When The Studio Lost Confidence, Todd Phillips Traded His Directing Salary For Backend Points On "The Hangover". That Was A Wise Choice…

By on May 11, 2023 in ArticlesEntertainment

On June 5, 2009, "The Hangover" was unleashed onto the world. The sophomoric road trip comedy went on to generate $467 million worldwide, which was enough to make it the highest grossing R-rated comedy of all time up to that point. Two more movies were spawned. Those sequels earned another $946 million combined.

As crazy as it sounds in retrospect, there was a time when almost everyone involved in the project was convinced that it was going to be a huge bomb. After all, before 2009 the four stars were basically unknown. The one person who believed in the movie all along was director/executive producer Todd Phillips.

Todd believed so strongly in the first Hangover that he made a huge financial gamble on the project before the cameras even rolled. At a time when the studio was highly concerned and thinking of backing out, Phillips agreed to forfeit his salary for a huge back-end equity stake. Guess how that turned out for him…

Todd Phillips

Todd Phillips Hangover Gamble /Frazer Harrison/Getty Images

What Happens in Vegas

Back in 2007, a script called "What Happens in Vegas" was making the rounds in Hollywood. Several studios passed on the script outright because they were worried that the title alone would be impossible to license. Complicating matters, there was a romantic comedy with the same working title (eventually starring Ashton Kutcher and Cameron Diaz) in progress at 20th Century Fox.

Despite the resistance, the screenwriters persisted and managed to get their script to Todd Phillips. Phillips, who had previously directed comedies like "Old School," "Road Trip" and "Starsky & Hutch," loved the concept and decided to make the film his next project. Phillips already had a deal in place with Warner Brothers and convinced the studio to greenlight what was now titled "The Hangover", with a budget of $35 million.

Unknown Actors

Warner Brothers was adamant that since the movie was going to be rated R, it needed star power to sell tickets. The studio tried to sign up Jake Gyllenhaal and Jonah Hill, but both were unavailable.

Todd Phillips then pitched a group of actors who were relatively unknown at the time, Bradley Cooper, Zach Galifianakis, Ed Helms and Justin Bartha.

Ed Helms was by far the most famous potential cast member thanks to his appearances on "The Daily Show" and "The Office." On the bright side for the studio, collectively the four actors earned less than $1 million combined.

A Huge Gamble

Warner Brothers was extremely hesitant to put a $35 million R-rated movie on the backs of these no-name actors. It also didn't help that Todd Phillip's most recent movie Starsky & Hutch was a disappointment at the box office.

Warner Bros. executives were finally persuaded when Phillips made an offer they couldn't refuse. Phillips believed so strongly in his script and cast that he agreed to forfeit his $6.5 million director's salary in exchange for 16% of the film's gross revenue. At this point the movie was a go, but Warner Brothers still had such low confidence that they didn't even think to lock down deals with the actors and Phillips for any potential sequels. A standard film contract would have had all sequel salary deals set in place in advance to minimize the actors' leverage in future negotiations.

So how did Todd Phillips' $6.5 million gamble pay off? EXTREMELY WELL.

As we all know now, The Hangover went on to become a massive hit around the world. The little comedy that no one believed in earned $470 million worldwide. The Hangover eventually dethroned Beverly Hills Cop as the highest grossing R-rated comedy of all time, a title that stood for more than 25 years.

When combined with DVD sales, Phillips earned $75 million off the first Hangover (before taxes and agent fees).

But wait there's more! As we mentioned previously, neither Phillips nor any of the four principal actors had deals in place for sequels. This put them in the prime position when negotiations for The Hangover 2 and 3 began.

Please recall that for the first Hangover, the four actors earned less than $1 million COMBINED.

For the second Hangover, the four actors held out for $5 million base salaries plus 4% of the gross, each. Todd Phillips negotiated a $10 million salary and 10% of the gross.

When the second Hangover earned $586 million, the four actors each made around $30 million. Todd Phillips made $68 million.

All five players had even better deals in place for the third Hangover which went on to make $360 million worldwide.

In total, Todd Phillips made at least $150 million from The Hangover franchise. Not a bad trade for $6.5 million in salary!

The four actors each made $40-50 million from the franchise.

So what's the lesson here? If you believe in something enough, don't hesitate to put it all on the line. You might make a fortune!

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