Film Accounting Glossary
Minimum guarantee
What is a minimum guarantee?
Also called MG, or guarantee.
A minimum guarantee (MG) is the floor amount a licensee or distributor commits to pay for rights in a territory, recoupable from that territory's receipts.
Presale MGs are what independent productions borrow against, so the MG's size and the buyer's creditworthiness together determine how much financing it can actually support. An MG is not additional income once earned out; it is an advance against the same revenue.
Example
A territory commits a $400,000 MG payable on delivery, recoupable from that territory's receipts. It is not extra income once earned out, it is an advance against the same revenue, and its value as collateral depends on the buyer's credit.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Presale contracts, which are the core collateral for independent film financing.
Common mistake
Treating an earned-out MG as extra income. It is an advance against the same territory's receipts, not a payment on top of them.
Related questions
- What is a minimum guarantee in film sales?
- The floor amount a distributor or licensee commits to pay for rights in a territory, recoupable from that territory's receipts.
- Why do lenders care who gave the minimum guarantee?
- Because the loan is secured on that buyer's promise to pay. A large MG from a weak buyer supports less financing than a smaller one from a strong buyer.