Management Agreements.  

The first point to make is that management agreements tend to be very fluid and are constantly developing. Gone are the days where the manager would be entitled to 25% of an artist's gross income on everything the artist ever did for the rest of his life.

Some managers will operate on a handshake and treat the need for a written contract as defeating the whole object of a relationship based on trust. Unfortunately, like marriage, the relationship can sometimes turn sour. Rather than fight it out through the courts, like a divorce, a well drafted contract can usually ensure that in such circumstances both sides know exactly where they stand and a quick resolution can be achieved.

The following terms represent the most important matters to be agreed:

Term or Duration of the Agreement

The term, or length of time the manager and the artist will remain contractually committed to each other, will usually be for a period of 2 or 3 years. However, a trial period of 6 months is often sensible if the artist is initially unsigned or the manager has no previous experience. The term can then be extended if both parties are happy with the way the relationship has developed. The trial period can also be linked to a performance clause ensuring that if the manager has not been able to secure a deal for the artist or an agreed level of earnings then the term ends.

Manager's Role

Many agreements allow a manager's role to encompass "all the artist's activities in the entertainment industry". Care needs to be taken over the aspects of the artist's career which the manager is able to manage. Sometimes it may be appropriate to limit the manager's role to certain of the artist's activities only. For example, a successful TV soap star beginning a career in the music industry would probably want to limit a manager's activities to the furtherance of his/her music career and exclude his/her TV career from the relationship as it is already established.

Commission and Expenses

The average rate of commission is 20% of the artist's gross earnings. However, certain deductions are generally made from the gross before commission is paid. For example, recording and video costs, tour support and third party fees are generally deducted before commission is calculated. In relation to expenses it is often sensible to be as precise as possible over the types of expenses which the manager is able to re-charge to the artist.

Duration of Commission and Post Termination Clauses

If a management relationship breaks down this is probably the most important clause of the agreement. Until the early 1980's it was usual for the manager to be entitled to commission in perpetuity. This included being able to commission income from albums or compositions recorded or written after the term had expired, but delivered by the artist pursuant to an agreement originally negotiated by the manager. In those days it would not be unusual for the artist to sign a 7 or 8 album deal with a record company. Should the management relationship end before all 8 albums were delivered the manager would still be able to commission the remaining albums even though he no longer managed the artist. Needless to say, this made it extremely difficult for the artist to afford a replacement manager and hence earn a living.

Fortunately, agreements have become a lot fairer since that time and nowadays a balance can be struck ensuring that the artist is not penalized for life whilst at the same time rewarding the manager for his/her efforts over a reasonable period. A typical compromise would be to allow the manager to receive commission after the term has ended ("post termination commission") only on albums or compositions written and recorded during the term. Furthermore, the level of post termination commission would reduce from 20% to nil over a period of years.

Artist's Obligations

If the manager arranges activities on the artist's behalf he/she needs to know that the artist will turn up and in a fit state. The manager also needs to be assured that the artist does not have another manager responsible for the same activities.

Territory

Most managers are appointed to look after the artist throughout the world. Occasionally, separate management will appropriate for, say, the USA. Such an appointment can either be made independently of the UK manager, in which case commission will need to be split on a territory by territory basis, or as a sub-management arrangement can be agreed with the UK manager paying the US manager out of his commission.

Accounting

This can be one of the biggest sources of discontent in the relationship. Put simply, either the manager is responsible for collecting all the money and, after deducting commission, pays the artist, or the artist collects and pays the manager his/her commission. Either way, it is vital that both parties have access to the relevant accounts and that the manager's ability to incur costs and spend the artist's money is limited.