Monday, February 26, 2007

Red Carpet Payola & Other Financial Lessons from the Oscars

Forget the speeches and the statutes. When it comes to the Oscars, it's all about the money. Even the red carpet fashion show is lined with dollar bills. Industry insiders actually have a name for the dollar dance executed between designers and celebrities. It's called Red Carpet Payola and I have learned a lot about personal finance and business by studying the cost of an Oscar.

Here are a few snippets of facts, with the bottom-line lessons that I have acquired from the Academy Awards.

The Name Game
Marketing is important, albeit expensive. For example, the New York Daily News estimates that it costs about $75 million to market a film, including a $25 million kicker for the Academy Awards.
'Movie studios traditionally spend up to $25 million a year per nominated film in an attempt to secure Hollywood's highest honor. This time around, Fox Searchlight ("Little Miss Sunshine," "The Last King of Scotland") and Paramount ("Babel," "Dreamgirls") are leading the pack. With marketing budgets commonly running around $40 million to $50 million for high-profile films, that extra $25 million smarts. But many studios feel it's worth it.' -- Daily News

Indeed, winning an Oscar adds about $60 million to a film's profitability, according to the Daily News.

Bottom-Line Lesson: I'm going to work harder to market my services as a writer. A higher profile can pay handsome dividends. The same strategy applies to other business efforts. Even in corporate and cubicle circles, there's a certain value to face time and self promotion.

Getting Paid
At a Nascar race, the drivers visibly wear endorsements. Likewise, in Hollywood some actresses are getting paid to wear certain labels, according to the Globe and Mail.

'Every Hollywood starlet wants to look like a million bucks at the Oscars. Now some are demanding red-carpet paycheques to match. '

It's rumored that many actresses are paid several hundred thousand dollars to wear a designer's dress to the Oscars and a multi-red carpet contract (repeat wearings of a label) can be worth about $1 million.

'Susan Ashbrook, whose Los Angeles firm pairs up-and-coming designers with celebrities, says no one in Hollywood questions the cash-for-couture system. Her clients simply can't afford to compete with the big fashion houses at the Academy Awards.

“I tell them, the Oscars are like the Super Bowl. There are other football games throughout the whole year, and those are the ones we'll play in. That's my strategy,” she says.

Ms. Ashbrook doesn't think getting paid to wear gowns is as widespread as Ms. Cutrone believes, but she says the trend is growing. “It's just like Tiger Woods has a deal with Nike.” --source: Globe and Mail

Personal Finance Lessons: From the actresses, I've learned that there's an art to getting paid for what you love to do. It's also important to know the value of your work and/or presence in the market.

The Secret Deals:
Designers and stars don't fess up to their dresses-for-dollars arrangements. Why?

"The better to preserve the fantasy image of Hollywood glamour. Designers want the public to believe celebrities have good taste. Knowing the price tag might cheapen the fantasy."--source: Globe and Mail

Lesson: As a consumer, it's important to look past the hype and the fantasies. The world of fashion and finance is filled with a lot of smoke and mirror tricks. I believe in complete transparency.

The Art of the Deal:
Even Donald Trump could learn a few tricks from Red Carpet Payola. The exchange of clothes for exposure began as a simple win-win barter. Stars scored free clothing; designers pulled in free publicity. But the transaction quickly evolved into six and seven-figure contract deals.

'Ms. Cutrone says she has seen celebrities sign detailed contracts for payments from clothing designers. Stars are no longer content with getting expensive couture gowns for free.

“It's a natural evolution,” Ms. Cutrone says. “First, they say: ‘Ooh, can I borrow it?' Then it's: ‘Can I keep it?' Then it's: ‘What else are you going to give me?' And then it's: ‘What are you going to pay me?'.”

Lesson: Contract negotiations for homes, jobs and other perks often resemble a a chess game. It's important, I see, to have a clear picture of long-term benefits and trends.

Also, I can see that the stars aren't afraid to push the envelope. I would have been content with the free designer dresses. But many celebs are getting the hot clothes and getting paid also.

And Finally: Don't Sweat

CBS News also has an interesting piece about the cost of botox (into the armpit as an anti-sweat measure) and other Oscar night economics.

Lesson: I don't do botox and I don't even believe in anti-perspirants. (Not healthy). But on a metaphorical level, I see the value in sweat-free living. I work best when I relax and enjoy the Red Carpet.



The Frugal Duchess Booktique
The Frugal Duchess of Beauty Store
Book Shop of Fear
The Poetry & Drama Queen
Frugal Jazz & Blues


No comments: