Skyrocketing Star Salaries

Is Sylvester Stallone worth $20 million a movie? Does Demi Moore sell enough tickets to warrant her current fee of $12.5 million? Is Charlie Sheen worth $5 million a film?

Charlie Sheen?

The average cost of films, including their marketing, has doubled in the last five years, reaching $50.4 million, according to the Motion Picture Association of America, the studio's lobbying arm. And, in a phenomenon familiar from corporate board rooms to baseball fields, the exploding salaries of stars and faux-stars have contributed heavily to these costs.

Several factors have spurred the mega-salaries, including the Hollywood law of supply and demand: more movies are being churned out but the number of superstars like Harrison Ford, Jim Carrey, Tom Cruise and Arnold Schwarzennegger, who can actually open a film and are popular in the increasingly critical overseas markets, remains fixed. This has led to ferocious competition to snag a star, whatever the cost.

At the same time, the demands of producing 15 or 20 movies a year have created a sense of urgency within studios. Each studio is almost compelled to roll out a big action film and a comedy each summer and winter. If Tom Cruise and Harrison Ford are unavailable -- and they usually are -- studios are at the mercy of talent agents who demand exorbitant salaries for lesser stars.

So Paramount, facing next summer without an action film, recently signed Kurt Russell to a $10 million deal to star in a futuristic action film, "Escape from L.A.," set in the city after the biggest earthquake ever. Similarly Mr. Sheen is earning more than $5 million for a sci-fi thriller, "Shockwave," produced by Live Entertainment.

Kurt Russell's high pay is attributed to two factors: his film "Stargate" was an unexpected success, and he has name recognition that studios seek in the absence of a Mel Gibson or Tom Cruise. Charlie Sheen is not a box-office draw. But recent films, like "Major League 2" and "Terminal Velocity," have placed him on a list of second-tier actors cast by studios when they urgently want to start a film, are desperate to fill out the cast and are unable to get Kurt Russell, no less Mel Gibson.

Joe Roth, chairman of Walt Disney Studios, a unit of the Walt Disney Company, said: "We're at a dangerous level right now. It's not so much that the actors, who time and time again sell tickets, are getting unbelievable amounts of money. It's that actors who haven't proven that they're consistent box-office draws, are showing up in the $10 million range."

To keep budgets out of the stratosphere, studios are forced to cut costs wherever else possible, including the salaries of secondary actors and the production staff. Sometimes extra scenes are abandoned to save money.

Movie stars have always earned piles of money. But what makes the current spiral unusual is that second-tier and third-tier actors, who have little or no clout at the box office, are also earning millions. Of course actors are hardly alone in Hollywood in collecting lavish salaries.

The industry's executives earn millions of dollars, and failure is often rewarded with extraordinary buyouts. The Sony Corporation, which owns Columbia Pictures and Tristar Pictures, has lavished about $100 million in buyouts alone on a handful of executives like Peter Gruber, Jon Peters, Frank Price and Mike Medavoy. During Mr. Gruber's reign as head of Sony Pictures Entertainment, Columbia and Tristar fared disappointingly.

Often, the star's huge salary is a down payment on his or her final take from a particular film. Like an author's book advance, these salaries are supplemented after the film has grossed a specified amount. At this point, the star also receives a percentage of the take.

The escalating salaries of actors at the top have a downside. Studios struggling, generally unsuccessfully, to keep a lid on costs are actually diminishing the amounts paid to low-level actors. Officials at the Screen Actors Guild, which has 95,000 members, said that in the past, studios often negotiated with an agent for an actor's fee.

Now studios, aware that at the journeyman's level there are far more actors than jobs, are increasingly offering only what's called "scale plus 10," or the guild's scale salary plus an actor's 10 percent agent's fee. For one film, these actors receive a scale salary of $522 a day, which, given the sporadic nature of their work, keeps many of them barely equal with the average salaried worker in the United States, who makes slightly less than $500 a week.

Variety reported recently that studios are also seeking to reduce production costs and staff salaries because of star salaries.

The most recent explosion of salaries, which rippled across the movie business, began in June when Columbia Pictures paid $20 million to Jim Carrey for a comedy, "Cable Guy." The studio, like others, was almost desperate for a comedy for next summer, and Mr. Carrey has emerged as a big international star. Action films and some comedies can gross far more abroad than in the United States.

What startled rival studio executives was that Mr. Carrey had leapfrogged over half a dozen other stars like Mel Gibson and Tom Cruise, who had been earning in the $12 million to $15 million range. The result was agents demanded -- and are receiving -- $20 million for those stars, too.

The escalation is not limited to stars with long-term international appeal. John Travolta's career was in the doldrums and he earned $150,000 for "Pulp Fiction," a low-budget film for which the actors accepted low fees. His current asking price is $10 million. Alicia Silverstone, who earned about $250,000 for her hit comedy, "Clueless," will receive about $5 million for her next film, "Excess Baggage," at Columbia.

