Film Accounting Glossary
Adjusted gross participation
What is adjusted gross participation?
Also called adjusted gross receipts, or AGR.
Adjusted gross participation is a profit deal in which a participant is paid from gross receipts after a defined set of deductions, but before the full studio overhead and interest load applied to net profits.
What gets deducted is negotiated line by line: distribution fees, prints and advertising, residuals, and checking costs are typical. Adjusted gross sits between first-dollar gross and net profits in value, and is where most meaningful backend deals actually land.
Example
On $80M of gross receipts with a 25% distribution fee ($20M), $30M of prints and advertising, and $4M of residuals deducted, adjusted gross is $26M. A 5% adjusted gross participant receives $1.3M. A net-profit participant on the same picture may receive nothing.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Negotiated in participation agreements by business affairs, then calculated on the distributor's periodic participation statements.
Common mistake
Assuming the deductions are standard. Which costs come off before adjusted gross is negotiated line by line, and two adjusted gross deals on one picture can differ substantially.
Related questions
- How does adjusted gross differ from net profits?
- Adjusted gross deducts a defined, negotiated list of costs. Net profits deducts everything, including studio overhead and interest on negative cost, which is why net rarely pays.
- Which deductions typically come off adjusted gross?
- Usually the distribution fee, prints and advertising, residuals, and checking and collection costs. Overhead and interest on negative cost are normally excluded.