In 2008, after the successful launch of their hit title, Grand Theft Auto 4, Take-Two (TTWO) Interactive's (TTWO) CEO Strauss Zelnick said that they had secured an employment agreement with key Rockstar talent. The deal was an incentive program "primarily based on a profit sharing arrangement." At the time, there were reports that CEO Robert Kotick of Activision was trying to get Rockstar's talent to jump ship. The Rockstar executives also took Zelnick's side against Electronic Arts' (ERTS) attempted takeover. So what did it cost Zelnick and Take Two to make these deals?

The answer appears to be now hidden in Take Two's most recent balance sheet. Accounts Payable rose by 262 million sequentially. Accrued Expenses rose by 100 million sequentially. These are unusually large numbers that at first can easily go unnoticed among the larger highlights: most prominently, 1.15 billion in deferred revenue and 302 million in deferred cost of goods sold from Grand Theft Auto 5, and an overall 975 million increase in Accounts Receivable.

But the real question investors should ask is how much is Rockstar making in the "profit sharing agreement". Here is one way to figure it out:

Take Two's Non-GAAP net revenues were 1.289 billion. Yet it's Non-GAAP gross profit was only 497 million. The gross profit was only 38%? Where did 792 million go? Where are the details of these Non-GAAP expenses? Well, because they are Non-GAAP, they are not disclosed. We know that 1.15 billion of that 1.289 billion total revenue (89%) is from one title: Grand Theft Auto 5. We know that 302 million of that 1.15 billion (26%) is cost…