Working With Managers
There comes a point in a successful career where management is not an option but a must. You will know when you get there. Your fans might be great at getting some posters up around town, but they won’t find festival gigs, product endorsements or know of other opportunities that are the lifeblood of a manager’s career.
A manager makes his money on a percentage of the income he generates for his client. Management fees have ranged from as little as 15 percent to as much as the famous Colonel Parker/Elvis deal at 50 percent. The percentage that a manager can reasonably expect to receive should be based on how successful the manager has been in the past. An artist would be foolish to embark on a long-term relationship with an unproven manager. Newcomers to the management game have to prove themselves; and, as their success and notoriety grow, so does the percentage they can demand from their clients. Management agreements can be tied to performance where the manager’s share goes up as earnings rise. This would be a must-have clause for a startup management person or firm if I was an aspiring artist.
When is it time to look into management? Ask yourself the following questions:
- Do I really need a manager?
- If so, for how long and for how much?
- What can a manager do for me that I can’t do myself?
Managers work for money. No manager will last long in this business if they can’t make a living. A manager may have to handle a number of artists to get to that place; or, if they are lucky, can make a living from managing just one artist[em]an artist that is earning about four times what the manager would like to take home. Let’s look at it from a bottom-feeding viewpoint[em]the very basics of a management relationship. If you are looking for a manager that is going to focus solely on you, you will need to be earning quite a bit.
The Today Tones think they are on the way, the projections for this year look like a gross of over $65,000. Not bad for a band fresh out of the garage. The band might think it’s time to look at management. Here’s a look at what a manager would regard as perhaps not even a marginal situation.
Today Tones Worksheet – August 20xx
Income Source Gross Expenses Net
[table caption=”Income Source Gross Expenses Net” width=”500″ colwidth=”20|100|50″ colalign=”left|left|center|left|right”]
no,Performance,CD Sales,Merch,Other
1,row1col1,row1col2,row1col3,100
2,row2col1,row2col2,row2col3,20000
3,row3col1,,row3col3,1405
4,row4col1,row4col2,row4col3,23023
[/table]
Live Performance $4,350.00 $265.00 $4,080.00
CD Sales $450.00 $105.00 $345.00
Merchandise t-shirts $385.00 $220.00 $165.00
All other income/expenses $300.00 $83.00 $217.00
Total $5,485.00 $673.00 $4,812.00
The band is netting about $4,800 a month. If this is the take for a group of weekend warriors, it’s not a bad starting figure at all, but a manager looks at it differently.
Here’s the manager’s monthly take and yearly earnings based on different percentages of the manager’s cut.
Manager’s Band Assessment
Group Name Monthly Earnings Manager @ 20% Band Net
Today Tones $4,812.00 $962.40 $3,849.60
Manager @ 30%
$4,812.00 $1,443.60 $3,368.40
At the 20 percent rate, the manager will be earning about $11,500 a year, and at the upper limit rate of 30 percent the manager will pocket $17,300 before taxes. If your manager has any aspirations of the good life, you are going to have to do a lot better than $5,000 a month to get the manager’s attention. If this manager had ten artists in his stable with comparable earnings to the Today Tones, he is starting to approach making a living. If the manager’s goal was to earn a modest (in management’s view) $150,000 a year and the Today Tones wanted his undivided attention, they would have to net $750,000 annually just to get the manager to this level at a 20 percent rate. If the band is more generous to the manager and pays 30 percent, they will only have to earn $500,000. Keep in mind these are gross figures that reflect income before any expenses are calculated.
Essentially, for the band to be really worth the manager’s time and focus, they will have to grow their earnings by an almost ten-fold increase. Is the manager capable of making this happen? Is the band?
Many other variables have not been put into play in this simple scenario and it is just an illustration of how the numbers might work. Let’s drill down into a management agreement to see what the important points are including the attached Manager’s Power of Attorney. Here’s what a performance-based simple management agreement might look like:
Artist Management Agreement
Agreement made this _____day of ___________________, 20__ by and between _______ (Artist)_________________ whose address is ___________________ (hereinafter referred to as “Artist” and ___(Manager)_____________ whose address is ________________, (hereinafter referred to as “Manager”)
Witnesseth
Whereas, Artist wishes to obtain advice, guidance, counsel, and direction in the development and furtherance of his career as a musician, recording, and performing artist and in such new and different areas as his artistic talents can be developed and exploited; and
Whereas, Manager by reason of Manager’s contacts, experience and background, is qualified to render such advice, guidance, counsel, and direction to Artist;
Now Therefore, in consideration of the mutual promises herein contained, it is agreed and understood as follows:
1. Manager agrees to render such advice, guidance, counsel, and other services as Artist may reasonably require to further his career as a musician, composer, actor, recording, and performing artist, and to develop new and different areas within which his artistic talents can be developed and exploited, including but not limited to the following services:
(a) to represent Artist and act as his negotiator, to fix the terms governing all manner of disposition, use, employment or exploitation of Artist’s talents and the products thereof; and,
(b) to supervise Artist’s professional employment, and on Artist’s behalf, to consult with employers and prospective employers so as to assure the proper use and continued demand for Artist’s services; and
(c) to be available at reasonable times and places to confer with Artist in connection with all matters concerning Artist’s professional career, business interests, employment, and publicity; and,
(d) to exploit Artist’s personality in all media, and in connection therewith, to approve and permit for the purpose of trade, advertising and publicity, the use, dissemination, reproduction or publication of Artist’s name, photographic likeness, facsimile signature, voice and artistic and musical materials; and,
(e) to engage, discharge and/or direct such theatrical agents, booking agencies and employment agencies, as well as other firms, persons or corporations who may be retained for the purpose of securing contacts, engagements or employment for Artist; and,
(f) to represent Artist in all dealings with any union; and,
(g) to exercise all powers granted to Manager pursuant to Paragraph 4 hereof.
