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Originally Posted by eastern motors
Does this mean each agent grosses $1mm for the agency?
Was it mentioned earlier what the commissions are on each type of deal? I assume movie stars getting $25mm pay a lower % than actors working for scale or unknown writers selling a script.
Oh, I was just taking WME's reported top line which was only $325 million a year in revenues for 300 agents = $1 million an agent. Of course higher level agents will drive higher commissions as their clients make more.
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Originally Posted by Riverman
A few thoughts on this:
1. WME fired a bunch of agents after the merger, since you don't need dupicate covering agents. Also revenue streams belong to the agency not the agent, so they could fire old, high-salary guys and hang on to their clients' commissions indefinitely. These factors both likely increased profitability.
Makes sense. Though I would think that that certain clients would leave based on certain agents being fired after a while.
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2. I didn't see a source for that revenue figure, but it sure seems low to me. It's in agencies' interests to lowball those numbers.
Why is it in an agencies' interest to lowball those numbers? To show that they are focused on only a select few? I'd think higher numbers would show how powerful you are in the industry - with more clients with higher commissions, and more packaged deals?
Yeah the number is strangely low to me - but I'm talking more directional - sure maybe it's $500 million a year, not $325 million (I remember reading CAA was like around $500 million a year) - either number is not that significant a number when compared to any major LOB for a major media company. Not peanuts of course, but you'd think the best agency in Hollywood would drive a lot more in revenues, especially with the packaged TV deal participation. (Understood you don't want to throw it in your top clients face how much you're making off of them, but aren't agencies' commission/participation deals pretty standard, so it's very transparent to your clients anyway?)
Either way - I wasn't too focused on the top-line, more the bottom-line - based on the fact that WME was formed (with ensuing cuts as you mentino), and CAA require outside funding - and these are the top 2 agencies in the game - my suspicions that it's a low margin business are probably not far off. So again, pretty surprising costs are not monitored more closely and a mid-level agent can book a $25k plane ticket. Just seems seriously ******ed in a business that is not wildly profitable (would be ******ed in that scenario as well, but less eye-brow raising).
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3. Yes, you are right, it is very, very top heavy. But everyone is very tight-lipped about compensation matters so I'm not qualified to offer an informed opinion because I wasn't exposed to that side of things.
Got it.
Thanks for the insight, again, cool thread.
Last edited by Aloysius; 10-25-2011 at 02:36 PM.