Every year for the past 3 years I have been delivering a series of 3 workshops to Emerging producers for Women-In-Film. The workshops are directed towards the business side of producing film and television, particularly film/TV production financing and accounting.
Once we get past managing budgets and cost reports, as well as the basic financial control points of managing a film production, the attendees inevitably want to know more about financing – particularly financing through tax incentives.
Before continuing I would like to dispel a general belief held by Wannabe-Producers that if you just find/create a great script, give a great pitch, that someone else will do all the leg work for you. That is vaguely possible, but extremely unlikely; especially in today’s climate of tight budgets. I really don’t think you have that viewpoint because you’re reading this blog – so, let’s refer to you as Emerging Producers.
Let’s leave the selling of the script alone for the purposes of this blog – how the script is developed and how you pitch the script (outside of pitching the strength of your understanding of the Money In/ Money Out aspects). Let’s assume that your skill as a Producer will blow away the Studio, the Completion Bond Company and any financier you meet.
DEVELOPMENT – PREDICTING MONEY-OUT AND MONEY-IN
Okay … A HUGH part of being a PRODUCER is arranging the financing. But before even talking to a financier there are two cycles of action that you need to be prepared for:
1. DEVELOPMENT – PREDICTING THE PRODUCTION PHASE – MONEY OUT: A good Producer will have the ability to circle through (sometimes several times) the Budget, the Shooting Schedule, the affordable Cast/ Director/ Cinematographer /Locations/ Crew/ Toys (Cameras, Cranes, Green Screen, etc) / Post Production functions and facilities/ and, finally, a Cashflow (cash out) breakdown by week of all of the above. Notice that these functions are all MONEY OUT
2. DEVELOPMENT – PREDICTING THE REVENUES AND THE REVENUE SHARING – MONEY IN: Before a Producer can sell Mr. Big-Bucks on financing, the Producer needs to know how to explain – What’s the financial gain for Mr. Big-Bucks? You know that will be on the investor’s mind from the outset, so plan for it. Learn the words he knows, like Your State/ Federal/ Provincial Tax Credits, Assignment of Rights/ Share Register/ Ownership/ Waterfall (breakdown of the revenue sharing by “position”)/ various kinds of Debt/ “Back-End” for re-runs, and the final Cashflow schedules, etc. Note that these functions are all related to MONEY IN.
UNDERSTAND THE BUSINESS WORDS USED IN THE FILM AND TV INDUSTRY
With a little imagination you can see how 1 and 2 above inter-relate during the Development, or early Deal-Making, stage (generally referred to as Commitments).
The Financier may be a someone with years of experience and very little patience (for example, a Broadcaster or Studio Exec). So, as a Producer you are at a decided disadvantage if you don’t at least understand the words!
PREDICTING AND MANAGING THE MONEY OUT
1. Learn to Manage a Film Production Budget Before Learning to Create One From Scratch
“Managing” a film budget can take just a couple of hours; and, it’s a blast! During my workshops I mock up three scenarios and ask the attendees to use the words they’ve learned in just the previous couple of hours – so that they’re familiar and comfortable in using phrases like “… how much is the Below-the-Line budget?”, “… how much are the tax credits?”, and “… how many work hours have you budgeted the crew for?”, “… what fringe percentage have you allowed for SAG Performers?”, etc. Each scenario has a catch that would affect the bottom line of the film budget, such as children, heavy on background extras, location specific shooting, crew travel and hotel costs, winter conditions, etc. The attendees get loud and have a ton of fun, and they all learn the buzz words fluidly, as well as some simply rules-of-thumb in managing a film budget. I supply budget templates of every kind – about 7 or 8 hours of hours of instruction and play can bring you into a pretty good “Manager” of film budgets.
2. Learn to Manage a Cost Report
I have worked with crew for 20 years who have NEVER seen a cost report! It’s amazing to me. This is the production’s financial report card for every producer, line producer, director, unit production manager on Earth. You cannot advance as a Line Producer or UPM without knowing how to manage this document. Any Producer worthwhile working with has an excellent grasp of what’s going on in the Cost Report. It’s referred to by every Bond Company, Studio, Financier on the planet – and I’m not overstating. So … Emerging Producers… there is no option. You must know how this baby works. There is a standard format that I show people in my workshops – it takes about 2 or 3 hours to get familiar with it enough to ask intelligent questions and know what you need to know to manage the production without embarrassing yourself. Again, my attendees have a lot of fun with the mocked up scenarios.
3. Film Schools and Other Programs Have Shooting Schedules Covered
4. Cashflows (cash out) – if you can use Excel I can show you, with templates, how a standard cashflow looks and works in 1/2 Hr.
PREDICTING AND MANAGING THE MONEY IN
I have prepared Options, Assignment of Rights, puzzled through Pre-Sales documents and Ownership documents, foreign currency cashflows (final cash In and Out), territorial rights, the waterfall of revenue sharing, residuals calculation (UGHHH!), etc. Curiously, I have found that the external auditors are more interested in this type of thing than Emerging Producers! So, I have videos in the Overview Course for Professional Auditors and Accountants.
However, I have to admit that I have only done this a few times and can’t lay claim to being an expert. But, I am someone who can show you some relevant applications that I’ve learned through the hard way – i.e. making them work through trial and error.
See more at http://www.talkfilm.biz/filmworkshops1.htm