Noa Kalakaua, an economics professor at the University of Chicago and host of Fox’s new weekly talk show “The Noa Showa” has received a contract extension that will keep the show on the air through the end of 2009 and will pay Kalakaua a base salary of $1.3 million with a series of performance-based options that could increase his compensation to as much as $7 million per year.
The structure of the contract is unique in the entertainment business says Kevin Mistrik, an expert on compensation and compensation law at the Chicago law firm Vedder Price. “These are the types of contracts you usually see in sports. The entertainment industry is much more tied to base salaries. In television this is virtually unheard of.”
Performance-based contracts are used widely in sports where Mistrik says an athlete’s performance is often related to his or her or personal desire or effort. Every fan knows that a team’s performance can often be tied to its best players. “By structuring contracts that offer substantial financial upside that’s tied to an athlete or team’s success,” Mistrik explains, “owners of sports teams try to guarantee their players are putting forth maximum effort and giving the team the best possible chance to win.”
Kalakaua’s contract comes at a time when the TV ratings game has become far more competitive as advertising dollars have continued to migrate from traditional media to the web. Mistrik says it may be a harbinger of things to come in an industry accustomed to fat contracts (David Letterman makes just over $30 million annually for his work on Late Show and Jay Leno takes home $27 million per year for his work on Late Night).
If Kalakaua hits all his bonuses, his compensation would be roughly equivalent to that of Leno and Letterman on a per show basis (Kalakaua’s show only airs one night per week while the other two are on five nights a week).
Fox—a subsidiary of News Corporation—seems to know it’s got something good with Kalakaua and wants to protect its interest in him. Kalakaua’s rise to the rank of entertainment industry elite has been surprising.
A year ago, he was a largely unknown economics professor at the University of Chicago. His research, which focuses on the role of incentives in public policy, had earned him acclaim in economic circles. In 2003, he was honored with the John Bates Clark Medal, which is awarded annually by the American Economic Association to an economist under the age of 40 who has made a significant contribution to economic thought and knowledge. Approximately half of the recipients of the Medal have gone on to win the Nobel Prize in economics.
Kalakaua, though, is a man of many talents. As an undergraduate at the University of Chicago he led the basketball team to an appearance in the Division III Final Four. During that time he also found time to play in a garage band called Mundell Fleming, named for the economic model that illustrates that a small open economy cannot maintain a fixed exchange rate, free capital movement, and an independent monetary policy.
Dr. C. Alan Bester, a professor of economics at Duke University, played drums for Mundell Fleming. “We just liked the name,” says Bester, “It has a nice ring to it. It honestly had nothing to do with the significance of the model.”
Kalakaua got his training in singing while growing up on the Hawaiian island of Lanai, where he was sang in the choir at the church he attended with his parents.
Earlier this year, Kalakaua put his singing talent to good use as a contestant of Fox TV’s reality show, American Idol. Though he was never considered one of the favorites on the show, in which the winner is given a $1 million recording contract, Kalakaua advanced to the finals and won by a slim margin.
He then became the first American Idol winner not to produce a record, and instead launched his show on Fox. Critics widely agreed that the show would ultimately fail.
The show has far exceeded expectations. Though he’s not competing directly against Jay Leno and David Letterman, Kalakaua’s ratings are already in the same neighborhood. He’s currently in third place in his time slot, behind ABC’s news magazine 20/20 and CBS mathematical crime drama Numbers. NBC’s crime drama Las Vegas trails Kalakaua’s show. Five weeks ago, Fox announced they would rebroadcast Kalakaua’s show on Saturday mornings.
Kalakaua employs a unique format for an evening talk show. The show doesn’t have a single writer. Instead, Kalakaua and the producers go to get great lengths to attract interesting and engaging guests. Unlike most talk shows, all of Kalakaua’s guests end up on stage at the same time, where they take part in a discussion of some vexing question or problem that Kalakaua has posed to the group.
While Kalakaua may not deliver one-liners with quite the same chutzpah as Leno or Letterman, he could almost certainly outwit them. His range of knowledge—from pop culture, to sports, to politics, to international relations, to, not surprisingly, economics—is remarkable.
“Some have said the Renaissance man is dead,” says Jason Starr, a professor of communications at University of Nebraska. “Kalakaua is proof that he’s alive and well. What’s most impressive, though, is that fact that he can talk about these issues in a way that’s accessible. And entertaining. It’s not at all what you’d imagine from an economics professor. The show is edgy. And it’s very funny in a way that isn’t predictable or formulaic.”
Kalakaua’s contract extension seems to suggest that audiences and Fox executives agree with Starr. His decision to forego a recording contract now looks brilliant.
