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Clause & Effect: <b>'Recoupment' Defined In Agreements for Theatre Productions</b>
In theatre, “recoupment” is a term of art that all knowledgeable persons in the business understand to have a specific meaning. Sometimes it is referred to as “Recoupment of Production Costs,” sometimes as “Recoupment of the Total Production Costs,” sometimes as “Recoupment of Capitalization” and sometimes as “Recoupment of Production Expenses.” These terms all are intended to mean the same thing: each is intended to fix a time when something occurs that creates additional benefits for certain people involved in a play production.
Simply stated, the concept is that the author, director or others involved in the play can be paid more after the play has started making a profit, which is the time when the investors could have recovered their respective investments. It has always been a good negotiation tactic, for example, to offer the author more after the play is making a profit. This tactic has saved many deals that could have fallen through.
There are several things to be acutely aware of. There is a profit when the amount of the production expenses paid or accrued as of opening night is recovered. The distinction between “Production Expenses” and “Running Expenses” must always be kept in mind ' expenses after the official opening are not to be considered as production expenses. If an amount of money is recovered so that the investors could have been paid the total amount of their investment, whether or not the funds are actually returned to them, the play has recouped. Bonds, deposits or other items returnable to the production company are not included as costs to be recovered. Once recoupment has been attained, subsequent expenses incurred by the production company will not alter the fact that the production company has recouped.
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