Tuesday, December 8, 2009

Hollywood's 10 Most Overpaid Stars

Posted By Ahmed Al-Salem

What it all comes down to when paying actors to play a part in a movie is whether they will make that movie profitable. Paying a certain actor a big salary is a sort of investment on the part of the movie studios to make their movies more appealing to the public and therefor generate more revenue. What happens when you pay certain actors huge salalaries and their movies flop and end up making you a loss? Forbes generated a formula and a list based on that formula calculating each actor's return on investment.

"To create our list, we looked at the 100 biggest stars in Hollywood. To qualify, each actor had to have starred over the last five years in at least three movies that opened in more than 500 theaters. We calculated each star's estimated earnings on each film, including up-front pay and any earnings from the film's box office receipts, DVD and TV sales. We then looked at each movie's estimated budget (not including marketing costs, which are susceptible to accounting chicanery) and box office, DVD and television earnings to figure out an operating income for each film. We added up each star's compensation on his or her last three films and the operating income on those films and divided total operating income by the star's total compensation to come up with each return-on-investment number."

Based on this calculation Will Ferrel is number one. This summer's Land of the Lost flopped, earning only $65 million on an estimated budget of $100 million. That pushed Ferrell to the top of our overpaid list. For every $1 Ferrell was paid, his films earned an average $3.29.

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