Line Producer – Managing Film Budgets and Cost Reports

Film production has a middle management position called “Line Producer” and/or “Unit Production Manager”. This person is charged with the responsibility of bringing the production in on time and on budget – really – and from the ground level. Most Line Producers and UPM’s learn their ability to manage shooting schedules through education and on-the-job experience. But, what about managing budgets and the related weekly cost report?

Breaking In As A Line Producer – Managing Costs and Reports

How does a 1st Assistant Director, a young producer, a filmmaker, a location manager, etc bust in as a Line Producer? How do they get exposure to the very confidential Cost Reporting process? In this environment of producing films cheaper-better-faster it’s especially important for Line Producers to understand the “Production Management” of budgets and cost reports.

Confidentiality of the Management of Film Budgets and Cost Reports

The confidentiality of the film budget, and its cousin, the weekly cost report, creates a barrier for emerging Line Producers. Most learn through a series of hard-knocks, easily avoidable with some practical training. However, there just isn’t any time on set for an active Line Producer to apprentice someone. It’s too fast and too late. The only way to learn this very important aspect of the film BUSINESS is to train in a controlled environment.

The Practical Methods of Managing Budgets and Costs

During a series of 6 live webinars, each 90 minutes long, we will review a $9Mil budget from several angles, learning the practical methods of managing a film budget used by film producers and production accountants everywhere. From that very important step, we practice the essential steps in controlling and reporting the production costs through the Weekly Cost Report – this report is fundamental to ALL media-based productions, and is reviewed weekly by the completion guarantors, the financiers, the studios, etc. In addition you will be introduced to the 6 basic ways that you can use to control the costs before they are spent.

Visit http://www.talkfilm.biz/filmworkshops5.htm to learn more. The next series of live online webinars is every Tuesday and Thursday night starting October 28, 2014. Note that the webinars are recorded for review at your convenience.

Cheers / John

#2 of 7: Film Production and ‘Directing the Money’

The topic of money in general is a little scary to most of us. When you approach the topic of money in film production – steel your nerve! There are reputations at stake and careers on the line.

The purpose of this article is to demonstrate that ‘Directing’ Money in the film production business (or any business, for that matter) is fundamental to your career – especially if you want to rise on the food chain of film production. If you’re already a Film Director, you know all about the flow of spirit, vision and creative collaboration that it takes to make a film. If that momentum is stopped in some manner, the whole project is clouded with doubt and apprehension. Film crew of all stripes can smell that arrested movement almost immediately – sometimes even before the Director and Producers.

Beneath the noble flows of creative spirit and collaboration runs the green flow of money. NOTHING happens without a corresponding effect on that money flow. Begin to think like a film director, but in the area of money flows. (It’s really just a minor skill, like playing bridge.) Would a good director worry about the small stuff? (Okay, maybe, but let’s hope not.) Then don’t put your attention on every penny – think in concepts of $1,000 at a time.

Keep those creative juices flowing; however, like it or not, your performance is measured to some degree by how well you can ‘Direct the Money’ – in whatever level of production you choose, but especially if you’re an aspiring, or working, Film Director. How well you can do that is how well you control your career in film.

Anything that’s bought (I mean ANYTHING) is tracked and compared to the budget. Every conceivable type of film equipment, prop-holding rooms, toilet paper, you name it, is compared to the ‘approved budget’. But, you’re not going to get fired because you wasted toilet paper. On the other hand, if you ‘Direct the Money’ (and know it when you’re doing it) by borrowing the Construction Department’s forklift for a couple of hours, instead of renting your another one, you’re ‘Directing the Money’. Now you just need to learn how to parley that into a truce with the Studio Exec, Producer, Production Manager, etc. by talking competently in terms of budgets and costs.

It’s time to introduce some details. Let’s take a look at what, exactly, is a priority in order for you to be seen as a competent ‘money talk’ person in film production (say a Producer, UPM or Department Head).

The very first task is to be able to make comments intelligently about the budget. Read the shooting schedule (and other script breakdowns) from a viewpoint of money. Ask the accountant what is the average cost of shooting per day and multiply by the number of shooting days. Become familiar with the terms of the budget and learn how to comment about the most important elements (read as, know what categories of costs could benefit you, or hurt you, the most). Become familiar with the ‘look’ and presentation of a budget, so that you’re not mistaking a subtotal line for an expense (actually, I’ve seen that happen too often to laugh). You’ll get some hands-on practice in the next 6 articles.

