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Schwarzenegger on the basis of his box office track record. Indeed, his previous two films,
End of Days
(1999) and
The Sixth Day
(2000), had failed both at the world box office and at video rental stores. Nevertheless, in the ten years that had elapsed since
Terminator 2: Judgment Day
, Schwarzenegger’s image had become so inexorably linked in video games and TV reruns to the deadly robot that he had become the crucial element of the deal and Kassar and Vajna needed him to raise money.
    To make this deal Kassar and Vajna first needed to get the rights to the moribund franchise. So, backed by the German-owned movie financier Intermedia Films, they bought the sequel rights to the
Terminator
franchise for $14.5 million from the bankrupt Carolco Pictures and the initial producer, Gale Anne Hurd. Next, they spent another $5.2 million developing a script. That was the easy part. Now they needed $160 million in financing, which was more than any other movie had cost in those days. They had lined up three distributors: WarnerBros. would pay $51.6 million for North American rights, the Tokyo distributor Toho-Towa would pay $20 million for Japanese rights, and Sony Pictures Entertainment would pay $77.4 million for the rest of the world. (The balance would come mainly from tax shelter deals in Germany.) But all three distributors—Warner Bros., Sony, and Toho-Towa—made their financing conditional on Schwarzenegger signing on to play the robot. So: No Schwarzenegger, no money.
    Kassar and Vajna had no real choice but to accept Schwarzenegger’s terms if they wanted to make the movie (and, aside from reviving the franchise, they themselves would earn $10 million in producer fees if the deal went through). Schwarzenegger’s demands, however, did not stop with the guarantee of $29.25 million. He also insisted on and got 20 percent of the gross receipts made by the venture from every market in the world—including movie theaters, videos, DVDs, television licensing, in-flight entertainment, game licensing, and so forth—once the movie had reached its cash breakeven point. Such “contingent compensation” is not unusual in movie contracts, but, in some cases, Hollywood accounting famously uses smoke and mirrors to make sure to define “breakeven” in such a way that a movie never reaches it. Schwarzenegger’s contract, thanks tothe ingenious lawyering of Jake Bloom, allowed for no such evasion.
    Schwarzenegger also could decide who worked with him. The contract “pre-approval” clause gave him choice of not only the director (Jonathan Mostow) and the principal cast, but also his hairdresser (Peter Toothbal), his makeup man (Jeff Dawn), his driver (Howard Valesco), his stand-in (Dieter Rauter), his stunt double (Billy Lucas), the unit publicist (Sheryl Merin), his personal physician (Dr. Graham Waring), and his cook (Steve Hunter). Finally, Schwarzenegger had the contract structured to give him every possible tax advantage.
    All the money was to be paid not to Schwarzenegger but to Oak Productions Inc., a corporate front he controlled. Oak Productions, in return, “lends” Schwarzenegger’s services to the production. Since Schwarzenegger didn’t get any money personally from the movie itself, he had more flexibility managing his exposure to taxes. For example, Oak Productions entered into a complex tax-reimbursement scheme with the production to help avoid additional tax liabilities that might occur abroad. In return, Schwarzenegger agreed to make himself available for eighteen weeks of principal photography, one week (on a nonexclusive basis) for rehearsals—if any were required—and five days for re-shooting. In addition,he had to make himself available for at least ten days, seven of them abroad, for promotional activities in connection with the initial theatrical release of the movie. This media work included everything from television and radio appearances to appearances at premieres and Internet chat rooms. The