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20 Things To Think About When You Option Your Screenplay - Part I

By Chip Street

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What does it mean to have your screenplay optioned?

A producer wants to option your script. Should you do it? What are the considerations?

Now that I’ve been through the option gauntlet a couple of times, I get asked about the experience and the process. It’s a little humbling, cuz I’m just a lucky guy with a couple of options, but I know how much I appreciate when I stumble across some good first-hand info, and figured it would be a good idea to share what I know. So I thought I’d gather my notes together here, in the hopes that it’ll prove useful to others. This is no substitute for having an attorney, mind you… more on that later. But I wish I’d had this list.

Of course, I’m no lawyer, but I did pay one (a really good one, too!) to represent me in my deals. I wanted to learn, so I was involved in the negotiation process, and reviewed each round of revisions on the offers and eventual contracts, asked lots of questions, and took lots of notes. I asked the attorney to mark up the contract with all the items of concern or negotiation he could think of… then I had him go over them with me, and explain things to me that I didn’t understand. I picked out the points I wanted to ask for, and removed items I felt were over-reaching or I just didn’t feel like I needed.

I don’t plan on being so involved in future deals. But now that I’ve got a handle on the basic vocabulary and have some sense of what it is I should be looking for, at least I won’t feel like an outsider in my own negotiations.

Part I is the basics… what is an option, how to respond, and what to expect. Part II is a list of negotiation points and terms that I’m very glad I know about now, and you might like to know about as well.

PART ONE:

1 – What is an option?

Producer Bob stumbled across your script on your site or in a screenplay competition, and has approached you with an offer to “option” it. What’s that mean, exactly?

Granting a producer an option means granting them the exclusive right to develop the script… to try to raise the money to make it, get talent or a director attached, and otherwise exploit the property with the end goal of making your movie. Any time within the option period they can “exercise” the option, and buy your script for an agreed price.

Sounds great, right?

Depends.

2 – Should you take the option?

Getting optioned is exciting. But it doesn’t mean your film is going to get made… it means someone wants to make your film but doesn’t have the resources yet. If they did have the resources, they’d buy it and make it, right? So what you really want (short of actually selling the screenplay) is to have it optioned by someone who has a high likelihood of getting it made. Because while having a script optioned is great (and it is great, don’t get me wrong) having a script produced is even better. Not just for your ego, but for your career.

Remember too that your scripts are your product, and have value. They’re an investment for you, and like any investment, they should be working for you. I assume that you don’t just write them and stick them in a drawer… you show them to people, put them into contests, post them on screenplay sites, right? You want them out there representing you, if not to get sold, to at least be working as writing samples.

But during the time the script’s under option, you’re likely restricted from any further exploitation of your own. That’ll probably include submitting it to any more contests, and certainly means not showing it to any other producers. When your script is under option, it’s “off the market” and is no longer working for you. Now the option has to be working for you, by being more valuable, more likely to lead to production, than having the script “on the market”. So, you want it optioned by someone who’s really got the goods to make things happen.

3 – It’s okay to say no

If you’re approached by an unknown producer with no resources, no previous credits, no financing and no connections, and thus a limited likelihood of getting to production, it’s okay to say no. Your script (assuming it’s a good script, and of course it is, right?) may be more valuable to them than they are to you. Your script may no longer be working for you, either inside or out of the option. (But you don’t have to say no. There may be good reasons to take said chance with Mister unknown resourceless producer… more on that later.)

4 – Get a lawyer

If you’re considering taking the option, let me say this first:

Get a lawyer… not just any lawyer, but an entertainment attorney. I promise you, they will handle things you never dreamed would need to be handled. They will ask for compensations and protections that you didn’t know existed. And you will be better off for it.

Second, partner with your lawyer. I’ve heard people complain long and hard about how their lawyers screwed up deals for them, lost them money or projects or investors. Your attorney works for you… they’re the pro, don’t get me wrong, and avail yourself of their wisdom, but be sure you’re involved enough to sign off on what they’re asking for. In the end, if you let your attorney ask for too much and screw the deal, it’s on you.

Where do you find a lawyer? I can only tell you how I found mine. My first option deal was a no-lawyer friendly deal with a producer I knew from a previous film (I was an art director). I signed an option contract that looked fair to my unschooled eye (and it pretty much was), and it ran its course. When the producer wanted to renegotiate an extension, I took that as an opportunity to look for an entertainment attorney, because I figured it would be easier to find a good one when I could say “There’s an offer on the table… can you help me?”.