In only two years Sandra Bullock's fee has climbed from $600,000 (for "Speed") to $1.2 million ("While You Were Sleeping,") to $6 million ("A Time to Kill," which is now being filmed). For her next film, "Kate & Leopold," a comedy in which the star plays a scientist who brings an 18th-century English nobleman back to life in New York, Ms. Bullock will earn $8 million. And Michelle Pfeiffer, part of a respected group of actresses including Meryl Streep but not considered a big box- office draw, is now about to double her fee because of the success of "Dangerous Minds."

Columbia, eager for a summer action movie for 1996, signed Harrison Ford to a $20 million contract for "Devil's Own," about a New York policeman who unwittingly opens his home to an Irish Republican Army commando. Brad Pitt was signed for $8 million. Both stars had veto power over the choice of director -- and the film had to start rolling quickly as part of the deal. So the director both actors wanted, Alan Pakula, and his agent, had leverage in negotiating his salary. Mr. Pakula signed for about $6 million, studio executives said. Such a deal will raise red flags among other top-flight directors, whose fees have generally hovered around $3 million.

"This whole thing is so crazy that paying Jim Carrey $20 million is not so ridiculous because he's proven to be huge overseas," insisted one of the top agents in Hollywood who insisted on not being identified. "Paying Kurt Russell $10 million is ridiculous. These salaries have cratered the business."

Some stars demand and receive increases even after their last film or two has failed. In fact, few businesses reward failure like the movie business.

Mr. Stallone, for example, recently signed a three-picture, $60-million deal with the Seagram Company, which recently bought 80 percent of MCA Inc., owner of Universal Pictures. Ron Meyer, the president of MCA, was until recently Mr. Stallone's agent. In one sense the deal was surprising because Mr. Stallone's last film, "Judge Dredd," a science-fiction fantasy released by the Walt Disney Company, is one of the biggest financial duds of the year, and Mr. Stallone's track record in recent years has been unimpressive.

The major reason for the deal? Mr. Meyer wanted to send a message to Hollywood that Universal was now in the big-star action business. Besides, Mr. Stallone is a bigger star abroad than at home. That gives stars like Mr. Stallone and Bruce Willis enormous leverage in negotiating deals.

Similarly, Sean Connery, who does not quite have the muscle of Mr. Stallone, is earning an unusually high $12 million to appear opposite Nicolas Cage as an aging convict in an action film, "The Rock," made by Disney. He earned about $8 million for his last movie, "First Knight," a romantic epic made by Columbia Pictures. That film ranks with "Judge Dredd" as one of the big financial disasters of 1995. Each of them lost at least $50 million and possibly more.

So why reward Mr. Connery and his agents at Creative Artists Agency? Disney's Hollywood Pictures is desperate for an action film for next summer. Executives say there are few older male stars with box-office clout who can play an aging convict.

As one high-ranking studio source said: "You sit down at a meeting with your video people and your international people and you crunch the numbers. You ask, 'What are the numbers if you have a film with, say, Nicolas Cage and Ed Harris, even though he's probably too young?' You get one set of numbers. You put in Connery's name. The numbers go way up. He's very big overseas."

There are some quirks in the salary picture, too. Demi Moore's pay is tied to the fact that she has starred in four films over the last five years that have grossed more than $100 million each. So for "Striptease," made by Castle Rock Entertainment, Ms. Moore is being paid $12.5 million, a record for a female star. But it reached this peak mostly because Ms. Moore -- who posed nude for a Vanity Fair photo while she was pregnant -- is taking off her clothes in the movie. For her current movie, "Scarlet Letter," which will be released next month, Ms. Moore keeps her clothes on and was paid half the "Striptease" fee.

Some top executives defend the salary escalation. Others are dismayed by it. "The Jim Carrey and Alicia Silverstone deals make financial sense," said Mark Canton, chairman of Columbia and Tristar, who gave the green light on the deals involving the two actors. "Jim Carrey has been magical around the world. He's probably at the top of his game. The film will cost $40 million, and we'll make money." As for Ms. Silverstone, Mr. Canton said, "She's going to be a very big star."

But Bill Mechanic, the president of 20th Century Fox, a unit of the News Corporation, said: "The entire business is out of control. There's no rationality to the prices being paid." He added, "At some point, I suppose, there'll be a cataclysm, a few people will lose a lot of money and then people will say, 'I just can't justify this spending anymore.' "

In the meantime, though, even talent agents marvel at the rate of inflation for salaries in Hollywood. Arnold Rifkin, a top agent at the William Morris Agency, who represents Mr. Willis, recalled that in 1986 he sought and received $5 million for the star to appear in "Die Hard," which was more than double the actor's earlier salary. The deal was unprecedented, the highest fee for an action star. Mel Gibson and Michael Douglas followed suit. "The rest is history," Mr. Rifkin said.