A Minimum Guarantee (MG) is a non-refundable advance paid by a distributor to a producer for the right to exploit a film in a specific territory.

It’s the bedrock of independent film finance, acting as collateral that producers use to secure production loans. Essentially, it’s a “floor” on your earnings—you get paid this amount regardless of how the film performs at the box office.

In the current landscape, where streamers are moving away from “cost-plus” global buyouts and back toward traditional licensing, understanding MG mechanics isn’t just helpful—it’s survival. Whether you’re a first-time producer or an established studio executive, the way you structure these guarantees determines your project’s bankability and your ultimate ROI.

What is a Minimum Guarantee (MG)?

Let’s be direct: an MG is the distributor’s skin in the game. It represents their commitment to your project before it’s even finished. For a producer, it’s a de-risking tool. For a distributor, it’s a calculated gamble on your cast, genre, and director.

Most independent production financing models rely on MGs from “anchor territories”—like the UK, Germany, and France—to cover up to 40% of the total budget. Without these firm commitments, gap lenders and banks won’t even look at your capital stack.

Phil Hunt, CEO of Head Gear Films, discusses the current financing climate:

How Minimum Guarantees Work in Pre-Sales

The process usually follows a specific rhythm. Your sales agent takes your “package” (script + cast + director) to markets like Cannes, AFM, or EFM. They’re looking for distributors to sign a deal memo promising an MG upon delivery of the film.

But don’t expect the cash upfront. Usually, only 5-10% of the MG is paid as a deposit upon signing. The remaining 90-95% is paid when the film is delivered and meets the technical specifications. Producers use the signed contract as collateral to get a bank loan—this is what we call “discounting” the paper.

Producers looking to benchmark their MG expectations can ask VIQI for latest territory rates based on specific cast tiers.

Negotiating the Deal: Key Variables

Negotiating Minimum Guarantees isn’t just about the dollar amount. Smart players recognize that the terms around the MG are often more important than the headline number. If you’re sitting across from a distributor, you need to navigate these four pillars:

• The Recoupment Waterfall: How quickly does the distributor get their MG back? Do they take their commission first, or is it a “pro-rata” split?
• P&A Commitment: An MG is useless if the distributor doesn’t spend on Prints & Advertising. You should negotiate a minimum P&A spend to ensure your film actually reaches an audience.
• Territory Rights: Are you giving away all media (Theatrical, VOD, TV) or just specific windows?
• Cross-Collateralization: Never let a distributor cross-collateralize your MG against other films in their slate. Each film should stand on its own economics.

Behind closed doors, the real dynamic is often about “overages.” Once the distributor recoups their MG and P&A, how is the remaining profit split? A typical split is 50/50, but if you have a high-demand project, you can push that to 60/40 in favor of the producer.

The Vitrina MG Valuation Matrix™

To help producers understand how lenders value MGs, we’ve developed the Vitrina MG Valuation Matrix™. Lenders don’t value every dollar of an MG at 1:1. They apply a “haircut” based on the distributor’s creditworthiness.

Strategic players understand that a smaller MG from a Tier 1 distributor is often more valuable than a larger one from a Tier 3 player because it’s easier (and cheaper) to finance. Capital efficiency matters as much as the headline revenue.

Matthew Helderman, CEO of BondIt Media Capital, on media financing:

How Vitrina Helps with Pre-Sales

Securing the right Minimum Guarantees requires access to the right distributors. Vitrina’s supply chain intelligence maps the entire global distribution landscape, allowing you to filter by territory, genre, and acquisition history.

• Explore 12,000+ distributors and their recent acquisition patterns.
• Ask VIQI to analyze territory values for your specific cast package.
• Contact Vitrina Concierge for hands-on support in finding the right sales agent to drive your pre-sales strategy.

Frequently Asked Questions