The ‘America’s Got Talent’ $1 Million Prize Isn’t All It’s Cracked Up to Be
America’s Got Talent is a very high-stakes talent competition because of its $1 million prize. The judges constantly mention that they are looking for a $1 million act. Terry Crews always stresses how much the acts are battling it out for the coveted prize. Every act shares how the money would change their lives. In reality, the prize money does have a lot of loopholes.
The ‘America’s Got Talent’ Prize is Not Actually $1 Million
Longtime fans of AGT might have seen this familiar disclaimer about the prize money at the end of every season. Season 15 champion Brandon Leake was announced as the winner just as the statement flashed on the screen. There is usually way too much happening on the screen to be able to focus your attention on reading the disclaimer.
The disclaimer says the following:
“The prize, which totals $1,000,000, is payable in a financial annuity over forty years, or the contestant may choose to receive the present cash value of such annuity. Contestants are informed of the rules prior to the show and must meet eligibility requirements to receive announced prizes.”
It does not come as a surprise to the winners that they will not be handed a check for $1 million immediately after winning the show. They are told beforehand about the details of the prize money if they do end up winning. It might come as more of a surprise for fans of the show who have been invested in voting for their favorite acts for the past 15 years.
If the AGT winner chooses the 40-year payout option, they will receive $25,000 a year for 40 years. This is a more feasible option for younger winners who are still in school or are in the very early stages of their careers. This payout is considered taxable income. The final sum of money that they will earn after 40 years will equal less than $1 million.
How Much Do Winners Actually Make From the Lump Sum Option?
The winner also headlines their own show in Las Vegas. In the case of certain winners like Grace Vanderwaal, this can literally mean headlining a three-day engagement. Other winners like Mat Franco have been dominating the Vegas strip for years with shows of their own.
Brandon announced that he chose the lump sum prize option to pay off his student loans. He also just welcomed his second child so it makes sense for him to want the money now. Even if the winner chooses the lump sum option, they are not getting $1 million upfront. All talent show prizes are taxed, even a prize as small as $10,000.
Should the winner choose to receive the lump sum option, otherwise known as the present cash value of the annuity, they will make less than $500,000 in total. Something that factors into how much they actually take home is the average inflation rate. This is also how the Mega Millions or the Powerball works. The lump sum is always lower than the advertised cash prize.
Season 5 winner Michael Grimm reportedly only took home $200,000 after choosing this prize option. He has since kind of faded into the background while other winners were able to launch their careers from the show. Season 2 winner Terry Fator inked a $100 million deal to perform at The Mirage in Las Vegas in 2008. This deal is better than his AGT winnings.
The Big Takeaway
The big lesson to take away from all of this is to always read the fine print. AGT is advertising a $1 million prize but there are a ton of rules and regulations that are involved in winning this prize. Anyone who is looking to audition for the show should be mindful that things aren’t always as crystal clear as they seem.
American Idol and The Voice also have their own set of rules for the prize winners after each season. These shows could all probably use a little more transparency. Or, a better idea would be for AGT to up the prize money so that winners could take home as close to $1 million as possible.