Settlement

What Is Settlement?

Settlement is the process of determining the income and expenses of a particular show so that the appropriate payments can be made to the performers.

The simple example of a show that requires settlement is a door deal. An artist is paid based on ticket sales. After the show, and only after the show, can the venue calculate the total ticket sales and the amount owed to the artist.

That process is called settlement.

Let’s use the example of a door deal where the artist gets 50% of ticket sales. After the show, the venue determines that they brought in $1,000 from ticket sales. So they calculate that the artist is owed $500.

In reality, settlement is usually much more complicated than that simple example.

A show can have multiple performing groups and multiple vendors that are all paid based on terms from each of their individual contracts. All of which depend on some variable income or expenses from the show that won’t be finalized until after the show.

Ticket sales are the most common item in a settlement, but they might also take into account bar sales, merch sales, sales tax collected, profit margin for the venue, catering cost, and the list goes on.

It all depends on what is written into performance contracts.

When Do Venues Do Settlement?

Settlement happens after the show.

Only then can critical numbers be determined like ticket sales, merch sales, and variable expenses.

If artists are paid with a simple guarantee, there may be no settlement process at all.

Venues may still carry out a settlement process in order to determine their own profit and loss for a particular show for their own benefit.

What Is Included in Settlement

Items you might find on a settlement sheet include:

• Ticket sales
• Bar sales
• Merchandise sales
• Sales tax collected
• Net Income
• Production costs
• Payment processing fees
• Performance fees (guarantees)
• Profit margin for the venue
• Catering
• Damages
• Deposits paid out to performers
• Deal terms

Items included in the settlement depend on what affects the amount that is owed to performers according to their performance contracts.

Anything that can affect how much someone needs to be paid can and should be included in the settlement.

What Is a Settlement Sheet?

A settlement sheet is a financial document that shows payment owed to the performer for a show and how it was calculated.

It typically includes revenues and expenses from the show and terms from the performance contract that affect the payment amount.

Problems with Settlement

Settlement can be very complex and difficult to understand. Lack of transparency about contracts or about sales numbers can often cause disputes.

The more parties involved in the show and the more complicated their agreements are, the more complicated settlement becomes. Large venues often spend thousands every year on software to help them handle the complexity.

Venues may be drawing ticket sales from multiple online sources plus their own door man. Documentation for each revenue source may not be provided or hard to verify. Performers don’t have much of a choice other than to trust the numbers.

The venue may try to underpay the artist by under-reporting income on the settlement sheet.

Tips for Artists

Make sure you know your deal.

Read your performance contract carefully to understand what you are owed and what gets deducted from what you are owed.

You should get a settlement sheet. This shows the ticket sales, other important numbers, and the calculation itself. If you didn’t take the time to understand your contract, the numbers you see may shock you!

Know when you will be paid ahead of time. Sometimes settlement can be done on the night of the show but not always. Find out when you are supposed to be paid before the day of the show.

If you think you are being underpaid, try to verify the numbers by requesting documentation. As a precaution, consider having someone on your team watching the door to get an estimate of the show attendance.