Before going any further, let’s look at the 4 basic sections of a budget. (As I said in my article ‘Making It in Film Production’ I’ve written these articles for the complete novice, so please be patient if you’ve already been exposed to the fundamentals here).

If you can’t read the picture below, click here: Page 37 of “Walk The Talk” for a clearer PDF illustration.

The Four Major Sections of Any Film Budget are:

1.Above-the-Line: This section includes all costs associated with the Writer, Director, Producers, Cast and Stunts. The costs of the writer, director, producer and stars is driven by the market place, Major Studios or financiers, so I won’t spend much time on them. However, you will need to have a good understanding of the costs associated with the daily/weekly cast and stunts. (Note: In the very early days of film budgeting there was actually a heavy line drawn here – thus the term ‘Above’ and ‘Below’ the line.)

2.Shooting Period: This is the most important section for anyone looking to produce films. As you would have guessed from the title, it includes all production costs of the actual time of shooting the film, including a bit of ‘wrap’ time (say a week or two) after the shooting is completed. It includes all of those costs that you would intuitively think of

– like the labor costs of all crew, camera-grip-electric equipment rentals, as well as, all construction-wardrobe- transportation costs, etc. When I first started in the business everyone called this section ‘Below-the-Line’, and I still hear it occasionally. The official definition currently in use for ‘Below-the-Line’ is the sum of the Shooting Period and the Post-Production Costs (see point #3 below).

3.Post Production: This section of the budget includes all costs associated with the time period AFTER the shooting is complete – costs like editing, sound mixing, music, visual effects, etc. I won’t be spending any time on post-production costs. It’s in the interests of the Studio and Financiers to create the best ‘look’ they can. There are experts in this area who stay current with the technology. The only control you can hope for is a tight coordination among the Director, Editors, Post-Production Supervisor and Financiers to arrive at some real plan for ‘post’.

4.Other: Finally, the last section includes costs like insurance, on-set publicity costs, legal expenses, etc. The financiers have certain requirements for these areas and usually have a pretty good idea what they’ll cost before approving the financing. So, in the interests of self-preservation, always defer any discussion of ‘Other’ costs to the Studio, Bonding Company or Financiers.

Occasionally, an ‘Overhead’ account is added after Contingency – but it’s almost never used. Again, they are what they are, once the financing is in place and the Bonding Company agrees to bond the show. (Note that if there’s a bank involved, there will always be a Bonding Company).

The four different sections illustrated above is a typical Budget Summary sheet. These four sections are universally referred to; so don’t be afraid to use the terms. Additionally, if your show is an independent production, there will be three more lines at the bottom (always presented in bold) – they are Financing Charges, Bond Fee and Contingency after the budget is approved (often referred to as the ‘Locked Budget) all costs incurred are compared to the approved budget.

At this point you need to switch gears from budgeting to the process of reporting the costs as they compare to the budget. There is an internationally agreed upon format for this purpose, called the Weekly Cost Report. It’s the ‘Report Card’ of how the show is going.

This Weekly Cost Report process is where the fun begins and you’ll need to be familiar with the many in’s and out’s of cost reporting. How the costs are gathered together is a technicality belonging in the realm of accounting – what you need to know is the importance of the Weekly Cost Report, and how to ‘Direct the Money’ by knowing how to acceptably manipulate the reporting process to show an honest, but credible presentation of the production costs. It is THE key report card presented to those with the money behind the film production. It’s presented to the Financiers/ Studio Execs/ Bonding Company every week, on every financed film production on planet earth, period.

Presentation of this cost report can make or break your credibility. AND, to my knowledge, there’s nowhere else you can learn these tricks of the trade – except for an off-hand statement here and there in the larger film schools. See my next articles for more about this report.

I want to remind you that in the 20 years that I’ve worked in film production, I have NEVER shown a crew member a Final Budget or a Weekly Cost Report. They are considered sacrosanct by Studio Executives, Financiers and Bonding Companies everywhere.

Well, get a good book, that’s easy to read, that lays it out for you. Recently both the University of Southern California Masters of Fine Arts (Peter Stark Program) and the University of Tampa Film Program have ordered my book, “Walk The Talk” as required reading for their students.

They’re available in my book – see my web site here “Walk The Talk”. All of them are simple but effective.

Cheers,

Visit my web site at www.talkfilm.biz.

