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Inside the Legal Battle Over a Lucrative 'Dirty Dancing' Stage Musical (Exclusive)

A blockbuster success couldn't stop an arbitration over global rights to the romance story.

Dirty Dancing Film Still - H 2011
Vestron Pictures/Courtesy Everett Collection
"Dirty Dancing"

When Dirty Dancing came out in 1987, it was a massive hit, grossing nearly $214 million in worldwide box office. But the film starring Patrick Swayze as a dance instructor at a vacation resort was nothing compared to the success of the stage version. In London alone, a Dirty Dancing musical reportedly grossed $500 million.

Such prosperity should be the formula for happiness among all involved, but it hasn't been. Behind the curtains, the screenwriter of the original film has been tangoing with the stage version's Australian producer over rights. Last year, an arbitrator ruled largely in favor of the production company, but the drama isn't over. Last week, amid reports of new Dirty Dancing musical tour dates in the U.K., a New York judge was asked to confirm the arbitrator's ruling.

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A couple steps back...

Dirty Dancing was written by Eleanor Bergstein, who based the story of a young teen falling in love in the Catskill Mountains of New York on her own life.

In 2004, Bergstein's Magic Hour Productions licensed stage rights to the cult film to Time of My Life Pty Ltd. According to a copy of the agreement, Bergstein got a $25,000 advance for an Australian show, further payments in the event that the show opened in other countries and a healthy share of box office profits.

At the time, Time of My Life Pty was run by Bergstein's close friend, Kevin Jacobsen, one of Australia's most important entertainment executives, who also owned a management firm representing the likes of Barbra Streisand, Bruce Springsteen, Billy Joel and Pearl Jam. But according to a 2012 story in the Sydney Morning Herald, Jacobsen fought an intense family battle with his brother, Colin Jacobsen, which he essentially lost. Kevin reportedly suffered financial troubles, investors demanded money, and after his company was threatened with being placed into receivership, he sold shares. As a result, Dirty Dancing's global rights eventually wound up in the hands of Colin and his daughter Amber Jacobsen.

Bergstein wasn't happy about this.

According to the arbitrator's decision last June, which has just become public (read in full here), Bergstein claimed that Time of My Life Pty breached the production agreement by removing Kevin Jacobsen from control of the company and from the Dirty Dancing producing team.

Bergstein also cited other grounds the agreement was allegedly breached. For one thing, Time of My Life Pty assigned its Dirty Dancing rights to a theatrical producer named Karl Sydow, who was responsible for Backbeat, a musical about The Beatles. The screenwriter claimed this was done without her authority. Bergstein also took umbrage with how her libretto was changed without permission. Finally, Bergstein claimed that rights to the stage show had lapsed and that Time of My Life Pty no longer held "reopening rights."

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In considering this dispute, arbitrator Robert Donnelly noted that "like the principal characters at the outset of the musical Dirty Dancing, it's evident that Claimant and Respondents just can't seem to dance very well together. After reviewing hundreds of pages of documents and after listening to many hours of testimony in support of each Party's position in this Arbitration it's also evident that each side has contributed to the failure of this relationship."

Although the arbitrator said that Bergstein was "justified" in seeking the best possible representation of her work, and that the Jacobsens had engaged in interfamilial disputes and exceeded the rights granted to them, he ultimately ruled in large part against Bergstein.

The arbitrator said that the production contract didn't obligate Kevin Jacobsen to remain in place. On the issue of changed music from Dirty Dancing, the arbitrator noted that Bergstein accepted her money, never sent a formal notice of breach and had worked on subsequent productions. Similarly, the arbitrator said that Bergstein had ample opportunity to refuse payments and to inform the production company that rights would soon lapse, but that she didn't until too late.

Ultimately, the arbitrator instructed the parties to commence negotiations over reopening rights and failing an agreement, that Time of My Life Pty would have a year to reopen the show in the United States, Canada and any country it recently closed and three years to open new shows in new territories.

So how's it going? The lawyer who filed the petition hasn't yet responded, but the act of filing should say something. With the clock ticking, Magic Hour Productions now wants to confirm the ruling.

For his part, Donnelly concluded his ruling this way:

"Dirty Dancing has existed as a work of musical theater since November 2004. It has now opened in locations all over the world. It has opened in large cities. It has opened in small cities. It has made money. It has lost money. Surely the Parties have acquired enough knowledge from these experiences to create productions which fulfill Claimant's desire to have a high quality creative work and Respondents' desire to have a high quality production which can make a profit for themselves and their investors. It is the Arbitrator's recommendation that the Parties use this long history of experiences as a logical way to collaborate and resolve future disagreements. And it is the Arbitrator's sincere hope that Claimant and Respondents will soon learn to dance together as smoothly as Johnny and Baby eventually did."

E-mail: Eriq.Gardner@THR.com
Twitter: @eriqgardner