Heathens & Theives

To support or invest in Heathens & Thieves—or for a PDF copy of the script or business plan—please email or call producer Peter Scott at (310) 576-6025.

How will profits be computed?
In the event the film draws an income, every dollar of net profit will be split 50-50 between the investor pool and the production pool. The funds in the investor pool will be divided based on the percent contributed. The funds in the production pool will be used to cover deferred payments and if net profits are high enough, the remainder will go to Orofino, LLC.

Profit participation plan
The arrangement we are seeking is a “50/50 Net” deal structure, a common format for independent film financing. As you will see in Figure 1 below, this deal-making design equally rewards Investors for their capital investment and Creatives for their sweat equity. The deal structure is comprised of two “pools,” one for the investors and one for the production.

Figure 2 breaks down the details of the investor pool. In this pool, for every net profit dollar, 50% is disbursed into the investor pool and 50% lands in the production pool. Investor pool net profits are divided and distributed to each contributor at a rate equal to the percentage of total invested. All investors will be “passive,” meaning they will not have any control over the development or marketing of this project. Passive investors contributing over $100,000 will be awarded an honorary “Executive Producer” credit. Passive investors contributing between $50,000 and $100,000 will be given an honorary “Co-Producer” credit. And passive investors providing between $10,000 and $50,000 will be granted an honorary “Associate Producer” credit. All investors will receive “special thanks” in the end credits.

As mentioned earlier, we are seeking $200,000 in venture capital, which in turn will be applied to our pre-production, production, post-production, publicity, and marketing budgets. To put the “50/50 Net” model to work, Figure 3 shows what would happen for investors if Orofino, LLC, sold Heathens & Thieves to a studio outright (meaning all rights, title, and interest in the project has been relinquished). In this scenario, we assume a $200,000 cash budget, $300,000 deferred, and $5M in net profits. The outcome following this example shows is that profit sharing would end and we would all walk away. Investors would get a healthy 11.5X return on their initial investment.

The second half of the “50/50 Net” deal belongs to the production pool. The production pool is comprised of the Orofino, LLC, and deferred costs, including, but not limited to cast and crew. To be clear, deferred pay is not only for the time and energy of cast and crew, it also covers any goods, services and other costs that may be extended. It is important to remember, deferred pay does not guarantee a financial return. As with investors, payments only occur when net profits are realized. Examples of deferred pay may include, but are not limited to: cast, crew, location costs, LLC costs, etc. The maximum cap on deferred payments is $300,000. It is precisely these deferred line items that allow us to shoot this film on such a small cash budget.

Almost all of our cast and crew are deferring pay, working without per diem, getting only travel, food and lodging with the understanding that an actual payday is contingent on net profits. Production pool net profits are divided and distributed based on a percentage determined by the total number of deferred-pay line items. For example, if there are 100 deferred line items, 1/100th of all profits in the production pool will be divided equally with 1% going toward each line item. An example of line items might be “Costume Designer Salary,” “Production Assistant Salary,” “Location X Fees,” or “Location Y Fees.” Only after all deferred line items are paid in full will Orofino, LLC, engage in net profit sharing with the investor pool. In Figure 5 we examine what would happen for investor pool and production pool members if we sold the rights only to the emerging markets Brazil, Russia, India and China. Again, this example assumes a $200,000 cash budget and a $300,000 deferred budget. In this example, all investors have their initial contribution reimbursed and begin profit sharing the remaining $100,000 according to their percent of total invested in the production pool. On the deferred payment side, all line items are paid down to a zero balance, but the LLC does not yet engage in profit sharing.

It is worth noting that under this example many other territories and ancillary rights could still be sold at a later date, resulting in yet more net profits down the road, at which point the LLC would begin profit sharing with the investment pool 50/50.