John Gaskin’s Profile: http://www.linkedin.com/in/johngaskin

Email: johngaskin@talkfilm.biz

Film Accounting and Auditing-CPE New York Lic#002443

Whew! I finally got the Continuing Professional Education (CPE) License Number for the New York workshop on “Film Accounting and Auditing”.

You may, or may not, know, but there are some States that have a list of rules that the Certified Accountant (of whatever branch) needs to track, and then it’s up to the person claiming the CPE to be honest about it (like Michigan, California, Louisiana). Then there are some States which positively make the Author/Instructor crawl over broken glass to get the course/ workshop approved and “Licensed” by the State (like Florida and New York).

The New York State Education Department gives it a very thorough review (as did Florida as well), so it’s time for me to proudly advertise my New York Sponsor License #002443 just before Sunday’s workshop in New York (at the delux Post-Production facility in Soho).

A quick word about the workshop – it’s designed to give the Certified Public Accountant a full rundown on the Film Accounting industry specific terminology and methodology, as well as to show the CPA how to do any State audits for the Tax Incentive much quicker.

Go to my web site and you’ll get more info about it:  http://www.talkfilm.biz

– John

FREE Stuff – Managing Film Budgets and Production Costs

I finally succumbed to putting FREE stuff on my web site. I have 13 on-demand Flash videos posted up, as well as related templates, budgets, pictures, etc. They’re all related to the process of production managing film budgets and production costs. They’re not only good for Line Producers and UPM’s, but also for aspiring Film Accountants.
The link to the web site page is: http://www.talkfilm.biz/filmworkshoponline2.htm

Best,

John

The Film Business – How Do Independent CPA’s Fit In?

CPA’s who want to service the film industry as auditors in some way have several routes:

– prepare an opinion of the Estimated Tax Credits from the Film Budget in ‘prep’,

–  prepare audited statements of the Cost Report in post-production for the Tax Credits,

– service the administration of the tax credit with the State for the Production,

– claw through the interim costs to see if the Estimated Tax credits are in-line, etc.

Or, work as a Production Accountant.

To do any of these tasks, as a professional, you need to get a feel for the rapidity of the film production business from and the responsibility and authority expected fom you. The weekly petty cash is about $50,000 a week, the weekly payroll is anywhere from 0 to $800,000 for the crew alone, etc – so there’s no time to train or figure out systems, it’s got to be right first off the mark.

FILM ACCOUNTING SYSTEM:

That system has been worked out over the years and that’s what is called Film Accounting – it’s basically the same system used throughout the film production industry internationally. None of it is brain surgery, but the rapidity of the life cycle is unique – in a few weeks/months you start with nothing, open a bank account, find a studio, order furniture, hire crew and cast, buy/rent everything, finish shooting, sell/return everything, pay off whatever, close bank accounts, turn off the light – the door slams on the back of the last man/woman standing – the film accountant. A FULL understanding of the film accounting system is vital to external auditors who need to move quickly to balance their chargeable hours to a competitive field.

BOOKKEEPING-REPORTING-AUDITING:

Throughout the Film Accounting process the multiple details of bookkeeping, reporting and auditing (ensuring that the transactions are legal and ethical), can get a little overwhelming, especially if you’re not ready. If you have 3 or 4 weeks before the shooting starts, to go from an empty room to a fully functioning office, you need to have a system that is drilled to the level of habitual. There is nothing on a ‘Woman Scorned’ when compared to a producer who doesn’t get his/her cost reports on time (the Weekly Cost Report compares every line item in the budget against current Estimated Final Cost, and all variances accounted for). There are a number of ‘tricks-of-the-trade’ in managing that report; remember, it goes to all bosses everywhere.

THE FILM ACCOUNTANT’S PRODUCT:

The film accountant’s Boss is the Financier(s). That would include the funders as well as lenders and the bonding company. It’s a little difficult sometimes, because the Producers are in direct communication with the Film Accountant and technically have the right to fire him/her. I could tell you stories – actually, I do tell you real stories how to handle that situation if it gets noisy. The Weekly Cost Report, more than anything else, is the ‘product’ of the Film Accounting Department. If all systems are ‘in’, the result is a meaningful Cost Report that the Producers and Financiers take to heart – the bond company has the right to take over the production and their most used document is the weekly cost report.

