In filmmaking, a guarantee is a term of an actor, director, or other participant's contract that guarantees remuneration if, through no fault of their own, the participant is released from the contract. Such an arrangement is known informally as a “pay-or-play” contract.
Many stars insist on guarantees in their contract due to the major time commitment agreeing to appear in a film can mean. For example, Kurt Russell's decision to appear in the film Soldier, for which he was paid $15 million, had a commitment of 18 months where he was not able to appear in another film. If the film was cancelled, or if he were replaced but not if he withdrew of his own accord, Russell would be paid $15 million, or a large part of that fee, to compensate him for clearing his schedule.
Studios are reluctant to agree to guarantees but accept them as part of the deal for signing major talent. They also have the advantage of enabling a studio to simply remove a participant under such a contract with few legal complications.
Examples of “Play-or-Pay”
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- When a writer's strike halted all production at Warner Bros. Studios in 1960, James Garner demanded that his "play or pay" contract be honored, and that he be paid for the time off. WB refused, saying that the strike shutdown was outside of their control, and honoring all such contracts for ancillary causes would cost them millions. Garner sued the studio for breach of contract and won, the first such case ever won by an actor against a Hollywood studio.
- Director Guy Hamilton originally agreed to direct Superman when it was due to film at Cinecittà Studios in Rome, Italy. When the producers realized that they could save millions by filming in Britain, Hamilton –a tax exile who lives in the Caribbean– had to withdraw. He insisted he be paid his $1 million fee in full.
- Director Brian De Palma had originally wanted his Greetings star Robert De Niro to play Al Capone in his film The Untouchables. When De Niro turned him down, De Palma cast British actor Bob Hoskins. However, De Palma and producer Art Linson were determined to get De Niro, and when he agreed after all, Hoskins was released from his contract. Later, Hoskins received a cheque through the mail for £20,000. He rang De Palma up and asked if he had "any other films you don't want me to appear in."
- In 1991, celebrity couple Julia Roberts and Kiefer Sutherland were supposed to appear together in a Western called Renegades. When Roberts called off their engagement, Sutherland was paid $3 million to leave the project. For a while, producers kept Roberts on the project as they tried to pair her up with Mel Gibson.
- Arnold Schwarzenegger agreed to appear in a mega-budget historical adventure called Crusades for Mario Kassar's company Carolco Pictures. When the projected budget went past $200 million, financing collapsed, despite pre-production expenditure of $20 million. Instead of collecting his guarantee of $15 million, Schwarzenegger received all rights to the script in the hope that one day he could get it made.
- Another example of a star turning down his guarantee was on Oliver Stone's proposed Manuel Noriega biopic. When the project collapsed, star Al Pacino decided not to increase Stone's misery and did not asked for his guarantee money.
- Also in the Batman franchise Marlon Wayans, considered for the role of Robin in both Batman Returns and Batman Forever reportedly received full pay for both movies even though he was not used in either. Robin was portrayed by Chris O'Donnell in the latter.
- On the cartoon Animaniacs, the theme song makes direct reference to pay or play contracts: We're animaniacs, We have pay or play contracts, We're zany to the max, There's baloney in our slacks...
Similar clauses outside of filmmaking
Additionally, elements of guarantee 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. In another 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. 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. The balance owed can be mitigated if the player signs with another team, with the balance owed by the cutting team subtracted from the amount paid by the new 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.
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; a so-called golden parachute. Similar clauses are often negotiated during mergers and acquisitions to protect the management team that is being merged or acquired into the new company.