2. Manager is not required to render exclusive services to Artist or to devote his entire time or the entire time of any of Manager’s employees to Artist’s affairs. Nothing herein shall be construed as limiting Manager’s right to represent other persons whose talents may be similar to or who may be in competition with Artist or to have and pursue business interests which may be similar to or may compete with those of Artist.
3. Artist hereby appoints Manager as his sole personal manager in all matters usually and normally within the jurisdiction and authority of personal manager, including but not limited to the advice, guidance, counsel, and direction specifically referred to in Paragraph 1 hereof. Artist agrees to seek such advice, guidance, counsel, and direction from Manager exclusively and agrees that he will not engage any other agent, representative, or manager to render similar services, and that he will not perform said services on his own behalf and he will not negotiate, accept, or execute any agreement, understanding, or undertaking concerning his career as an actor, musician, recording and performing artist without Manager’s prior consent.
4. Artist hereby irrevocably appoints Manager for the term of this Agreement and any extensions hereof as his true and lawful attorney-in-fact to sign, make, execute, accept, endorse, collect and deliver any and all bills of exchange, checks, and notes as his said attorney; to demand, sue for, collect, recover, and receive all goods, claims, money, interest and other items that may be due him or belong to him; and to make, execute, and deliver receipts, releases, or other discharges therefore under sale or otherwise and to defend, settle, adjust, compound, submit to arbitration and compromise all actions, suits, accounts, reckonings, claims, and demands whatsoever that are or shall be pending in such manner and in all respects as in any way limiting the foregoing; generally to do, execute and perform any other act, deed, or thing whatsoever deemed reasonable that ought to be done, executed, and performed of any and every nature and kind as fully effectively as Artist could do if personally present; and Artist hereby ratifies and affirms all acts performed by Manager by virtue of this power of attorney.
Artist expressly agrees that he will not on his own behalf exert any of the powers herein granted to Manager by the foregoing power of attorney without the express prior written consent of Manager and that all sums and considerations paid to Artist by reason of his artistic endeavors may be paid to Manager on his behalf.
It is expressly understood that the foregoing power of attorney is limited to matters reasonably related to Artist’s career as a musician, actor, recording and performing artist and such new and different areas within which his artistic talents can be developed and exploited.
Artist agrees and understands that the power of attorney granted to Manager is coupled with an interest which Artist irrevocably grants to Manager in the career of Artist, in the artistic talents of Artist, in the products of said career and talents and in the earnings of Artist arising by reason of such career, talents, and products.
Simultaneously with the execution of this Agreement, Artist shall execute a short form power-of-attorney which Manager shall be entitled to file in any jurisdiction.
5. (a) As compensation for the services to be rendered hereunder, Manager shall receive from Artist (or shall retain from Artist’s gross monthly earnings) at the end of each calendar month during the term hereof a sum of money equal to Zero Percent (0%) of Artist’s gross monthly earnings if such earnings are less than Ten Thousand ($10,000.00) dollars per month, Five Percent (5%) of Artist’s gross monthly income if such monthly income is more than Ten Thousand ($10,000.00) Dollars and less than Fifteen Thousand ($15,000) Dollars per month, Ten Percent (10%) of Artist’s gross monthly income if such income is more than Fifteen Thousand ($15,000.00) dollars and less than Twenty Thousand ($20,000) dollars per month, Fifteen Percent (15%) of Artist’s gross monthly income if such income is more than Twenty Thousand ($20,000) dollars per month, and Artist hereby assigns to Manager an interest in such earnings to the extent of said percentages.
