How You Can Easily Settle a Show On the Back of a Napkin

One of the most common statements I hear from tour managers is how confusing settling a show is. Big numbers and large amounts of money are involved, and you don’t want to get it wrong.

It's ideal to have a nice spreadsheet to help you settle a show - especially when you have a lot of expenses to notate.

But what if you don't have a nice spreadsheet?  What if you're starting from scratch?  What if the internet stops working and you can't access your fancy spreadsheet on your Google Drive? 

When you understand the simple math behind how settlements work, all you'll need is a pen and a napkin.

Let me show you how...

What type of deal are we settling?

The 4 most common artist deals are:

Flat Guarantee Deal - Artist receives a fixed rate to show up and perform regardless of expenses or attendance

Door Deal - Artist receives a certain percentage of the ticket sales 

Versus Deal - Artist receives a guarantee versus the right to receive X% of net ticket sales after expenses.

Plus Deal - Artist receives a guarantee fee plus a potential for additional money. This potential overage can be a percentage of box office receipts or a flat bonus based on ticket sales goals. 

Though each of these types of deals are fairly common, the Flat Guarantee and the Versus deal are probably the most common. 

Let's zoom in on the versus deal.

The Flat Guarantee deal is so simple that we don’t even need to talk about it here. You just show up, play the show, and get paid. But the Versus deal is slightly more involved.  

In your artist’s contract, you may see a statement that says something like:

Compensation: $10,000 guarantee versus 85% of the net.

This states that your artist will receive $10,000 just for showing up and playing the show. 

In this deal, your artist also has the right to receive 85% of the net revenue after all the expenses have been paid. You would take home whichever amount is larger. 

How do we do the math?

So this is a versus deal, and it's offering us the option to choose either the guarantee or 85% Net. 

But in order to settle the show, we'll have to calculate what that 85% Net would equal. And with some simple math, you can figure that out. 

Here’s the equation:

((Gross Box Office Receipts - Taxes -  Expenses) x .85)) =  Artist Walkout aka Compensation

Let's put it into practice.

Now that you can see the equation, let’s solve this problem together by simply plugging in the numbers.

Your show just made $40,000 of revenue from ticket sales. The sales tax rate is 7%. And your expenses are totaling $21,000.

Here’s how to figure it out. Let's do the math together. 

GROSS BOX OFFICE RECEIPTS - TAXES = NET BOX OFFICE RECEIPTS

($40,000 / 1.07) = $37,383.18

👉🏽 Gross Revenue includes the ticket prices PLUS sales tax. To learn more about how to subtract sales tax, go here.

NET BOX OFFICE RECEIPTS - EXPENSES = NET

$37,383.18 - $21,000 = $16,383.18

85% of the NET = ARTIST WALKOUT

$16,383.18 x .85  = $13,925.70

Now you have a choice.

You can choose to either take home your guarantee of $10,000, or according to this deal you have the right to receive 85% of the Net which equals $13,925.70. I’m sure you know which one to choose here. 

Woohoo!  You just settled a Versus deal!  And on top of that, your artist made extra money!  Everyone goes home happy…

…just don’t forget to collect the check before you leave.