Then, I reached out to other screenwriters I know, asked for references, and was recommended to a great attorney in Beverly Hills. I was able to contact his offices, reference this other writer’s name, and say “So and so referred me to you. I’ve got an offer on the table. Can you help?”

The short answer, I guess, is network for recommendations.

5 – Why do you get paid?

So if they’re not making your movie (yet) why do you get paid?

Your script is Intellectual Property (IP), and he with the best IP wins. No script, no movie. (Well, that’s not entirely true… plenty of films go into production with no script, but they’ve usually got big stars or big producers behind them. Iron Man comes to mind as a recent example…) IP has inherent value, and potential value. The inherent value is that it’s legally defensible property that you own and control the rights to. The potential value is, of course, what its resulting film (and all that might go with that… merchandise, novelizations, sequels, serializations, TV series, etc.) will be worth.

When you option the script to a producer, you’re transferring your rights in the IP to that producer to use as her own. It’s no longer yours for the period of the option… it’s now an asset in the producer’s portfolio. Even if the film isn’t made, the rights to that asset – control over the potential – are of value to the producer. Why? A producer with a portfolio of ten good producible scripts she’s got exclusive rights to is in a stronger position with potential financiers, studios, production partners, than is a producer with no rights to any scripts. Make sense?

Because you’re giving up an asset with value and taking it off the market, you should be compensated.

6 – How much will you get paid?

Your option contract should include at least two numbers: the option price, and the purchase price.

The option price is what you get for giving the producer rights to your IP, and taking it off the market. The option price is traditionally 10% of the purchase price, and is yours to keep no matter what happens.

The purchase price is just what it sounds like: at some future point defined in the contract, should the producer raise the funds and resources to make the film, she will “exercise the option” and buy the script from you. This should be prior to the start of principal photography, but could be another negotiated date.

The option price (what you’ve already received) may be applied toward the purchase price… say the purchase is 50K, and you’ve received 5K as the option price (10%). When they exercise, they’ll give you the other 45K. Should they never exercise, you keep the 5K as compensation for being “off the market”. But again, this is all negotiable.

So what is the purchase price?

That’s the trick, isn’t it? If you’re in the Writer’s Guild (WGA), I believe the union minimum right now for a feature script is in the neighborhood of 76K. Of course, the WGA does understand that small movies can’t take that hit, and they’ve got low-budget agreements for those kinds of productions. Ask the WGA for more info – they’re pretty accessible folks, even for non-members.

I’m not currently WGA, and I’m assuming you’re not either. So what do we ask for?

One rule of thumb says the script should account for about 3% of the budget… so if your script is a little indie film that’s being shot on weekends for 50K, figure $1500. A 2MM movie? Shoot for a $60,000 purchase price. Find a balance, and don’t cripple the production with an unreasonable percentage. Be a partner, and an asset, not a financial liability. Instead, negotiate those alternative compensations. Wouldn’t you like to have owned a little backend piece of Paranormal Activity?

7 – What about those “dollar options”?

Again, if you’re in the WGA there are restrictions on how little you can accept… but we’re not WGA. So we’ve got the freedom to strike any deal we want.

The producer may ask you to option your script to them for very little or no money, and while many writers may disagree with me, I don’t think that’s necessarily a bad thing. There are good reasons to take low dollar or free options, especially when you’re early in your career — so long as you’re confident that the producer has a reasonably good chance of reaching production, or you’re otherwise going to get some good value and experience from the option. There’s value in getting the opportunity to work with certain people, for instance, or in being allowed to participate and gain experience in a production role.

If you choose to take the dollar option, just bear in mind that you should be reimbursed for that additional concession. In addition to your purchase price, consider negotiating for other compensations, like backend points, or a higher purchase price, or box office bonuses, a first right of refusal on all paid rewrites, the sequel, remakes, etc. Or consider retaining some or all of other rights in exchange for the dollar option, like the novelization, video game, or merchandising rights.

Or at the very least, if there’s little or no money up front, shorten the option period. Mitigate the “off the market” time you’re willing to endure for zero dollars.

8 – How long will the option be?

Options run 6-12 months (usually). At the end of the option period, the producer may have an “extension clause” they can exercise, to get another 3-6 months or more. But if they do, there should be another payment involved.

At the end of the extension, if they really want to hang on to the script, they can ask you to do another extension, or renegotiate the option, or whatever… but then it’s up to you.

