hangoverEXCLUSIVE: Even before The Hangover opened, executives at Warner Bros and Legendary Pictures had commissioned a script for another installment. Who knew it would take six months of headache-inducing negotiations to make it happen?

Finally, the participants have completed talks and are ready to sign deals to reprise.  I’m told that Zach Galifianakis, Bradley Cooper and Ed Helms will each be paid in the vicinity of $5 million against 4% of first dollar gross. Director/producer Todd Phillips will be paid around $10 million against 10%. For Phillips, there are also escalators and bonuses that insure if the sequel does anywhere close to the original’s $467 million worldwide gross, Phillips will not make less than his income on the original. That meter is still running, and it has passed the $50 million mark.

Why was The Hangover 2 such a difficult deal to put together? It was a perfect storm of leverage: the three stars made less than $1 million collectively on a film that became Hollywood’s biggest grossing R rated comedy ever. Those stars did not have options locking them into a sequel. What they did have were teams of managers, agents and attorneys who negotiated together, determined about one thing: Warners and Legendary weren’t getting another Hangover unless the trio got paid well.

Warners didn’t make option deals with the cast because the studio never envisioned a raunchy comedy would become a juggernaut that begged for an encore. In fact, Warners’ uncertainty over Phillips’ casting choices were the reason the filmmaker gambled his upfront fee in exchange for slightly more than 15% of the film’s overall revenue that allowed him to make the movie for the $34 million budget ceiling that the studio established for that cast. At the time, only Cooper had any feature name recognition.the-hangover-01

Cooper made slightly more than Helms and Galifianakis, but none made more than $300,000 to star in the original, I’m told. While Warners eventually cut each actor a $1 million bonus check right before sequel negotiations began, the cast was a bargain the first time around. So reps of the thesps were dug in for a long battle when the studio initially came to the table offering each actor $3 million against 1% of the gross,  with a deadline attached. That deadline passed, and I heard that twice during the talks, Warner Bros chief Jeff Robinov walked away from the table and pronounced that the sequel was off.

Finally, the deal-making got done. The sequel’s still being honed, but an October start is considered likely if Helms can work things out with his NBC series The Office.  The sequel will be considerably more expensive than the first film—upfront salary alone for the trio and Phillips is around $25 million, and the original costs $34 million all in. But even if the original budget doubled and Warners is paying over 20% of first dollar gross, I think this is a good bet on a film with an established audience that wants more.  A studio that wanted to establish itself in comedy has a beachhead franchise, and most likely its big comedy for Memorial Day weekend, 2011.

UPDATE: Since many commenters asked, Justin Bartha, who played the missing groom in the original, will be back for the sequel. I have no idea what he will be paid. As for the writers, I believe the script is currently being worked on by Todd Phillips and Scot Armstrong, but there might be others contributing.