Creating Financial Projections
The truth is, no one knows exactly how much a film will make. But it is easy to calculate how much similar films will make. It just takes research. Here are specific techniques you can use for creating your financial forecasts.
- For films that will have theatrical release, start by going to www.boxofficemojo.com. In a spreadsheet record the Film name, the genre, the budget (if available), the key cast, the domestic revenue, the foreign revenue and the number of theaters (for the first week, and for final release), for every film similar to yours over the last three years. You should aim to have a list of 50 or more films. You should be able to justify why each film is on that list. You should record films that make a loss as well as films that make a profit. You will note that the most profitable film have long runs and may not have the largest number of theaters. You will note that they don’t have the biggest stars either.
- Repeat this procedure to calculate projected DVD sales estimates using the figures at www.the-numbers.com.
- Go to www.filmspecific.com, pay the $20 to become a subscriber, and review the averages provide there for foreign rights sales. Not that foreign rights are often sold by territory and they are often a fixed price sale not a percentage of domestic markets.
- Go to www.variety.com to search for ten to twenty films most like yours. Search for terms like “cable license fee” and PPV license fee. You’ll find articles that review the data available.
- Sales agents can provide this information for a consulting fee, but your research is likely to be better than theirs if you are diligent and you may gain insights into what makes films like yours financially successful.
- If you produce your film state that offers significant rebates for production, you should factor these rebates into your forecasts. Some states rebate 25%-40% of every dollar spent in the state to productions after the film is complete. Rebates can be transferrable, which means companies who owe money in that state can buy the rebates and use them to reduce their tax debt. This means they can decrease what they owe on taxes in a given year and, in some cases, get some chance of a back end on a film. Alternatively, they can buy the rebates for 85% of their value, and make 15% on what they give you. There are companies like TAX CREDITS LLC that will handle this transaction for you for a price. Rebates can also be refundable. That means after production, if you do not owe any money (which mostly you won’t since you are spending money during production, not making it) you can get a check from the state government for the amount of the rebate your film earned. This means that your funder can expect to get a huge percentage of their money back. Best of all, the rebate is NOT based on making a profit or successful distribution. It is just based on what you spend. You can find a list of states and the rebates they offer online by looking up “state rebates for film production” on Google.
Of course, the best and most believable financial projections come from previous productions you and members of your team have completed. Producing one profitable film is the best way to ensure you get funding for a second.
