Film Accounting Glossary
Recoupment
What is recoupment?
Also called recoup, or cost recovery.
Recoupment is the recovery of costs and advances out of a title's revenue, in the order set by the waterfall, before profit is shared.
Each position recoups in full before the next receives anything, so a picture can be generating substantial revenue while junior positions remain unpaid. Recoupment order, not revenue size, is what determines whether a given participant ever sees money.
Example
A picture returns $9M net of fees. Senior debt takes $5M, the gap lender $1.4M, equity $2.16M with its premium. That is $8.56M, leaving $440,000 for deferments of $900,000. The deferments are half paid and the profit participants receive nothing, on a picture that grossed well.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Executed literally by the collection account manager in the order the interparty agreement sets.
Common mistake
Assuming strong revenue means everyone gets paid. Each position recoups in full before the next receives anything, so order decides outcomes, not volume.
Related questions
- What is recoupment in film finance?
- The recovery of costs and advances out of a picture's revenue, in the order set by the waterfall, before any profit is shared.
- Why might a profitable-looking film pay no profits?
- Because senior positions recoup first. Fees, debt, and equity plus premium can absorb the revenue before deferments and participants are reached.