WORKSHOPS #1 and #2:

The first workshop drills the film accounting system. The second gives you a look at the building blocks that comprise what you will be auditing – the costs as compared to budget. Knowing how those costs are tabulated, along with a system to capture certain types of costs with Free Fields, really gives you an understanding of where the producers are coming from – not always on the up-and-up. This is a vital area for both aspiring film accountants and for external auditors.

 

For example, here’s something I’ve seen:

The producer wants more tax credits – one way of increasing those tax credits by ‘flipping’ – an actual example is the producer puts a Story Consultant in the budget for $100K, then funds the $100K from Company A, then has the production pay $100K to a local State shell Company B, then has Company A invoice Company B for Management Fees of $100K. (or, more nefariously, has Company B make advances to someone the producer actually is doing another deal with entirely). This is a ‘flip’ or ‘turnaround’ that could be viewed as a sham and is fairly common.

SMALL GLOBAL VILLAGE:

The film industry is a small global village. I have seen line producers, 1st AD’s, production accountants, etc. keep working in spite of a downward spiral of bad habits and poor performance – simply because they already have a resume and others have ‘heard’ about them. It’s just the way it is. Almost no attention is paid to self-promotion, and even if a face-to-face meeting is finagled, the ‘I love you baby’ routine is actually real – so, you’re in a quandary that you have to solve. The only way I know of to solve it is to get started by learning the trade from the ground up and do the workshops. I say, with some humility, that I know the bond companies, I know the bigger international Tax Admin Companies, I know a few VP Finances at the Major Studios, quite a few people on the food chain at various levels, etc – simply by stating my name you’ll at least get an ‘Oh yeah, I know John’ – of course, I can’t promise anything, but I’ll always back you up as one of my attendees if called.

A COMMENT TO EXTERNAL AUDITORS:

It’s going to be a shark fight very soon for the simple tax credit audits. Really, to just do the audit is a meat grinder – stick the meat in one end and out the other end comes hamburger. But, the guys who take the extra step to learn what is really needed by the studios and producers, and provides what’s needed, will be the ones who get the callbacks. Out of State studios will need someone to set up a Prod Co (a shell company used only for the production), they’ll need access to an inexpensive lawyer for simple in-State assignments, deals of whatever kind, they’ll need advice on how to estimate the tax credit and what’s current with the State decisions, the banks will want a letter of opinion that’s accurate and quick, the producers and banks will want an interim report of the Estimated Tax Credits to make sure everything’s in-line, etc. The only way I know that you can do that is to get real familiar real fast with all film budgeting and cost reporting and general ledger formats.

WHERE AND WHEN:

In Detroit, MI near the airport at the Lexington/Hampton Inn on May 16/17 and May 30/31. See this link to learn more: http://www.talkfilm.biz/MichiganWorkshops.htm

 

I hope to see you at the workshops.

John 

www.talkfilm.biz

MAKING IT in Film Production

Do you, or do you want to, work on film productions? If you want to expand in your career in film, this article will help you make it!

BECOMING A PRODUCER

Why aren’t there more Props Masters, Sound Mixers, Costume Supervisors, Key Grips, etc. becoming Line Producers, Producers-For-Hire or UPM’s? Why aren’t more crew reaching the level of Department Head? Why aren’t more film school students finding work? I’m sure there are lots of reasons, but take a quiet moment to really look. Let’s see…. It’s not competence – most crew disappear pretty quickly if they’re slow witted and incompetent. Film students who graduate have shown they’re smart and creative. It’s not a lack of drive – again, for the same reasons. Wouldn’t you agree that the biggest hurdle is getting the opportunity? Well, that’s true and not true. The biggest hurdle is MAKING the opportunity.

How do you increase the odds of landing a contract as a Line Producer, a Department Head (if you’re not one already), or even a UPM on a small independent production? Lots of film school graduates are ready to burst with ideas to get their scripts into production; how do they get to produce their scripts?

CREATING CONFIDENCE

First you need to get the confidence of the person in front of you. That single person in front of you needs to believe that you can control your sphere of work so effectively that he/she can get on with creating their vision.

If you’re already a working professional in film, you can easily convince someone that you can control the heck out of your area of expertise. But, if you want to upgrade, what do you know about the relationship of your department to all other facets of film production? You need to be able to convince others that you understand the common denominator of all filmmaking. Nobody denies that you need to have a creative bent in film productions. But let’s lay it on the table:

THE DRIVING FORCE BEHIND FILM PRODUCTION IS MAKING A PROFIT!

