Management Contracts 101

DISCLAIMER: Neither transmission nor receipt of this information is intended to or does create an attorney-client relationship. All information provided is of a general nature, is not legal advice or a solicitation therefore, is not a substitute for legal advice pertaining to a specific situation, and should not be acted on by readers without obtaining advice from legal or other professional counsel applicable to a particular set of facts.
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MANAGEMENT CONTRACTS 101
You can read a ton of material on what clauses, percentages and legal language to look out for in a management contract, but most bands I work with in my capacity as a music attorney have their eyes so glued on the contract they are being asked to sign that they often forget to ask the manager the most fundamental questions of all—the ones that can make ANY management agreement not worth the paper it is printed on. Contrary to popular belief, Step #1 when you are handed a management agreement is NOT to rush off and find an entertainment lawyer.First, your band needs to have a good long heart-to-heart discussion with your potential manager to see if you even want to go down the road of negotiating a contract with them. During this meeting, EVERY band member must have the opportunity to ask any and all questions they have for the manager. Do not get lost talking about percentages of gross revenue or other contracts terms just yet. The threshold questions from your band members should, among other things, focus on six threshold issues:

(1) What is the manager’s vision for the band?Does his or her vision involve refinement or a continuation of the current musical, artistic or marketing direction the band is headed in, or does he or she have a drastic change in mind for the music or lineup etc.? This is NOT something you want to find out after you have spent hours of legal fees negotiating a contract, or worse—after you have signed the agreement.

(2) Does the manager have a sound business plan?

“Get signed” is not a financial plan, it is b.s. The manager should have a plan to create substantial revenue and an expanded fan base for the band immediately through live performances and merchandising, so you can stream the revenue towards radio promotion and publicity. If your band has a substantial revenue stream and fan base, it will not make business sense for a major label “not” to sign your band, and the contract terms will be favorable.

If the plan is just “get signed,” sell your equipment and buy lottery tickets—it will be faster and you won’t have to lug drums and amps up the stairs. Even if you do get miraculously signed without a fan base and revenue stream somehow, your contract negotiations with the label will not be from a position of strength, and you will likely end up with a bad recording deal that makes you little to no money in the long run (i.e., you will likely not recoup your recording advance).

(3) Does your potential manager have actual contacts and experience in the music industry?

Enough said.

(4) Availability

What exactly is the manager’s availability and time commitment to the band going to be? Does he or she represent other bands or have other business commitments whose schedule might conflict with yours?

(5) The Yes-Men Rule (avoid) 

If you have a manager who sees their role as being a yes-man (or woman) to the band, don’t waste your time with them. You want a manager to be able to give you an honest and relatively objective perspective on the status of the band so you can improve and make money. Period. Yes-men might make your band feel good, but will typically add little to nothing to the quality of your band in the long run.

(6) Personal References 

Ask your potential manager for at least three of them, and follow up. Entering into a 3-5 year business relationship with someone is not a small commitment, and you are talking about your CAREER. If he or she won’t provide references, walk.

Assuming that you have done all of the background work, then—and only then—it is time for Step #2, the specific terms of the management agreement itself.
— Lee Rudnicki
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