How Johnny Depp Became the Highest Paid Actor Ever
Part Two: Balancing art and commerce key to deft Depp’s $78 million for P2
By Alex Ben Block
HOLLYWOOD, CA (Hollywood Today) 5/1/07 — How and why did Johnny Depp become perhaps the highest paid actor in history for a single film? The estimated $78 million Johnny Depp has earned for acting in “Pirates of the Caribbean: Dead Man’s Chest” may set records just as the film did. Plus his share of the booty from the “Pirates of the Caribbean” trilogy since 2003 now exceeds $106 million with another $40 million-plus on the line for P3, according to an analysis by Hollywood Today.
It’s unusual for an actor actually earn nearly that much (especially without producer income added), no matter how much is promised on back end based on box office gross. The term “gross” is a highly subjective term in Hollywood where “Batman” is still technically a money-loser. Plus Disney, whose own theme park ride gave rise to the film franchise, made sure they were paid back P2’s $225 million budget in a creative contract that may mark a new standard in Hollywood.
It boils down to a very special actor in a role that fits him like a glove. Lots of films have great scripts, casts, marketing, special effects, etc. Only one has Depp’s Captain Jack Sparrow.
Depp, unlike almost any other star of past or present, is able to move back and forth between big commercial fare like “Pirates” and more personal and arty movies. That is because Depp created a character that lives above and beyond who he is in reality. A top movie distributor and exhibitor in Japan recently made the point to Variety (2/11/07) that “Depp as Captain Jack Sparrow is popular, not Johnny Depp per se.”
After avoiding the obviously commercial for much of his career, Depp now believes he has found the balance that makes it work for him. He told Newsweek in 2006, “It’s because I feel like I have a voice. The idea of commercial success never bothered me necessarily. What bothered me was striving for that, and lying to get that.”
While Hollywood and fans often throw stones at those on top, the comments from Part One of this article last week on the subject were surprisingly unanimous in their opinion that Depp deserved every penny and that it couldn’t have happened to a nicer guy.
Among contemporary actors the ability that Depp has shown to move back and forth between blockbusters to smaller, more artful films is unusual, and among the greatest stars of history, even more rare. One comparison is to look at the top money making stars of the year, as compiled by Quigley Publishing each year since 1932. Depp topped the poll in 2006, which surveys theater owners as to which stars perform best for them. Depp had appeared in the top 10 twice before but this was his first year to top the list.
Depp will have to sustain a long career to break the all time record for topping the list of seven, held by Tom Cruise (who is still looking to add to his own streak). Third with five is an honor shared by Tom Hanks, Clint Eastwood, Burt Reynolds and Bing Crosby. Four time first place finishers were Doris Day, Shirley Temple and John Wayne, who placed among the top ten during 25 different years from 1949 through 1974.
HOW MUCH DID DEPP MAKE? Only his family, agent and business manager know for sure and they aren’t talking. However, there are numerous industry sources, published reports and other resources to draw a picture of how the “Pirate” loot is divvied up.
These figures have not been adjusted for a percentage of his income that Depp would pay to agents or managers. Depp has been able to use his success not only to buy an island, but to build a creative getaway as well with a production company called Infinitum Nihil. It is currently working on a movie called “Shantaram,” based on a true story in India. An Australian escapes prison and flees to Bombay where he does his best to disappear among the teeming masses. Depp stars as well as produces along with Brad Pitt’s Plan B Productions and Warner Bros. It will be financed and distributed overseas under a deal with Initial Entertainment.
The level of success achieved by P1 was a pleasant surprise for Disney. In the past, movies inspired by theme park rides had not performed well, and the pirate genre had sunk many a producer in the recent past.
Depp’s upfront salary for P1 was $10 million and he was entitled to a gross profit participation of 10 percent of the money received by the studio, after certain mandatory deductions (even for a gross player) such as taxes (10 percent domestically and more foreign), residuals 12 to 18 percent, checking & collection (to keep everybody honest) and a dues and contractual assessment (covering other mandated costs). That can add up to 20 to 25 percent of the gross revenue off the top before it gets to the gross participant.
