Mastering Event Settlement: Deal Types and Payouts

Demystifying Event Deal Types

The "deal" between a venue and an artist dictates how the night's revenue will be split. Here are the most prevalent types:

• Guarantee: This is the simplest deal. The artist receives a fixed, predetermined amount, regardless of ticket sales. If the show doesn't sell well, the venue still pays the guarantee. If it's a massive success, the artist still only gets the guarantee.

  • Example: An artist is guaranteed $5,000. If the show grosses $10,000 or $2,000, they still receive $5,000.

• Guarantee Plus Percentage After Expenses: This deal offers the artist a safety net (the guarantee) and a share in the show's success. Once the guarantee and all agreed-upon expenses are covered by ticket sales, the artist receives a specified percentage of the remaining profit.

  • Example: Artist guaranteed $2,000 + 80% after expenses. If expenses are $1,000 and the show grosses $5,000:
    • Gross Revenue: $5,000
    • Total to cover (Guarantee + Expenses): $2,000 + $1,000 = $3,000
    • Profit after guarantee and expenses: $5,000 - $3,000 = $2,000
    • Artist's percentage: 80% of $2,000 = $1,600
    • Total artist payout: $2,000 (guarantee) + $1,600 (percentage) = $3,600

• Percentage After Expenses: In this scenario, the artist's payout is solely based on a percentage of the net revenue after all expenses are deducted. There is no upfront guarantee.

  • Example: Artist gets 70% after expenses. If expenses are $1,500 and the show grosses $6,000:
    • Gross Revenue: $6,000
    • Net Revenue (after expenses): $6,000 - $1,500 = $4,500
    • Artist's payout: 70% of $4,500 = $3,150

• Straight Percentage (or Dollar One): This is a straightforward split of the gross revenue from the very first dollar. There are no expenses deducted before the percentage split.

  • Example: Artist gets 60% straight percentage. If the show grosses $1,000:
    • Artist's payout: 60% of $1,000 = $600

• Vs. Deal (Guarantee vs. Percentage - Artist Gets the Better): This deal offers the artist the best of both worlds. They are guaranteed a minimum amount, but if a percentage of the net revenue (after expenses or even gross, depending on the agreement) exceeds that guarantee, they receive the higher percentage amount.

  • Example: Artist gets $3,000 guarantee vs. 75% after expenses. Expenses are $2,000.
    • Scenario A (Low Sales): Show grosses $4,000.
      • Net revenue after expenses: $4,000 - $2,000 = $2,000
      • 75% of net: 75% of $2,000 = $1,500
      • Artist gets the better of $3,000 (guarantee) or $1,500 (percentage) = $3,000
    • Scenario B (High Sales): Show grosses $10,000.
      • Net revenue after expenses: $10,000 - $2,000 = $8,000
      • 75% of net: 75% of $8,000 = $6,000
      • Artist gets the better of $3,000 (guarantee) or $6,000 (percentage) = $6,000

Understanding and Tracking Expenses

Expenses are a crucial component of event settlement and can significantly impact the final payout. It's vital to clearly define and track all expenses, as who is responsible for them (artist or venue) can vary based on the deal. Common expenses include production costs, marketing, venue costs, hospitality, travel, and ticketing fees.

Key Consideration: The offer sheet or contract should explicitly state which expenses are deductible before calculating percentages.

The Role of Deposits

For deals involving a guarantee, it's common practice for the venue to make a deposit to the artist or their agent prior to the event. This deposit is an advance on the guarantee and must be meticulously tracked, as it will be deducted from the final payout.

Calculating the Payout: Putting It All Together

At the end of the night, with all ticket sales tallied and expenses accounted for, you calculate the final payout by:

1. Calculating Gross Revenue: Total income from all ticket sales, door sales, and any other agreed-upon revenue streams.
2. Deducting Agreed-Upon Expenses: Subtract all expenses that are to be covered before the artist's percentage or guarantee is paid.
3. Determining Net Revenue: The amount remaining after expenses are deducted.
4. Applying Deal Terms: Based on the specific deal type (Guarantee, Guarantee Plus %, % After Expenses, Straight %, Vs. Deal), calculate the artist's share.
5. Subtracting Deposit: If a deposit was made, deduct it from the artist's final calculated share.

Example Scenario (Guarantee Plus % After Expenses with a Deposit):

• Deal: $3,000 Guarantee + 90% after expenses
• Deposit Made: $1,500
• Gross Ticket Sales: $8,000
• Agreed Expenses:
  • Sound Engineer: $500
  • Lighting Tech: $400
  • Marketing: $300
  • Venue Rental: $1,000
  • Total Expenses: $2,200

Settlement Calculation:

1. Gross Revenue: $8,000
2. Deduct Expenses: $8,000 - $2,200 = $5,800 (Revenue after expenses)
3. Determine if Guarantee is met/exceeded:
   • Is $5,800 (revenue after expenses) greater than $3,000 (guarantee)? Yes.
   • Calculate profit remaining after guarantee and expenses: $5,800 - $3,000 = $2,800
4. Calculate Artist's Percentage: 90% of $2,800 = $2,520
5. Total Artist Earnings (before deposit): $3,000 (guarantee) + $2,520 (percentage) = $5,520
6. Final Payout (after deposit): $5,520 - $1,500 (deposit) = $4,020

As you can see, event settlement can quickly become intricate, requiring careful attention to detail and accurate calculations.

Simplify Settlements with VenuePilot

As we've seen, event settlement can be a complex and time-consuming task, prone to errors and frustration. That's precisely why VenuePilot was created.

We designed VenuePilot to transform this intricate process, empowering you with a powerful, error-free solution. Our platform centralizes all your event financials, meticulously tracking every detail and automatically handling all the complex calculations. Whether you're dealing with guarantees, percentages, or "vs." deals, VenuePilot supports every deal type, allowing you to generate comprehensive settlement sheets in just a few clicks.

You'll always be ready for any expense, withholding, bonus, or deposit deduction, with all information clearly displayed for ultimate transparency. Our professional settlement sheets even include a dedicated line for the band's signature, ensuring clarity and accountability.

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Ready to eliminate the headache of event settlement and embrace effortless, accurate payouts? Connect with VenuePilot to see how we can simplify your process.