What Terms are in a Management Agreement?

In this set of articles, I’m going to break down the main sections that you’ll find in almost any management contract. I’ll also give some tips that will help you negotiate more favorable terms and some things to think about when entering into a management agreement. This article will be helpful for musicians, producers, artists, and other creatives. In this first part, you’ll learn about the term, service, authority, and commission sections.

The Term

Plain and simple this is the minimum length of time that you can expect to be bound to the terms of the management agreement. The term is made up of the initial period and any exercised option periods. So for example, you may have an initial period of 2 years with 2 options for 1 year each.

That means that barring any causes for termination (we’ll get to that section), you can expect to be bound by these contract terms for the initial period of 2 years and an additional year if the first option is exercised for a total of 3 years. And if the 2nd option is exercised, you’ll be bound to this agreement for a total of 4 years.

The Service

This lists all of the services that the manager will provide during the term of the agreement. Usually, they’ll define the scope of their exclusive management services. Most managers will want to enter into an exclusive management agreement, but some artists or producers with more negotiating power will enter non-exclusive management agreements and will only get paid from revenue resulting from their efforts.

The service portion will typically start by defining the scope of the management agreement and they’ll usually do this by specifying what industries the contract will cover. They often use a catchall phrase like “entertainment industry”, but you shouldn’t get any resistance by pushing for more specific terms.

If they’ve already defined what they mean by “entertainment industry” then they’ll often include a laundry list of industries such as live performance, music, music recording, music publishing, motion pictures, film, television, literary, dramatic, and theatrical, merchandising or sponsorship.

A good rule of thumb is that if they’ve never had any success or managed someone in those industries then request that those industries be removed from the scope of the contract

Tip 1: Limit the scope of the management agreement to what they’ll actually be doing for you

Next, they’ll either list the services or at the end of the agreement they’ll attach a list of management services as a schedule or exhibit.

Below are some of the standard services that a manager will provide.

• Advising and counseling in any and all matters pertaining to publicity, public relations, and advertising
• Advising and counseling with relation to the adoption of a proper format for presentation of Artist’s talents, and in the determination of proper style, mood, setting, and characterization in keeping with Artist’s talents
• Advising and counseling regarding the selection of artistic talent to assist, accompany, or embellish Artist’s artistic presentation and advising and counseling in connection therewith
• Advising and counseling with regard to general practices in the entertainment and amusement industries, and with respect to such matters of which Manager may have knowledge concerning compensation and privileges for similar artistic values
• Advising and counseling concerning the selection of theatrical agencies, business managers, and persons, firms, and corporations who will advise and counsel Artist, and will seek and procure employment and engagements for Artist
  to the extent permitted by law
• Advising and counseling in connection with the negotiations of all agreements affecting

Artist’s career

Subject to approval by Artist, coordinating the professional schedules of Artist with Artist’s prior written consent,. This causes the audit and examination of books and records of parties that the Artist has contractual, or other rights, to audit and to examine any other services customarily performed by a personal manager in the entertainment industry (However, that Manager shall not be obligated to seek, solicit, obtain, or procure any other employment or engagements for Artist, but shall consult with and assist licensed booking agents in doing so.)

These are pretty standard and aren’t usually subject to much negotiation.

There will also be some language that the manager will provide customary and reasonable services when reasonably required and that the manager is allowed to offer these services to others during the term.

Authority

This section lists what the manager is authorized or empowered to do on your behalf. For different activities, the manager will have different authority. Some activities the manager is authorized to do on the artist’s behalf without getting approval, while others will require approval.

This is where you will often see a section mentioning “power of attorney”. Signing away your “power of attorney” would allow the manager to sign agreements and checks on the artist’s behalf. In rare, situations you will give someone else “power of attorney”, but in most cases you should avoid this at all cost and push to get it removed from the agreement.

You’re never too busy to sign your own checks or sign agreements.

TIP 2: Do NOT sign away your power of attorney

The Commission

The commission is what the manager will be paid for their services. Usually, managers are paid a percentage of all revenue generated by their clients. That percentage is usually between 10% and in rare cases can be as much as 30%, but it usually falls between 15% and 20%.

My rule of thumb is that unless the manager has a management team that is managing a significant portion of the business administrative tasks i.e. tax filings, accounting, invoices, etc. then the percentage shouldn’t go above 20%.

Tip 3: Unless the manager is handling business administrative tasks, or they have had meteoric success, then they shouldn’t receive more than 20% of the revenue generated by their client.

Depending on where the artist is in their career a manager may negotiate “bumps” or increases in their percentage based upon certain milestones being achieved.