"Right of first refusal?" Alan Sharpe's face darkened. "Why?"
Michael Davenport knew that in negotiations, you shouldn't present all conditions at once, as it might break the other party's psychological threshold. Instead, conditions should be introduced gradually, pushing the psychological threshold back bit by bit.
Frankly speaking, given the budget constraints of the three projects, $1.5 million was no small amount for him.
Breaking down this $1.5 million into smaller parts would significantly reduce the pressure.
Michael smiled and said, "Firstly, I am still researching this project. Secondly, my funds are currently tied up. Transacting with a right of first refusal benefits both of us."
This is also a common practice in Hollywood.
Producers or production companies discovering valuable novels, scripts, or other literary materials often prefer to pay a small amount upfront for a right of first refusal rather than making a large one-time purchase. This approach effectively eases financial pressures and increases business flexibility.
Perhaps the earlier haggling had lowered Alan Sharpe's psychological threshold, or this transaction method was quite common, so Alan didn't immediately refuse. Instead, he asked, "What are your conditions?"
"We sign a right of first refusal agreement," Michael said. "I will pay your company 10% of the buyout fee, which is $150,000 as an advance payment."
The right of first refusal is exclusive and irrevocable, meaning that during the contract period, no one else can acquire the project reserved by him.
Thus, by spending only $150,000, he could control the rights to "The Bourne Identity" for a period.
While Alan Sharpe was contemplating, Michael continued, "If this project is officially launched within 18 months, I will pay the remaining 90% of the fee."
Seeing Alan Sharpe remain silent, Michael added, "This is a win-win transaction. If the project does not launch within 18 months, the $150,000 advance is yours, and you still retain the rights."
Alan Sharpe thought for a moment and countered, "Eighteen months is too long. Twelve months at most. Also, the $150,000 should be a deposit, not part of the buyout fee."
Michael calculated in his mind and said, "Twelve months is acceptable, but I require the right to extend the authorization period. If the project isn't launched by the end of the 12 months, I will pay another $150,000 to extend the period by six months."
This was to guard against any unexpected situations. He rejected the second condition: "The $150,000 must be included in the $1.5 million buyout fee."
When negotiating a right of first refusal, the future buyout price must be agreed upon; otherwise, the rights holder could raise the price at the last minute, leaving no room for negotiation.
As an industry veteran, Alan Sharpe didn't argue over this and slightly adjusted the previously unmentioned conditions: "I require a launch bonus and a share of the box office revenue." He demanded exorbitantly, "When the film launches, your company must pay me a $200,000 launch bonus. After the movie is released, I want 5% of the box office revenue."
Michael could guess that these were probably the so-called conditions Alan had mentioned earlier.
Firmly, Michael shook his head: "You are not the original author. You cannot have a launch bonus and box office share."
"But the rights are with me," Alan Sharpe replied.
Michael sighed, "If that's the case, you can keep the rights. After all, they have been with you for 13 years."
For a moment, Alan Sharpe couldn't find a rebuttal. Having the rights for 13 years indeed weakened his position.
"Let's compromise," Michael offered, giving a bit of leeway. "The $150,000 as an advance payment, and when the project launches, I'll pay your company the $1.5 million buyout fee."
Alan Sharpe, having intended to haggle, frowned and thought deeply.
Michael showed signs of impatience.
Alan Sharpe Productions bought the 20-year film rights to "The Bourne Identity" for $300,000 in 1986. Not being too familiar with the dollar's depreciation, Michael estimated that Alan should make a decent profit at around $1.5 million.
Just as Michael wouldn't be foolish enough to discuss a box office share agreement with Alan, no one wants to make a loss.
Seeing Michael's impatience and considering the 13 years the rights had already been held, Alan made a decision: "The $150,000 as an advance, and $1.5 million as the buyout fee upon launch. You can extend the authorization by six months with an additional $150,000."
Michael extended his hand: "Deal."
Alan shook hands with him: "Pleasure doing business with you."
With the critical financial terms settled by the heads of both companies, the minor details were left to their teams. Within three days, a formal agreement was signed, and the change was registered with the Copyright Office.
All changes in Hollywood copyrights must be registered with the recognized legal body, the Copyright Office.
For instance, a script registered only with the Writers Guild has industry validity but can't serve as legal evidence in plagiarism or other infringement cases.
Seashore Entertainment, the purchaser of the rights, borrowed $150,000 from Relativity Entertainment as a loan. On the day the contract was signed, the advance was paid in full.
Of course, the future buyout fee would also be raised through loans.
As for the loan interest rate, it wasn't high, just a fixed 15%.
This rate is commonly used by major Hollywood companies when borrowing internally.
Compared to other more exploitative rates, it's pretty reasonable.
Unfortunately, neither Seashore Entertainment nor Relativity Group has the current capacity to use certain methods that are only viable with overseas investors.
Thus, Michael planned to secure overseas funds for this project.
With the rights to "The Bourne Identity" secured and awaiting future development, Mary and her newly expanded finance team began managing the finances.
Having three independent financial entities provided greater operational flexibility.
Once the rights were secured, the project was temporarily shelved, awaiting further action.
George Clint's caution was justified, and Michael understood well that his current resources were stretched to their limits. It was impossible to take on another large project like "The Bourne Identity."
Michael's focus remained on "The Blair Witch Project" and "Final Destination." The potentially doomed "Kingsman" received less attention, mainly delegated to George Clint and Paul Greengrass.
This also served to groom George Clint. As the company grew, Michael wouldn't be able to produce every project himself.
By March, after the 1999 Oscars, the media unanimously criticized it as the weakest Best Picture and Best Actress in over a decade.
As an industry insider, Michael saw beyond the chaos to a classic case of commercial maneuvering.
The success of "Shakespeare in Love" and Gwyneth Paltrow had little to do with cinematic art and was instead a brilliant business operation.
This successful maneuver promised millions of dollars in profit for the producers.
Michael planned that once he had the capability, he too could join the Oscars game, potentially making a fortune and even producing a few Best Actresses.
There was also a rumour that Best Supporting Actress Judi Dench had tattooed Harvey Weinstein's name on her backside to win his favour, allegedly showing him in private.
Compared to that, Michael's strict adherence to professional ethics and righteously rejecting unethical temptations indeed painted him as a righteous figure.
How long he could maintain this righteousness, Michael didn't know. But he understood that one often doesn't succumb to temptation simply because the temptation isn't significant enough.
While Michael was engrossed in work, an official from the Abu Dhabi Investment Authority's Los Angeles office came to visit.