The glitz and glamour associated with the film industry often causes usually-sensible business minds to lose control of their senses and throw caution to the wind. Rarely do investors in film see a serious return. Instead, their money is swallowed up in an ever-increasing production budget, and their return is merely the kudos that comes with being part of such a glamorous industry.
Ensuring that a project stands out from the crowd – through a known star or a unique premise – can make or break any production
Throughout the film industry’s glamorous history there have been countless tails of big budget failures. Films that large studios pump staggering amounts of money into have been met at the box office with such little enthusiasm that hundreds of millions of dollars have had to be written off as a result. Recent examples include Disney’s The Lone Ranger remake and science fiction film John Carter, both of which saw colossal marketing spends do little to get people to shell out the ticket price.
Some of the reasons for this are the high costs involved in making a film, the relatively long time it takes between conception and release, and the high risks that come with a project solely reliant on the taste of the public. It’s little wonder that studios have increasingly looked at funding remakes, sequels and projects that they are surer of recouping money from through merchandise. For more challenging works, studios seem far less enthusiastic than they once were.
For the many creative minds that want to get their films made, this leaves the independent route as the only viable option, but this comes with similarly perilous financial risks. Putting together a film without the massive funding that Hollywood studios provide can be an incredibly daunting task. A film requires expensive camera equipment to be hired, vast numbers of people to make up the production crew, and people to work in both pre and post production. There’s also the all-important screen talent that can cost far more than anyone else involved in the film. This is all before the marketing costs are added on once the film is complete. Budgets for independent films can range between anything from $200,000 for small and first time films to $20m for ones with an established team behind them. While some writers and directors that pitch their ideas will have reputations that unlock the necessary finance pretty quickly, those starting out will find things far more difficult. Without a track record, few budding filmmakers will even get their foot through the door.
Boxing clever
Going cap-in-hand to investors is something few people relish doing. For independent filmmakers, sources of finance for projects can come in various forms. Government grants, film institutes and private investors form the backbone of the investment pool. However, there has also been a recent trend of specialised investment funds being formed that help to back independent films, while at the same time offering investors various financial incentives.
Andrew Lang, whose first film – documentary Sons of Cuba – swept up a number of awards upon its release in 2009, says that investors picking films like his tend to do so for their passion, rather than as a cold-blooded business transaction. Lang spent years struggling to get his tale of child boxers in Havana made, relying in large part on the financial help of friends and family. Some private investors got involved, but it wasn’t until the project came to the attention of New York-based non-commercial television station WNET, who provided much of the initial funding, that things really got going.
As with many other smaller films, Lang says that many worked on Sons of Cuba in return for a percentage. “You might get an editor to work for low to no pay, but then he gets a back-end percentage that equates to his contribution. It means that you can get the film made, but it also means that every pound that comes in of sales is often split many different ways.” Sons of Cuba was eventually sold to around 30 television channels around the world, including the BBC, although the acquisition fees are relatively low, depending on the territory.
[T]here are many better ways to make money than investing in an independent film – Andrew Lang
“Smaller investors might be more from the heart” according to Lang. By contrast, public bodies may have a passion for the project, but will also have the experience to know whether it is likely to be successful. Public bodies such as the British Film Institute (BFI), Creative England, France’s national Cinema Center, and the German Federal Film Fund provide financing to projects. There are also a number of regions that offer tax breaks and subsidies for films that are shot, at least partially, within their territory. Independent film festivals and bodies – such as Robert Redford’s Sundance – can also sometimes offer financial assistance.
There are a number of tax incentive initiatives offered by governments to investors that get involved in film projects. While some regions offer better conditions for making a film – the Netherlands, France and Germany are all said to be very helpful towards independent projects – many others are becoming increasingly aware of the benefits of having a burgeoning film industry. California is currently revising its laws to enable greater incentives for productions based there, while the UK continues to offer assorted tax breaks to entice films to its shores.
In the UK, Seed Enterprise Investment Schemes allow taxpayers to get 50 percent of their investments back in the form of a rebate on their next tax bill. This is capped at £45,000 per investor, and allows a film to have a total of £150,000 in overall investment. For bigger projects there is the Enterprise Investment Scheme, which allows for a 30 percent rebate for investors.
Film funds have recently begun gaining prominence, whereby experts advise clients on the best projects to invest in. Although these can be much like any other investment fund, they can also be hard to access and rarely offer the sort of stable returns that typical investment funds might provide. However, Lang says there are some financing bodies aimed at making a profit: “It depends. There are some film funds that are very much aimed at profit, run by experts who make the most informed choice possible of whether a film will turn a profit.” He adds that investors can rarely expect to make much money, and if they do it’s usually because their investments have been dominant part of the film’s budget. “There are some notable exceptions where people have stumped up a large percentage of a small budget movie and made a lot of money. But generally, there are many better ways to make money than investing in an independent film.”
Unsurprisingly, getting any of this funding is a hugely competitive business, with huge numbers of films being made every year competing for a very limited pot of money. Ensuring that a project stands out from the crowd – through a known star or a unique premise – can make or break any production.
Thanks to the success of Sons of Cuba – including Best Documentary at Rome Film Festival – Lang has found it much easier to get meetings and funding for projects, as investors recognise a proven talent. While few first-time films get the sort of funding and subsequent recognition that the likes of Sons of Cuba have managed, it goes to show how important a strong story and a highly determined bunch of filmmakers is to getting such projects off the ground. While investors may not see the sort of financial rewards that they might get from other investments, they tend to be happy just to be involved in these types of projects, which can only be a good thing for viewers.