‘Transformers’ sequel could earn big bucks for Paramount and Michael Bay

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Paramount Pictures’ upcoming film doesn’t hit theaters until June 24, but Hollywood is already buzzing that ‘Transformers: Revenge of the Fallen” could be the biggest movie of the summer and net one of the richest paydays ever for a director.

Director Michael Bay agreed to forgo his normal percentage of ticket sales and a portion of his upfront fee in exchange for an even bigger piece of total profits from all revenue sources after Paramount recoups its costs. This kind of deal is increasingly common in Hollywood as studios attempt to avoid situations where they lose money on a film or eke out a tiny profit while big-name talent walks away with tens of millions of dollars, as happened with Paramount’s ‘Mission Impossible III’ and star Tom Cruise.

Bay cut a similar deal on the first ‘Transformers’ movie in 2007 and walked off with about $75 million after the sci-fi event film grossed $708 million worldwide and became one of the year’s top DVD sellers.

Though the bar is higher for ‘Revenge of the Fallen’ to go into the black since it cost more than its predecessor, Bay could make an even bigger killing this time around if the sequel does significantly better.

Several executives who have seen the most recent pre-release audience surveys are predicting a five-day domestic opening exceeding $160 million. That would beat ‘Spider-Man 2’s’ $152 million in 2004, currently the five-day record for any film debuting on a Wednesday.

‘Transformers: Revenge of the Fallen’ is also opening day-and-date in most major foreign territories. If it follows the pattern of the first film, it will earn even more money internationally than in the U.S. and Canada. The original ‘Transformers’ earned 55% of its box office revenue overseas.

Tracking is never a surefire indicator of a film’s performance, of course. But it’s rare when a film is the No. 1 most anticipated offering three weeks from its opening -- which ‘Transformers’ was last week.

The movie has a good shot at being the summer’s top grossing worldwide hit. Warner Bros. July 15 release, ‘Harry Potter and the Half Blood Prince,’ is the only other competitor for the crown.

That probably will mean very healthy profits for Paramount, which spent just under $200 million to produce the sequel and is investing $150 million to $175 million to market and distribute the film globally. The studio paid $155 million to produce the original ‘Transformers.’

Aside from Bay, no other talent is participating in the movie’s profit pool. The film’s star, Shia LaBeouf, earned a flat fee of around $5 million. He received about $500,000 on the first movie.

DreamWorks principal Steven Spielberg, who worked closely with Bay on both ‘Transformers’ movies, gets no money for his services. That’s because when Paramount bought DreamWorks in 2006, he agreed to be compensated only for movies he directs -- not produces -- under his company’s banner. Though DreamWorks’ name is on the ‘Transformers’ films, Spielberg’s now-independent studio of the same name has no financial interest in the franchise.

-- Claudia Eller and Ben Fritz

Top photo: ‘Transformers: Revenge of the Fallen.’ Credit: Paramount Pictures.