*

5 Multimillion-Dollar Negotiation Mistakes (and How to Avoid Them)

Learn from the Biggest Negotiation Blunders in Business History

2. Warner Bros vs. Todd Phillips: $63.5 Million

In this example, we’ll score one for the good guys. This Hollywood Reporter article tells the story of how the blockbuster hit The Hangover came to be. One of the most interesting parts talks about Warner Brothers trying to cut costs when no A-list stars had agreed to star in the movie.

They went to director Todd Phillips and “insisted that the film's mid-$40 million budget be trimmed and Phillips' $6.5 million directing fee be cut in half (with the rest paid only if the movie was a success).”

Some directors might have agreed, having faith in themselves that if they worked hard, they would get the full amount. This is how many people negotiate their salary. They accept a low-ball offer and hope to work hard and get a raise a year or more later.

However, like a good negotiator, Phillips’ agent and attorney came back with a different proposal: The director would forgo his fee almost entirely in exchange for what sources say is a 16 percent stake in the film. The studio agreed.

As you can see, the director REALLY had faith in himself. The result? The unexpected hit netted him nearly $70,000,000 from the first movie alone, a windfall of more than $63 million more than if he had accepted the first offer (assuming he would have received the full $6.5 million).