(b) The term “monthly gross earnings” as used herein refers to the total of all earnings, which shall not be accumulated or averaged whether in the form of salary, bonuses, royalties, interest percentages, shares of profits, merchandise, shares in ventures, products, properties, or any other kind or type of income which is reasonably related to Artist’s career in the entertainment, amusement, music, recording, motion picture, television, radio, literary, theatrical, and advertising fields, and Artist’s artistic talents are developed and exploited, received from administrators, assigns, or by any person, firm, or corporation (including Manager) on his behalf.
(i) Royalty advances made to Artist which are deemed recoupable against future earnings by the party or parties making such royalty advances shall not be included in gross monthly income.
(ii) Royalty payments made to Artist after recoupment shall be payable to Manager at the scale and rate aforementioned in Section 5a of this Agreement.
(c) The compensation agreed to be paid to Manager shall be based upon gross monthly earnings (as defined herein) of Artist accruing to or received by Artist during the term of this Agreement or subsequent to the termination of this agreement as a result of any services performed by Artist during the term hereof or as the result of any contract negotiated during the term hereof and any renewal, extension, or modification of this Agreement.
(d) In the event that Artist forms a corporation during the term hereof for that purpose of furnishing and exploiting his artistic talents, Artist agrees that said corporation shall offer to enter into a management contract with Manager identical in all respects to this Agreement (except as to the parties thereto).
(i) In the event that Manager accepts such offers, then the gross monthly earnings of such corporation prior to the deduction of any corporate income taxes and of any corporate expenses or other deductions shall be included as a part of the Artist’s gross monthly earnings as herein defined, and any salary paid to Artist by such corporation shall be excluded from Artist’s gross monthly earnings for the purpose of calculating the compensation due to Manager hereunder.
(e) In the event that Artist forms a corporation or enters into a contract with a corporation during the term hereof for the purpose of exploiting or furnishing his artistic talents, then in addition to any and all other considerations to be paid to Manager hereunder, Manager shall be entitled to purchase at least Twenty Percent (20%) of the capital stock of such corporation at the price of One Dollar ($1.00) Per Share. Artist agrees expressly not to enter into any contract with a corporation for such purpose unless said option is made available to Manager.
(f) Artist agrees that all gross monthly earnings as herein defined may be paid directly to Manager by all persons, firms, or corporations and may not be paid by such persons, firms, or corporations to Artist, and that Manager may withhold Manager’s compensation therefrom and may reimburse himself herefrom for any reasonable and receipted fees, costs, or expenses advanced or incurred by Manager that portion of Artist’s gross monthly earnings which equals Manager’s compensation hereunder and such disbursements incurred by Manager on behalf of Artist.
6. Artist shall be solely responsible for payment of all booking agencies, fees, union dues, publicity costs, promotional or exploitation costs, traveling expenses and/or wardrobe expenses and reasonable expenses arising from the performance by Manager of services hereunder. In the event that Manager advances any of the foregoing fees, costs, or expenses on behalf of Artist, or incurs any other reasonable expenses in connection with Artist’s professional career or with the performance of Manager’s services hereunder, Artist shall promptly reimburse Manager for such fees, costs, and expenses.
7. Artist warrants that he is under no disability, restriction, or prohibition with respect to his right to execute this Agreement and perform its terms and conditions. Artist further warrants and represents that no act or omission by Artist hereunder will violate any right or liability to any person. Artist agrees to indemnify Manager and hold Manager harmless against any damages, costs, expenses, fees (including attorney’s fees) incurred by Manager in any claim, suit, litigation, or proceeding instituted against Manager and arising out of any breach or claimed breach by Artist of any warranty, representation, or covenant of Artist. Artist agrees to exert his best reasonable efforts to further his promotional career during the term of this Agreement, and to cooperate with Manager to the fullest extent in the interest of promoting Artist’s career.
8. The initial term of this Agreement shall be for a period of One (1) Year with a Four (4) Year annual irrevocable option from the date thereof to renew this Agreement by written notice mailed to Artist no less than Sixty (60) days prior to the expiration of the initial term or option periods, as the case may be.
9. Manager agrees to maintain accurate books and records of all transactions concerning Artist, which books and records may be inspected during regular business hours by a certified public accountant designated by Artist upon reasonable notice to Manager.
10. During the term of this Agreement, it is understood and agreed that there shall be no change or modification of this Agreement unless reduced to writing and signed by all parties hereto. No waiver or any breach of this Agreement shall be construed as a continuing waiver or consent to any subsequent breach hereof.
11. It is agreed that as a condition precedent to any assertion by Artist or Manager that the other is in default in performing any obligation contained herein, the party alleging the default must advise the other in writing by Certified United States Mail of the specific obligation which it claims has been breached and said other party shall be allowed a period of Sixty (60) days from the receipt of such written notice within which to cure such default.
12. This Agreement does not and shall not be construed to create a partnership or joint venture between the parties hereto.
