Backend Deals: Adjusted Gross vs. Net Profit, When to Choose What?

Hey everyone, Rohan Kapoor here. Been shooting features for a while now, just wrapped a project where I was running an ALEXA 35 with a full set of ARRI Signature Primes, plus a couple of SkyPanel X’s and an Orbiter on the truck. Great shoot, but now we’re in the backend negotiation phase, and it's always... complex.

I’ve been offered two options: a smaller percentage of 'adjusted gross' or a seemingly larger percentage of 'net profit.' The 'net profit' option, despite the higher percentage, feels incredibly vague, as it always does. My concern is that 'net profit' often gets whittled down to nothing by distribution fees, marketing costs, and all the usual 'Hollywood accounting.'

I’ve pushed for more clarity on the 'net profit' definition, but it's still pretty broad. My instinct, based on past experiences where 'net profit' almost never materializes into anything substantial, is to lean towards the 'adjusted gross,' even if it's a smaller number upfront. But, if the film blows up, I'd be kicking myself. Has anyone had a situation where the larger 'net profit' deal actually paid off significantly? Or is it almost always safer to take a smaller slice of a more defined pie?

When, in a real-world negotiation, is it truly better to take a smaller 'adjusted gross' percentage versus a larger, but ill-defined, 'net profit' share?