(Original title: Cai Xukun’s contract termination turmoil resumed, former boss reveals multiple evidence to recover compensation! High-ranking artists are enough to sustain a company)
Not long ago, the prospects of Lehua Entertainment and Fenghua Qiushi made the public aware of the powerful ability of top artists to attract money. In the face of huge interests, contractual disputes between brokerage firms and artists are also increasing.
Recently, Cai Xukun’s former agency Shanghai Yihai Film and Television Culture Communication Co., Ltd. (Yihai Culture) released a lot of evidence via Weibo, saying it will pursue financial compensation for Cai Xukun’s early termination of contract with legal means.
The termination of the contract causes a sensation again
The contract termination dispute between Cai Xukun and its former owner Yihai Culture dates back to 2015.
In 2015, Cai Xukun signed a contract with Haoyang Media (Hunan) Co., Ltd. to participate in the “Star Moving Asia” program. During the program registration process, due to the transfer of the program producer, Cai Xukun was told to re-sign the contract, otherwise he could not continue participating in the program. In order to continue completing the program registration, on November 17, 2015, Cai Xukun signed a brokerage contract with Yihai Culture.
After the contract was signed, the two sides signed an additional contract in June 2016 to change Cai Xukun’s contract termination fee. For example, Cai Xukun’s unilateral contract termination compensation was changed from 8 million yuan to 80 million yuan, and the early termination fee was changed from 3 million yuan a year, revised to 30 million yuan a year.
In 2017, Cai Xukun proposed to Yihai Culture to terminate the contract and filed a lawsuit. The main reason is that Yihai Culture unilaterally increased the contract by liquidating damages and compensation at will, and also required Cai Xukun to bear the cost of his art assets and extract a large share of his art assets.
In addition, Cai Xukun believes that Yihai Culture has failed to fulfill the performing arts brokerage obligations stipulated in the contract, has failed to fulfill the management and operation obligations of the artists’ brokerage business, and has failed to make a complete and reasonable plan for his performing arts career, so he was unable to enhance his performing arts career Professional and stable support.
However, Yihai culture tells another story. Lui stated that on November 12, 2015, he signed a brokerage agreement and supplementary agreement with Cai Xukun, agreeing that he would be Cai Xukun’s sole agent and that the contract period would end on April 17, 2023.
After signing the contract, the company arranged for Cai Xukun to participate in the large-scale development talent show “Star Asia”, and arranged to go to Korea to receive art training and release albums, etc., helping Cai Xukun to develop from a middle school student to an official debut artist.
In January 2017, the company notified Cai Xukun to participate in show activities, but was rejected, after which Cai Xukun refused to participate in any activities organized by the company. On February 10 of that year, Cai Xukun proposed to terminate the “brokerage contract”, then filed a lawsuit in the court, demanding the termination of the brokerage contract.
Yihai Culture does not agree to terminate the contract. In the counterclaim, Yihai Culture requested that Cai Xukun be ordered to pay 50 million yuan in damages for breach of contract and to pay 70% of all performing arts proceeds (including subsequent advertising sponsorship earnings) obtained by his appearance in the online drama and variety show ‘Idol Trainee’ for the company.
On October 29, 2018, the Jing’an Court issued a ruling to terminate the brokerage agreement and compensation agreement signed by both parties. However, regarding the compensation issue caused by the termination of the contract, the ruling stated that the two parties can negotiate independently and, if the negotiation fails, they can claim the corresponding rights separately. This also became a source of future disputes between the two sides.
The former owner recorded multiple proofs of expense
Since September 2021, the case of Yihai Culture suing Cai Xukun for custody contract disputes has been held several times. The second trial of the dispute between Yihai Culture and Cai Xukun will be held on December 1st.
From November 16 to 21, Cai Xukun’s former brokerage firm Yihai Culture made multiple posts on Weibo in succession, explaining the litigation with Cai Xukun and revealing a variety of spending proofs.
Yihai Culture said that after signing the contract with Cai Xukun in November 2015, the company has invested a lot of money and resources in performing arts training, image building, advertising and promotion, and its early termination of the contract caused huge losses to our company.
Evidence released by Yihai Culture includes training contracts signed for Cai Xukun and other trainees, and details of some training and even plastic surgery expenses. In addition, there are photos of the company organizing promotional activities for Cai Xukun’s group. great attention on Weibo.
(Spend details announced by Yihai Culture)
In addition to directly going to court for the contract termination dispute, the relevant legal documents show that in recent years, Yihai Culture has also sued Cai Xukun and the products and companies it has endorsed many times, including L’Oreal, Yangshengtang , ALIVE, etc.
For example, he once sued Cai Xukun, Cai Xukun’s studio and VIVO company, believing that Cai Xukun and Cai Xukun’s studio cooperated with VIVO company without the company’s consent, agreed that Cai Xukun was the spokesperson for vivox23 series mobile phones and shot a lot of advertisements, posters and other advertising materials.
Yihai Culture believes that its behavior has violated its exclusive brokerage rights, constituted unfair competition, seriously harmed the legitimate rights and interests of the Yihai company, and caused serious economic losses to the Yihai company. However, most of these lawsuits ended in the withdrawal of Yihai Culture.
A great artist is enough to support a company
While disputes with Cai Xukun continued, Yihai Culture’s operating conditions were not optimistic.
According to company research information, Yihai Culture has had many labor disputes, and due to its ability to fulfill, it has refused to fulfill the obligations determined by the actual legal documents, and has become a dishonest person subject to execution, with a total amount of 5.86 million yuan not satisfied. The company also has 13 limited high consumption records.
For Yihai Culture, Cai Xukun’s value as a top artist is undoubtedly enormous. The outcome of the dispute with Cai Xukun at this time will inevitably have a major impact on the management of Yihai Culture.
In recent years, through the listing application materials submitted by some brokerage firms, the outside world has been able to glimpse the huge role of top artists in related brokerage firms.
For example, Lehua Entertainment’s prospectus shows that in the first three quarters of 2022, the company achieved revenue of 753 million yuan, a decrease of 15.9% from 895 million yuan in the same period last year. Among them, the income attributable to the number one artist accounted for 58.8% of total income over the same period.
This means that in the first three quarters of this year, Leroy’s top artist Wang Yibo contributed nearly 60% of the company’s revenue. The prospectus information shows that the contract between Wang Yibo and Lehua Entertainment has been renewed until October 2026.
According to data released by another company, Fenghua Qiushi, artist Luhan also accounts for a large portion of its income. Fenghua Qiushi signed an exclusive music contract with Lu Han in 2015. In fiscal 2018, Fenghua Qiushi earned 70.9 million yuan from Lu Han, which was 70.6% of the company’s total revenue that year.
However, over-reliance on top performers has also brought negative effects. In the past two years, with the reduction of Luhan’s activities, Fenghua Qiushi’s income has also decreased. From 2019 to the first half of 2022, Luhan’s directly attributable revenues were 14.2 million yuan, 15 million yuan, 7.6 million yuan and 1.07 million yuan, respectively accounting for 25.5% , 21.2%, 9.3% and 25.2% of the company’s total turnover.
As of today, the listing of Lehua Entertainment and Fenghua Qiushi in Hong Kong is still pending.