Other data for P1 we took a very conservative approach and included:
Theatrical gross domestic - $305.4 million. We took 45 percent of that as rentals which were returned to the studio and start to make up the revenue pie.
Theatrical gross outside the U.S. of $347.8 million. We took 35 percent as rentals due to higher taxes and the difficulty of collecting all revenue.
Sale of TV rights to ABC Network (also owned by Disney) and then re-sale of some rights to USA Network, valued at $25 million toward revenues.
DVD sales 18 million. Retail price varied up to $30 for a special set. We used $16 as the wholesale price to determine revenues to Disney.
Soundtrack album released 7/22/03 with a suggested retail price of $18.98 recorded sales of 524,000 copies, and was certified Gold by the RIAA). We estimated wholesale price at $12 to determine revenue back to Disney.
Under a first dollar gross deal, Depp stood to receive a 10 percent share of about one quarter of the gross revenue that was returned to the studio related to the movie.
There was minimal merchandising revenue from P1 because it wasn’t expected to be a hit, let alone a lucrative franchise.
Things were different when it came time to negotiate for production of the second and third movies as a contractual package. Disney needed to keep the now-franchise pictures coming; and Depp had become a full fledged star. Producer Jerry Bruckheimer and director Gore Verbinski were also iin a position to negotiate profit participant deals.
Disney, according to several sources, was willing to share, but not to lose money, and not to look like a fool for paying participants profits before covering costs. The “Pirates” 2/3 contract became the formula for a new relationship between the star actors and producers and the studio that puts up the money – in this case as much as $600 million to make and market two movies.
So P2 and P3 were produced under what is called the Cash Break Even Method, as opposed to the First Dollar Gross Method of sharing revenue with participants. Under the CBEM, the studio gets paid back for the cost of making the movie before the participants share kicks in. In return, the participants get a bit richer a deal once it reaches that point.
Under a first dollar gross deal, the participants would be capped at 27.5 percent of the revenues allocated to the profit pool. Under the P2/3 deal that rose to 32.5 percent, according to sources.
We estimate the cost of P1 was $180 million, of P2 at $225 million, and P3 at more than that (this becomes relevant down the road when that cost is deducted before the profits kick in).
This time Depp received as upfront salary $20 million for P2 and $20 million more for P3, with a back end percentage on each movie of 20 percent, based on the CBEM.
The domestic theatrical box office for P2 was $423.3 million, and the foreign was $637.3 million for a worldwide gross of $1,060,571,331. We used the same formula as with P1 to determine rental income.
The sales of the TV rights are once again estimated at $25 million.
The DVD sales of P2 set new first day (five million) and first week marks but then it came back to earth. We estimate total sales of 15.5 million copies, at an average wholesale price of $12 per copy as revenue back to Disney.
The soundtrack album was not nearly as successful as for P1. It was released July 4, 2006 and sold 221,000 units at a suggested retail price of $18.98. We estimated the wholesale price at $11 per unit.
For P2 and beyond, the merchandising became huge factor. For the most part, merchandising and licensing rights, as they concern Depp, have been done in a separate contract. We assumed that it was a typical A-list merchandising deal which would be worth about 5 percent of revenues, and in this case an additional licensing fee for use of his image on everything from lunch boxes to theme parks.
Depp has become the face of “Pirates” and it is hard to imagine the franchise without him. His slightly gay pirate, almost tipsy pirate has become an iconic image that has driven the sales of numerous spin offs and a wide range of products.
He even became an icon for a holiday. Last Halloween, the hottest kid’s costumes were Pirates based on characters from the Disney movie, especially Depp’s comedic Captain Sparrow.
With talk of Pirates 4 and even 5 on the horizon, there’s no doubt Depp will be living the pirate’s life for some time to come. But you can judge for yourself on May 25 or to see some new clips, click here .
Hollywood Today Newsmagazine Senior Columnist Alex Ben Block is a best selling author and radio commentator and was formerly Editor of The Hollywood Reporter and TV Week and associate editor of Forbes Magazine.