I have ever changed managers is because they wanted contracts that could affect my future earnings when they played no role in those earnings... or when the band broke up... or they got way busier clients than me and just didn't have the time to handle my career properly [and I'm still friends with those guys as well].

The one manager I'm not friends with is the one that tried to fukk me by having the label pay him for my services directly... then double and even triple billed for work I didn't do without A) telling me he was doing that; B) cutting me in on the overbilling. When I found out about this I went to the label, explained what had happened, suggested they threaten him with a suit and demand their money back... [the label guy, with whom I'm still friends, was flummoxed that I did that]... one night while wandering past my ex-manager's office [with a couple of friends and seriously shitfaced] I carved the word "scumbag" into the door of his BMW 740i with a house key... but I digress.

The best management arrangements work on a handshake. Period.

Best of luck with it.

[kudzu]

Ditto Fletcher. The two mangers I've had, had the same "handshake" agreement ... They made a lotta money outa me ... I also from them ... it worked. It seems that, as with everything in the music biz these days ..THINGSAV CHANGED.

[Jules]

Originally Posted by kudzu

On a side note, had some great meetings with some London music biz accountants recently ?????... no really it was great !
Discussions on the impact of iTunes/iPod, retailers (f*cking @ it 2 B honest), DVD/CD profit margins, LLP's, tax issues ... very interesting ... would it be a good idea to have a gearslutz discussion forum on these matters ? I think they are important....
If not, do you know of any forums that discuss these ? I think it would be helpful to all

Funny, I was out to dinner with an in house lawyer for Warners last night and want to post up some stuff we talked about to to with podcasts & copywright issues / the future

Sure start it in my forum, in fact I am moving this management topic there right now to get more attention..

[matt_tricks]

Hi,

A fair deal is usually that if you have a deal with your manager for some of your points (say 10%), they would only receive that for contracts signed during the term of your contract (ie. recording contracts, production deals etc) or cuts signed during the contract term if you are unsigned. You should be able to fit that in its legalese version into less than 3 pages in your contract ;-)

If you think about it, it's fair that if the manager shops you around and gets you a killer contract then they should continue to receive the agreed percentage. Arguably they were just as responsible for the contract and eventual albums as you were... I did say arguably.

As a few people have mentioned, try to make sure they only get a cut of the advance and not of your publishing and royalties. Of course, this depends on how much you like your manager :-)

2.5c
Matt

[Kenny Gioia]

Originally Posted by kudzu

This year has been a busy year ... I've ended up having to get a manger to front negotiations for me.

Although a "manger" was good enuff for Christ our Lord, I think you might be better getting yourself a "Manager" for your needs. (Ain't I quite the Grammar Police as of late)

Originally Posted by Fletcher

The one thing I have found is that the only way a management relationship works is if the deal is on a handshake.

Period.

The manager negotiates for you... gets you what you want [or more] and gets his [or her] cut. End of story. If there is an ongoing royalty situation [like a record that actually sells] then you jot down the specifics [like the manager gets 20% of all monies received from ____ until you stop receiving money]... real informal shit that outlines the "broad strokes" of the deal.

Anytime a manager starts to work like ball and chain... anytime they start to get their teeth into you for shit they either didn't bring to you or negotiate for you then you are in deep shit.

.

I would tend to agree. Although a Sunset Clause (as it's called) is quite standard these days.

If a Manager plays an important part in developing your career, I believe he has a right to a portion of that career beyond the working period.

I do believe that the number should diminish immediately after the working period and fade out over time.

Everything is negotiable and it really depends on how you get paid. If you are mostly paid upfront for your work than a sunset clause should be unimportant. If I manage some young artist who blows up (ala Britney Spears) and wants to fire me at will and cut me off cold turkey, it might be a bit unfair.

[pomoone]

10 years is a very long time for them to be collecting on 20%. If you change managers later in life you will be having 40% of your income going out the other parties. Not wise.

