Pay or play contract

A pay or play clause (or guaranteed contract) in an entertainment contract means that the person who is being hired (typically an actor) is guaranteed payment regardless of whether he or she actually works. For example, if a natural disaster shuts down a production, or a new director is brought on who wants to make casting changes, actors with pay-or-play contracts will receive their contracted salary even though they are no longer on the project. While pay-or-play clauses were, in the past, generally offered only to A-list actors who had a greater amount of bargaining power, they are now relatively standard clauses in any entertainment contract.

One such example is Billy Dee Williams's contract when he agreed to play Harvey Dent in the film "Batman". Williams hoped that this contract would help guarantee a starring role in a sequel to the film when his character became the villain, Two-Face. However, when Tim Burton declined to direct "Batman Forever", the new director, Joel Schumacher, decided to pay Williams' penalty fee to cast Tommy Lee Jones instead.

Another famous example is Bob Hoskins's lead role in "The Untouchables". Director Brian De Palma wanted Hoskins to play the role of Al Capone, and signed a contract well before production began to ensure he got Hoskins for the part. However, the studio pressured DePalma to cast the better-known and bankable Robert De Niro in the role. Hoskins took the replacement in stride. When he received the fee for De Niro's replacing him, Hoskins called DePalma and asked him, in good humor, if there were any other movies De Palma didn't want him to be in.

Additionally, elements of pay-or-play clauses can be found in other industries, under different names. In the sports world, standard player/coach contracts are guaranteed for the life of the deal, regardless of whether the player or coach actually works for the full duration---hence the name for such contracts being guaranteed contracts. For example, if a baseball player is signed to a 5-year, $30 million deal but is cut by his team after year 3, the team will still owe the player the balance of the $12 million due, regardless of whether the player is performing services for that team or another team. The balance owed can be mitigated if the player signs with another team, with the amount paid by the new team subtracted from the balance owed by the cutting team. A notable exception to this rule is in the NFL, where only the bonuses outlined in player contracts are guaranteed. NFL players are not guaranteed the salaries outlined in their contracts; they are only paid the salaries outlined while they are actually still employed by their team. For example, in 1996, when Kirby Puckett suffered a career-ending glaucoma in his right eye, he was only two years into a five-year, $15 million contract; he was then paid for the subsequent three years.

High school athletic programs have used a spin-off of pay or play contract, called the pay-to-play method, to compensate for budget cuts over the years. This means students have to pay to participate in sports offered by the school, but does not guarantee any playing time. Critics argue that the pay-to-play system takes opportunities away from students who do not have extra money to participate in sports teams, although many school districts have waivers for low-income students.

In the business world, high-level executives are often guaranteed to receive their salary for a specified period of time outlined in their contract, regardless of whether the company continues to employ them or not--so called Golden parachutes. Similar clauses are often negotiated during mergers and acquisitions to protect the management team that is being merged or acquired into the new company.

ources

* [http://www.rmslaw.com/articles/art60.htm Navigating The "Pay Or Play" Minefield] , "The Business Of Film" October - November 1997