By Annys Shin
Washington Post Staff Writer
Tuesday, August 29, 2006
Just days after media mogul Sumner M. Redstone cut ties with Tom Cruise for his off-screen conduct, the star has a new backer: Washington Redskins owner Daniel Snyder.
Snyder, partnering with home builder Dwight C. Schar and Six Flags chief executive Mark Shapiro, cut a two-year deal with Cruise's production company to pay between $3 million and $10 million annually for development and overhead costs in exchange for the opportunity to finance film projects and to profit from any hit movies.
The deal marks the latest addition to Snyder's burgeoning entertainment empire. Having made his fortune in marketing and building the Redskins into one of the most valuable franchises in professional sports, Snyder last year won control of ailing theme park operator Six Flags Inc. He recruited Shapiro, a former top ESPN programming executive, to run it and Miramax co-founder Harvey Weinstein to sit on the board. Snyder also owns five radio stations, which broadcast Redskins games.
Working under a new partnership called First and Goal LLC, the group's investment will help cover operational costs while Cruise and his production partner, Paula Wagner, develop movie projects. Shapiro will oversee the investment. Snyder, Schar and Shapiro have the right to back out after two years or the option to renew the deal long term.
Cruise and Wagner, are still working on lining up other financing and distribution deals.
"We are entering into what we know will be a profitable relationship with unlimited creative and financial potential," Wagner said in a joint press release with Snyder.
Shapiro did not return several e-mails seeking comment.
"Paula and Tom have a superior instinct for developing and producing films with universal appeal," Snyder said in the release, adding that together they were "creating an alliance that goes beyond traditional film financing models and serves as an exceptional investment for us."
Beyond the Redskins, Snyder has yet to score a major success in the entertainment business. Since Shapiro launched a strategy to make Six Flags more family friendly, revenue and attendance have been down .
By investing in Cruise's company, Snyder has inserted himself into the middle of a major Hollywood breach, backing a marquee name who just last week was spurned by his corporate supporters.
Cruise has been a major box-office draw for Paramount Pictures, part of Viacom, which is chaired by Redstone. His last two films for the studio, "War of the Worlds" and "Mission: Impossible III," grossed $1 billion worldwide.
But he is an expensive talent, given a large percentage of each ticket sold -- as much as 20 percent, according to some reports.
In addition, Redstone thought that Cruise's off-screen behavior -- jumping on Oprah Winfrey's couch and bad-mouthing antidepressants during a film publicity tour -- was costing the studio money, perhaps as much as $100 million to $150 million in ticket sales for this summer's "Mission: Impossible III." The movie took in about $390 million worldwide.
An alliance with a big-name movie star is no guarantee of success for Snyder and his partners. The group will still have to negotiate the amount and the terms of its investment in any films Cruise and Wagner propose.
"How good or bad the decision is depends on how much say they have in how the money is going to be used by the producer," said Jehoshua Eliashberg, a marketing professor at the University of Pennsylvania's Wharton School.
Arthur S. De Vany, professor emeritus of economics at the University of California at Irvine and an expert in film finance, said Snyder and his partners will likely discover that movies are a risky business.
"If they had a high rate of return, they wouldn't need outside money," De Vany said.
Several film finance experts said Snyder would be better off financing a range of projects, especially family films, and not just star vehicles for Cruise.
Many Cruise/Wagner Productions films have starred Cruise. But the company has also produced films without him, such as "Shattered Glass," about New Republic plagiarist Stephen Glass.
The company describes its films as "ranging from high concept to more personal, character-driven movies."
De Vany said Snyder should also avoid the urge to tie-in his other media properties with any future Hollywood blockbusters.
"I hope we don't see Six Flags in the next scene in 'Mission Impossible,' " he said. "The surest way of ruining a movie is start thinking how to commercialize it."
Staff writer Paul Farhi contributed to this report.