All of these numbers are negotiable… how many months, how many extensions, how much additional payment. You’ll want to balance your desire to work with the producer, the time off the market, the likelihood of production, and make a deal you can live with… because once you sign, you’re obligated.

9 – Will they change my script?

In a word, “Yes”.

Every script, by every writer established or new, will go through changes. During my first option, among many other changes, all the characters had their genders reversed, and (I kid you not) a scene with a giant flying corncob was added. Yup. It all made sense to someone somewhere, and those changes, if they appease the right people, are probably bringing your project closer to production. I mean, come on, people don’t add flying corncobs for simply no reason, do they?

Don’t be married to your script. Filmmaking is a collaborative artform, and your option makes you a part of a team. If you’re so in love with your story and will suffer heartache (that money or a produced credit can’t solve when it gets changed), then put it in that drawer and don’t take it out till you can make it yourself, your way.

Negotiate yourself as the writer of any rewrites, polishes, and punch-ups that might be necessary. Maintain some creative control. Especially if you’re doing one of those dollar-options.

But don’t underestimate the value of having more eyes on your work. There’s a lot to be learned by seeing what another writer does with your stuff, and maybe (just maybe) you’ll like the experience. Maybe, just maybe, you’ll end up sharing credit with a writer of note. And that’s not a bad thing.

If you can, negotiate to protect your credit. Look into the WGA guidelines for which credits mean what. Understand that if WGA writers are brought on to massage your work, they’ll be treated like WGA writers, possibly to your detriment. More on that in Part II.

And this is important – negotiate the rights to any changes or alternative versions created by the producer or on behalf of the producer during the option period. In other words, if the script reverts back to you, so should the rights to any changes made to the script while the producer had it. Otherwise, you’ve got your script back, but the producer potentially still has rights to their version… and now you’re in competition with another version of your script that you don’t control. That’s not a place you want to be.

*EDIT* I received further clarification on this from a well-positioned Hollywood exec and consultant. Check out the post “Who Owns The Rights To Your Screeplay Rewrites“.

10 – So why option?

If you were a producer, wouldn’t you rather spend a little money to guarantee your exclusive rights to a great script, and spend a year testing the waters with financiers, production partners and distributors, than buy a script outright for ten times the money only to discover you can’t gain any traction?

As great as you and the producer might think your script is, the production environment is fickle. Deals fall apart all the time. Movies go in and out of production like fashion and fads. The option lets you and the producer partner together with limited liability and obligations well defined, to try to bring your project to the screen. A carefully written and executed option contract makes for good and honest business partners… and that’s what you are, in the end.

So here’s my philosophy. Enjoy the option for what it is: a vote of confidence in your hard work, and an opportunity to learn and network.

Dream about the option turning into a sale and a produced script… and plan for it in your option negotiations. But from a practical standpoint, consider the option the endgame. The option is a great opportunity to learn more about the business, to meet new people, and make new connections. Take full advantage of it (as much as the producer will allow) and be a participant. Producers (many of them, anyway) want to work with writers who do more than just deliver a script and wait for a check… they want a creative partner. Negotiate your right to rewrite and polish, and attack it with everything you’ve got. Prove yourself a team player and a saleable writer.

This industry is all about relationships anyway. If the movie isn’t made, you’ve spent a year on someone’s radar, in this producer’s office, on the phone, meeting her contacts, and showing yourself to be a professional who delivers and is willing to work and play well with others. You’re in her rolodex, and maybe she’ll refer you to her pals.

That may just prove to be payment enough, when it leads to your next big deal.

Coming up…

In Part II you’ll learn many of the terms, clauses and points of negotiation I’ve become familiar with, so that when you’re talking to your attorney (and your potential producer) you’ll have at least a little vocabulary to lean on.

About Chip Street

Chip's first screenplay, Rocket Summer sold to eKidsFilms and the novelization is now available on Amazon.com. His second script, Grampa Was A Superhero, was promptly optioned for two years. His third, Faeries, is under option and is being developed into a franchise property. He has also co-written and directed several short films, is a screenplay contest judge, and founded Write Club Screenplay Challenge, which launches quarterly micro-screenplay contests (when he has time). Chip's screenwriting and crowdfunding articles have been referenced by Script Magazine, the BlueCat Newsletter, IndieWire, JohnAugust.com, Bleeding Cool, and No Film School. To learn more about Chip and his projects, visit ChipStreet.com.

Screenwriting Article by Chip Street

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