Is the manager well known with a proven track record? If so you might be in good shape and never want to leave them. If it is some random guy who still holds a day job at StarBucks you might want to reconsider.

There are very few good managers out there. The good ones are the ones who take on the big clients and the small mangers know that. If the manager is sure that they will deliver the goods then I don’t see why they are reaching for such a high percentage for such a long period of time.

How long is the initial contract for?

[FFTT]

This gets very complicated especially if there is no failure to perform clause.
What if this manager is getting you bar gigs, but nothing really meaty and then
you meet a serious manager a year or two down the road?

I've had offers from some fairly big league managers in the past with horrible
restrictions on what you can do IF the relationship terminates for "ANY" reason.

What if the only contract they can get you totally sucks? This is quite possible.

Then they own your masters and everything attached and it can get VERY nasty &
expensive to terminate the deal if you actually do move on to bigger and better things.

Even with the high level contracts I was looking at, the termination of relationship limitations expired in 5 years and I STILL insisted that I could opt out if management failed to perform with certain tangible results.

[Kenny Gioia]

One other thing:

If your plan is to only pay your manager for up front stuff and to kick him to the curb as soon as you outgrow him, don't be surprised when he negotiates better up front fees and is less concerned about your long term plans.

[JFK Chopper]

Hi Guys,
Michael Brauer also posted a wicked reply to my manager questions when he was a guest moderator last September. Check it out.

Here is my question to add into the mix.

I now have managment and things have been going well, but I recently put a home studio together and work is beginning to get busy, a few projects with significant budgets have approached me about working in my "studio". I will be producing and charging a low daily fee to basically cover my payments on all my gear. So I have 2 revenue streams (1) Producers Fee (Per song basis) & (2) Studio Fee (going against Equip. debt).

The problem is now my manager wants to commission 20% me on my studio income. This doesn't sit well with me, especially since I have $50,000.00 in studio start up debt. and he has had to take none of the financial risks.

He also feels that I should charge everything all in for one price. "Production & Studio included". I think that blows. Is it just his way of getting a commision out of me.
Plus I'll never be able to charge clients for all the days that would really be required in the studio. I would be losing money. It all feels very awkward. Any thoughts, opinons or suggestions?

Thanks.
(Sorry If I hijacked the thread, but I thought it was relevant and perhaps useful to the others as well.)

Best,
JFK

[jayfrigo]

Originally Posted by JFK Chopper

So I have 2 revenue streams (1) Producers Fee (Per song basis) & (2) Studio Fee (going against Equip. debt).

The problem is now my manager wants to commission 20% me on my studio income. This doesn't sit well with me, especially since I have $50,000.00 in studio start up debt. and he has had to take none of the financial risks.

He also feels that I should charge everything all in for one price. "Production & Studio included". I think that blows. Is it just his way of getting a commision out of me.
Plus I'll never be able to charge clients for all the days that would really be required in the studio. I would be losing money. It all feels very awkward. Any thoughts, opinons or suggestions?

Incorporate the studio; then it will be its own entity. The manager deserves a part of your personal rate, not any other entities or businesses you ever start (hopefully the contract is well written and doesn't give him rights to everything including your stock dividends). He can have 20% if he gives you a $10 grand investment in the new business. Charge the studio time completely separate from your time and keep detailed records. However, you can't lower your rate and charge it all from the studio to avoid the manager. Your rate, hence his share, should continue as it has been.

[kudzu]

[quote=Produceher]Although a "manger" was good enuff for Christ our Lord, I think you might be better getting yourself a "Manager" for your needs. (Ain't I quite the Grammar Police as of late)

HA HA Produceher, thank you ... manger ? I didn't even notice ... I like the slip tho, festive or what ????

Anyway, the manager in question has a great track record ... (one instance ... steered a band to 15 consequtive weeks @ no.1 in the UK singles chart) ... he is a well respected/liked/connected person in the UK and international music biz ... I am thrilled that he will be looking after my career ... but I just didn't expect him to ask for so much ... If I take Fletcher's approach, a handshake, then I think he will walk ...