By the time we, as working crew, start working on a film production, our creative bent is totally bent by the amount of MONEY available to us. We want to get the best product we can out of every buck. Like it or not, your performance in film production is measured, to some degree, by how well you control the money. It’s like ‘Directing’, only you’re ‘Directing the Money’.

THE LANGUAGE OF DEALMAKING

Do you want to get that upgrade? Then, learn the language of DEALMAKING – or, more loosely interpreted as, learn the language of ‘Directing the Money in Film and TV Production’. To my way of thinking, that’s the only way to be taken seriously.

Here’s the deal – you need to show them, with attitude, that you will provide them with a controlled environment from which they can create their vision. The only way I know of to do that is to graduate to a ‘Director of Money’. From that position you can be the go-to Line Producer, Producer-For-Hire, Department Head, UPM, etc.

LET’S PRETEND

Let’s pretend for a moment that you’ve met a hot new Director, Actor or Executive Producer, etc. with a script. Whoever you meet, they’ll be very excited to talk with you about it. After the first ½ hour or less, how do you segue into being their Line Producer, Producer or UPM?

Here’s some real questions that would knock their socks off and show that you’re the one to ‘Direct the Money’ while they get on with creating their vision:

1. Do you need help with the budget? (Don’t agree to build it from scratch – but know someone who can; find out what you can about the script breakdown)

2. Do you have an idea of the Above-The-Line costs budgeted? (Cast, Director, Writers, Producers)

3. What kind of bottom line do you have in mind for the final budget?

4. Who needs to approve the budget? Will it be an independent film or studio driven? (If it’s studio funded, you’ll need all of his/her backup, and if it’s an independent production, find out which bonding company is involved.)

5. If union crew are planned for, find out how many shooting hours a day are planned for? (Insist on at least 13 worked hours per day, as well as a storyboard artist)

You get the idea. You need to know the ‘lingo’ of budgets and you need to understand that those budgeted numbers need to be directed. You’ll also need to inspire confidence in the Financiers, or the Bonding Company, that you know what the weekly financial report card is all about (that is, the universally standard Weekly Cost Report).

Most of those questions, with a little imagination, can also apply to anyone who wants to upgrade to a Department Head. A Production Manager would be completely blown away!

SO HOW DO YOU BECOME A DEALMAKER?

So how does a crew member get familiar with the language of Budgets and Cost Reports? I’ve been a Production Auditor for more than 20 years and I’ve NEVER shown a crewmember a Final Budget or a Weekly Cost Report (the universally standard financial report card issued to the Financiers and Producers every week) in that entire time. They are considered sacrosanct by Studio Executives, Financiers and Bonding Companies everywhere.

Well, I’m about to tease you with some relevant articles that will open the door enough to let you walk through. They’re written for the complete novice, so be patient if you’ve already been exposed to budgets and cost reports. You can find them on my web site at http://www.talkfilm.biz/filmarticles.htm , or sign-up, FREE, for 7 weeks of articles at makingitinfilm@aweber.com . Remember, the articles are techniques on being FAMILIAR enough with budgets and cost reports to be able to ‘Direct the Money’.

Written by John Gaskin – With 20 years experience in the Film Industry as a Production Auditor, John has managed over 40 major films all over the world. John has worked with some of the industries top professionals including academy award winning producer Ron Howard, Brian Grazer, Joel Silvers, etc…See more  “About the Author” at www.talkfilm.biz .

Order for my Book from USC Producer Program

The University of Southern Cakifornia, “The Peter Stark Producing Program”, just ordered my book as part of their Masters of Fine Arts program. It deals with managing the production by “directing the money”. The two professors in this part of the program are working professionals who know the importance of managing film budgets and production costs.

To give you an idea of why working producers know the value of the book let me introduce you to the world of film production. The film budget is VERY IMPORTANT. However, most producers and production managers rarely, if ever, create a budget from scratch. They mostly manage a budget prepared by the financier’s appointee – an in-house film accountant or line producer. Once the budget is finalized in prep, then the producers need to manage the rarely seen “weekly cost report” – a document that has the same format worldwide and is of paramount importance to all studios and financiers.

My book, “Walk The Talk” deals with all of that in non-accountant terms, giving a novice producer, director, production manger, etc. the insight to an undocumented topic. (Nobody else has written about this niche topic).

Visit my web site to learn more about “directing the money”: http://www.talkfilm.biz