SAG-AFTRA fought the long fight, the AMPTP came to the table, and we finally have a new three-year agreement in the bag. It’s back to business as normal, right? Not quite! Now we face the uncertainties and difficulties of implementing agreed-on terms. And nowhere is this proving more confusing at present than regarding residual payments. Blake & Wang P.A.’s Brandon Blake, our specialist entertainment attorney Los Angeles, unpacks some of the concerns currently muddying the water.



Brandon Blake

Advance Paid Residuals- and Why They’re Making Waves        

In particular, we’re seeing layers upon layers of misunderstanding about the new ‘advance paid residuals’ system, especially between actors and their reps. It has even been said that this could ‘drive smaller agents out of business’. But what is the reality?

 

Advanced paid residuals are designed to cover a portion of the actor’s per-episode fee, to be bundled with future residual payments. This is typically negotiated by the agent or equivalent rep as part of initial compensation. Studios then pay this fee to the rep, where their commission is withheld. Then the remainder is passed on to the client.

This will change after the ratification of the new SAG-AFTRA/AMPTP deal. Now advance paid residuals are supposed to be paid to the union and forwarded to the performer from there. Additionally, residual pay cannot top 15% of the guaranteed compensation if the performer is earning under $75,000 per episode or week.

The Implications of the Shift


This means talent agents and reps can no longer automatically commission their clients and pass on the remainder. Instead, they will have to invoice the client and hope for the best. It’s easy to see how this could have considerable implications for agencies with tight balance sheets. Coupled with the knock-on effects of a seven-month-long production halt due to the various strike actions, you have a very difficult situation indeed. It’s easy to see how some are framing this as a slight to the talent reps who helped support the strike actions throughout their lengthy duration.

 
Additionally, the issue is made worse by the fact that SAG-AFTRA can be notoriously slow in making residual payments they already handle, primarily due to the sheer volume they handle. Reps, in comparison, typically get them passed on to the client within days.
 
This is a matter that could be solved by eliminating the advanced residual system. This would leave us with initial performance fees, and residual payments beginning once a property enters reruns. As it stands, there is often confusion among actors regarding what is clear payment and what is advance residual as it is. However, there would likely be significant studio pushback against this sort of change.
This will inevitably have the most impact on boutique agencies, with less cash flow to cover new delays and hiccups and where every cent of a commission is critical to their survival. These boutique agencies are a critical part of the wider Hollywood ecosystem, and knock-on effects (like the unwillingness to take on green or unproven talent) will inevitably follow. In turn, this will also affect the ‘pipeline’ of actors through to the A-list, who typically start in smaller outfits before moving on to the ‘big league’ agencies. Let’s hope to see some union clarity- and sense- on the matter soon.
 
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