I think I will ask for 10% commission for 7 years after termination ... with "success attainment clauses" kicking about ... We'll see

[Fletcher]

My handshake deal has always been that anything that earns because of their involvement will earn for them as long as it earns for me... the thing is I've not had the problem of years and years and years of royalty checks so I can't really tell if the system worked or not... what I can say is that I "kicked up" on everything I earned that was ever related to a manager [unfortunately, I seriously believe in the whole "goes around comes around" / "instant karma" thing so I try to never be a scumbag in the hope that when I get fukked it isn't too painful [so far, so good]

[kudzu]

[unfortunately, I seriously believe in the whole "goes around comes around" / "instant karma" thing so I try to never be a scumbag in the hope that when I get fukked it isn't too painful [so far, so good][/quote]

Yip, me to Fletcher ... Karma thing has stood me in good stead ... I've also watched other people acting as assholes and it coming back to bite them ... fully reinforcing the "Karma" thing ... I guess I'll need to talk to a lawyer soon ... F*ck ... Lawyers ... there's bad Karma !!!
Thanks for all the info ... nice to know there's more of me/us out there ...

[MHB850]

Originally Posted by JFK Chopper

The problem is now my manager wants to commission 20% me on my studio income. This doesn't sit well with me, especially since I have $50,000.00 in studio start up debt. and he has had to take none of the financial risks.

He also feels that I should charge everything all in for one price. "Production & Studio included". I think that blows. Is it just his way of getting a commision out of me.
Plus I'll never be able to charge clients for all the days that would really be required in the studio. I would be losing money. It all feels very awkward. Any thoughts, opinons or suggestions?JFK

That's just plain unethical. There are plenty of times that we do an all-in project. But, it breaks down to: 1-studio costs 2- tape/3rd party costs 3-my rental fee. What is left fromt the budget is my mix fee or in your case, the production fee.
My manager gets his commission from the mix fee. If the budget is really low I don't deduct my rental fee. That's the right thing to do. He doesn't nor does he expect to get a commission on my rental equipment because he didn't invest in it.

Michael brauer

[quincyg]

it sounds like a bad thing to me. regardless it seems extreme to you, right? just come back with an extreme counter offer. no percentage of future earning and a lower overall percentage, etc. the role of your manager is to negotiate hard. he is going to negotiate the hardest for himself. giving a long term cut of things not yet in existense sounds absolutely horrid to me. i think flether is right in that if he makes you money then he will make money. if he does his job well then you would keep him as a manager. if he doesn't do his job then you will let him go.

if he sucks and you have to fire him, he will own your ass for 20 years. that's CRAZY.

my only experience with an agent started out as a good thing. she got us work, not great work, but work. we reached a point where what she was bringing to the table was not good enough any more and we hired a new agent. isn't that how it's supposed to work?

i say it about once a day...i really wish there was a business/legal forum. would be great.

[Sqye]

i've seen this quite a lot. managers, lawyers, label a&r, and talent,
and, yes, even us writers, producers & engineers attain a few large
successes, and then begin to construct deals so that only the very wealthy,
or stupid, can afford to pay.

hey, if a professional can afford to work and live that way - fine,
but it often feels a bit careless to me on a business level,
because you never know where your career is headed next.

cheers.

[wwittman]

Originally Posted by Fletcher

My handshake deal has always been that anything that earns because of their involvement will earn for them as long as it earns for me...

that's right

if I make a record that earns royalties for years, then why SHOULDN'T the manager involved get his share of that money just because it's spread out over time?

although in practicality, it's tough to enforce.

what i would NOT agree to is a continued percentage on work that is initiated AFTER the term or after the manger no longer works for me.
for one thing, there is likely to be a NEW manager in the picture... are you going to give 15-20% to BOTH of them?