NYT Saints Hollywood's Business Managers
Once again, the NYT uses Entourage as an entry point to Go Behind the Scenes in Hollywood (who knew HBO was so educational?). In yesterday's NYT, Warren St, John's hagiography anoints celebrity business managers as the industry's unsung do-gooders, trailing after their newly-monied clients, burning up Bentley leases and slapping $35,000 watches out of their profligate charge's greedy little fingers. But a money manager who's dealt extensively with Hollywood's bottom-line minding saints writes in to tell us that the business managers have no reason to curb an actor's money-burning tendencies:
Warren St. John's paean to celebrity business managers in today's NYT Styles was grossly off the mark. The story portrays business managers as the fiscally conservative gatekeepers of celebrity pocketbooks, but in truth they're anything but. Because of Hollywood's perverse compensation structure, business managers have zero incentive to get in the way of a star's spendthrift ways.
Hardly "doomsayers," as St. John portrays them, business managers often lead the coterie of yes-men that surround Hollywood stars.
Think about it: typically, business managers rapaciously collect 5% of an actor's annual income. Given this scheme, it's in a business manager's best interest to look the other way when their star client engages in irresponsible fiscal behavior. Here are a few reasons:
(1) Business managers desperately need their clients to like them for one simple reason: so they will remain clients. Thus, a business manager feels tremendous pressue to approve the Patek Phillipe purchase or NetJets share for fear that the star will shitcan them and find some other business manager to green light them.
(2) If the celebrity likes their business manager, the hope is that in time become part of their entourage and invite him to that hedonistic weeklong birthday celebration on a private Caribbean island. Or better yet, maybe they'll mention their name mention in their Golden Globe acceptance speech. We're all starfuckers at heart.
(3) Given that business managers collect 5% of a client's annual income, they are disincentivized from encouraging a client to save. For a business manager, the ideal client is the Hollywood star that spends as fast (or even faster) as he earns it. Then, the actor must continue to keep working to support his profligate ways, lining his business manager's
pocket all along the merry way.Work, spend. Work, spend, Work, spend. This is the virtuous cycle for a Hollywood business manager, and accounts for why, in the words of St. John, "there are so many pathetic, real-life tales of financial ruin, amusing for their inevitability."