13. (a) This Agreement shall be construed in accordance with the laws of the State of ________ governing contracts executed and performed therein, and shall be binding upon and inure to the benefit of the parties, respective heirs, executors, administrators, successors, and assigns.
(b) The use of the masculine gender in this Agreement shall be deemed to include the feminine whenever the context shall so require.
In Witness Whereof, the parties hereunder have subscribed their signatures in the day and year first above written.
By__________________________________
Manager
By_________________________________
Artist
by_________________________________
Witness
by_________________________________
Witness
* A Power of Attorney will be attached to allow the Manager to act in the Artist’s name.
Special Power of Attorney
State of _______ )
County of ___________ )
I, ____________(Artist)_____________________________, City of ___________, County of _____, State of _______, hereby appoint ___(Manager)_________, of _______________, City of ___________, County of __, State of ______, as my attorney in fact, to act in my name and in my behalf to execute contracts for my personal services as a performing artist and to perform all acts of whatever kind and nature as may be necessary or proper in the preparation and execution of said contracts and I agree to appear and perform said contracts.
In the event I do not appear and perform said contracts, and in consideration for ___________________ acting as my attorney in fact, I agree to indemnify ________________ for any actual loss or damage to him including Court costs and attorney’s fees, resulting from my failure to appear and perform said contracts.
This instrument is to be construed and interpreted as a Special Power of Attorney whereby ___________________ is empowered to make valid and binding contracts for my personal services as a performing artist. The rights, powers, and authority of my attorney in fact, ___________________, to exercise any and all of the rights and powers herein granted shall begin on ________________________, 20__ and such rights, power, and authority shall remain in full force and effect until ___________, 20__ or until a written notice of termination signed by me is delivered to ________________________________.
_________________________________________
Artist
Dated _________________, 20__.
Witness_____________________
Witness_________________________________
Now I will explain certain things about the contract above that may not be clear.
Section 1: This paragraph describes what the manager is empowered to do in the name of the artist and it is comprehensive. The artist is turning all aspects of their career management over to the manager. The Manager’s Power of Attorney, which will be a rider to the main contract, will codify this in front of a public notary. The manager also has to be reasonably available to the artist for career and business consultation. The manager has the hire and fire power, the ability to enter into agreement in the band’s name. Obviously the manager is the professional on the team that will require the most trust as you are literally and legally placing your entertainment business future in their hopefully capable hands.
Section 4: This section continues to spell out management duties but also touches on what the artist cannot do. The artist has to direct any business inquiries or advances to the manager. There will be no moonlighting or working under the table in this agreement. The artist could be responsible for damages should such a violation occur.
Section 5: These paragraphs specify the compensation to the manager on a performance graded scale. An established and successful manager would probably require the deletion of this paragraph. If you are sitting in his office, it is a sign that you know what the manager’s skills and rate are.
In the case of an artist or band trying out a manager new to the business, it might start the manager’s commission scale to begin when earnings are increased. A band would look at the money they are currently earning as theirs. They made the contact, cut the deal and built the relationship before the manager came on line. This is a negotiable point for both agents and managers. The artist has a bit of wiggle room, but when it gets down to brass tacks, the manager will be taking over all the old accounts and many of them will fall by the way as the manager moves the band upwards in the pecking order.
Special Power of Attorney: This simple document will be needed by the manager to open bank accounts and take over the day-to-day business of the band. The manager will require the power to enter into enforceable, serious and sometimes long term agreements.
Manager School
Managers have to start their careers somewhere and that somewhere might be your band. Many new managers are young, hungry and capable, so a lack of experience is not always a bad thing. A new manager might see opportunity outside the box and exploit it. Unfortunately, most aspiring managers, like musicians, never get to the big game. This is why a couple basic cutout clauses are necessary for the band.
Changes to the contract to accommodate a new manager would first and foremost be performance based when talking about the manager’s commission or cut. No performance, no payment. The manager has to take the band to increased earnings during a trial period or the contract is invalidated. Like a publisher paying for a song option to shop a song around, the new manager is given the tools they need but nothing more until they have proven themselves. Granting a power of attorney to a new manager might be something to wait on until some gauge of performance is assessed and a foundation of trust and rapport is established.
Having a manager will affect your bottom line immensely; not just in the manager’s cut, but also in his expenses. Another negotiating hot spot is whether the manager gets paid his commission on gross or net earnings. It can make a major difference. If a band grosses $10,000 in a month and their expenses run $2,000, if the manager is keyed to the net income at a 20 percent rate they would earn $1,600 that month. If, on the other hand, the manager is tied to the gross earnings his commission base will be $2,000 for that month and his expenses are deducted from what is left or “below the line.” If you take this simple formula and apply it to a band that is grossing millions annually, you can see why the small print in the management agreement can make a big economic difference.