On June 5, 2009, audiences were introduced to “The Hangover,” a riotous comedy that quickly became a global sensation. This comedic escapade raked in an impressive $467 million worldwide, setting a new record for R-rated comedies at the time. The success of the original film led to the creation of two sequels, which collectively amassed an additional $946 million.
In hindsight, it might be surprising, but there was a moment when almost everyone involved thought the film would flop. The cast was virtually unknown before 2009. However, Todd Phillips, the director and executive producer, had unwavering faith in the project from the start.
Todd Phillips was so confident in “The Hangover” that he made a bold financial decision even before production started. While the studio was on the verge of pulling out due to concerns, Phillips opted to relinquish his salary in exchange for a significant back-end equity stake. This gamble paid off handsomely for him in the end.
Todd Phillips Hangover Gamble /Frazer Harrison/Getty Images
What Happens in Vegas
Back in 2007, a screenplay titled “What Happens in Vegas” was circulating around Hollywood. Many studios rejected it outright, fearing the title would be too difficult to license. To complicate matters further, 20th Century Fox was simultaneously developing a romantic comedy with the same title, eventually starring Ashton Kutcher and Cameron Diaz.
Despite facing considerable obstacles, the screenwriters persevered and managed to get their script into the hands of Todd Phillips. Renowned for directing comedies like “Old School,” “Road Trip,” and “Starsky & Hutch,” Phillips was drawn to the concept and decided it would be his next undertaking. Having an existing agreement with Warner Brothers, Phillips persuaded the studio to approve the film, now renamed “The Hangover,” with a production budget of $35 million.
Unknown Actors
Warner Brothers insisted that a film with an R rating required notable actors to attract audiences. The studio made attempts to cast Jake Gyllenhaal and Jonah Hill, but both actors were unavailable.
Todd Phillips then pitched a group of actors who were relatively unknown at the time: Bradley Cooper, Zach Galifianakis, Ed Helms, and Justin Bartha.
Ed Helms was by far the most famous potential cast member thanks to his appearances on “The Daily Show” and “The Office.” On the bright side for the studio, collectively the four actors earned less than $1 million combined.
A Huge Gamble
Warner Brothers was extremely hesitant to put a $35 million R-rated movie on the backs of these no-name actors. It also didn’t help that Todd Phillip’s most recent movie, Starsky & Hutch, was a disappointment at the box office.
Warner Bros. executives were finally persuaded when Phillips made an offer they couldn’t refuse. Phillips believed so strongly in his script and cast that he agreed to forfeit his $6.5 million director’s salary in exchange for 16% of the film’s gross revenue. At this point, the movie was a go, but Warner Brothers still had such low confidence that they didn’t even think to lock down deals with the actors and Phillips for any potential sequels. A standard film contract would have had all sequel salary deals set in place in advance to minimize the actors’ leverage in future negotiations.
So how did Todd Phillips’ $6.5 million gamble pay off? EXTREMELY WELL.
As we all know now, The Hangover went on to become a massive hit around the world. The little comedy that no one believed in earned $470 million worldwide. The Hangover eventually dethroned Beverly Hills Cop as the highest-grossing R-rated comedy of all time, a title that stood for more than 25 years.
When combined with DVD sales, Phillips earned $75 million from the first Hangover (before taxes and agent fees).
But wait, there’s more! As we mentioned previously, neither Phillips nor any of the four principal actors had deals in place for sequels. This put them in the prime position when negotiations for The Hangover 2 and 3 began.
Please recall that for the first Hangover, the four actors earned less than $1 million COMBINED.
For the second Hangover, the four actors held out for $5 million base salaries plus 4% of the gross, each. Todd Phillips negotiated a $10 million salary and 10% of the gross.
When the second Hangover earned $586 million, the four actors each made around $30 million. Todd Phillips made $68 million.
All five players had even better deals in place for the third Hangover, which went on to make $360 million worldwide.
In total, Todd Phillips made at least $150 million from The Hangover franchise. Not a bad trade for giving up $6.5 million!
The four actors each made $40-50 million from the franchise.
So what’s the lesson here? If you believe in something enough, don’t hesitate to put it all on the line. You might make a fortune!
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