A house nut refers to a predetermined allowance or fixed deduction from gross revenue, typically in contexts like box office earnings, that is subtracted before the remaining revenue is split between parties, such as a distributor and an exhibitor (e.g., a movie theater). It is also known as a "house allowance."
Understanding the House Nut in Revenue Sharing
In the entertainment industry, particularly concerning film distribution and exhibition, the house nut plays a crucial role in how profits are divided.
- Initial Deduction: The house nut represents a sum that the venue (the "house") is allowed to keep from the gross revenue before any percentage-based revenue sharing begins. This deduction covers the operational costs of the venue, such as rent, utilities, staff salaries, and other overheads.
- Revenue Calculation for Distributors: After the house nut has been deducted from the total revenue, the remaining amount is what is subject to percentage splits. For instance, a film distributor often receives a percentage of the revenue after this "house allowance" has been removed.
- Common Distributor Agreements: Distributor agreements frequently include clauses to ensure fair compensation. It is common for a distributor to receive either:
- A direct percentage of the total gross revenue.
- A higher percentage of the revenue after the house nut has been deducted.
The distributor typically receives whichever of these two calculated amounts is larger, ensuring they are compensated adequately regardless of the initial fixed deduction.
This mechanism ensures that the operational costs of the venue are covered first, while still allowing for a structured and often flexible revenue-sharing model for the content creators or distributors.
