Entertainment Spending

A Cost Overview of Film & Theatre

Assignment #1: Blockbuster or Bust Work in groups

Identify and analyze a blockbuster and a bust from two different industries

Share findings in a class presentation

Topic pairs are first-come, first-serve

So are presentation slots

Groups of 3 students representing at least 2 majors

(one group of 2)

PRESENTATIONS: February 20, 22, 24

Grade also includes peer-review of the other presentations

Basic Business Model (review)

Total Revenue - Total Costs = Profit

Sales/Admission Planning for it

Merchandise Creating it

Sharing it

Total Cost= Total Fixed Costs + Total Variable Costs

Translating Costs

Film Theatre

Fixed Costs

Pre-Production

“Other”

Indirect Costs

(company)

Variable

Costs

Production

Post Production

Direct Costs

(show)

Marginal

Cost

Duplicate Prints

Weekly Running Expenses

Contingency

Contingency

Film Costs

27%

53%

8%

10%

2% Pre Production

Production

Post Production

Contingency

Other

$12 million film

Pre Production $3,107,278.96

Production $6,132,689.46

Post Production $953,767.80

Other $293,602.69

Contingency $1,174,423.67

What do you get for $12 million?

Jaws (1975), The Muppet Christmas Carol (1992), American Pie (1999),

Harold & Kumar Escape from Guantanamo Bay (2008)

Pre Production (Above the Line)

Fee-based costs

The Script

Key Personnel & Cast

Travel and Housing

Fringes (benefits) STORY & SCREENPLAY $345,442.61

PRODUCER $233,045.92

DIRECTION $229,404.00

CAST $1,973,122.14

TRAVEL & LIVING $77,681.97

FRINGES $248,582.32

Success…Sequels…Skyrockets

M Night Shamalan

The Sixth Sense $2.6M to write and direct

The Village $10.7 M

$7.2 M story rights

$300,000 writing services

$3M producing fee

$221,000 directing fee

Personnel Perks

Not just about salary - Big star equals lots of extras

MEL GIBSON: Signs BRUCE WILLIS: Unbreakable

$25 M salary

$20M salary

$300,000 jet allowance

$500,000 private charters

$20,000 family airfare allowance

$57,000 chiropractor/masseuse

$55,000 stunt double

$14,000 stand-in

$1000/day per diem

$525/day per diem

$52,000 makeup artist $53,000 makeup artist

$67,000 hair stylist

$36,000 trainer

Production Costs

Everything related to actual

filming

Design & Construction

Location fees

Extras

Crew

Equipment

Craft Services

EXTRA TALENT $89,377.76

SET DESIGN $240,632.43

SET CONSTRUCTION $653,145.18

SET OPERATIONS $481,264.87

SPECIAL EFFECTS $206,256.37

SET DRESSING $403,927.16

PROPERTY $211,412.78

WARDROBE $151,254.67

MAKEUP & HAIRDRESSING $137,504.25

ELECTRICAL $453,764.02

CAMERA $602,782.43

PRODUCTION SOUND $180,474.33

TRANSPORTATION $422,825.56

LOCATIONS $498,452.90

PIX VEHICLES/ANIMALS $34,376.06

FILM AND LAB $343,837.80

SPECIAL VISUAL EFFECTS $103,128.19

SECOND UNIT $80,661.63

TESTS $4,000.00

PRODUCTION FRINGES $833,611.07

Post Production

Getting the film ready for theatres

Editing equipment & personnel

Sound

Music

Effects

MUSIC $117,441.08

POST PRODUCTION SOUND $234,882.15

POST PRODUCTION LABORATORY $102,320.00

OPTICAL EFFECTS $322,962.96

TITLES $44,040.40

POST-PRODUCTION FRINGES $132,121.21

Other

Publicity

Publicist & Press Materials- NOT distribution

Insurance

Legal

Accounting

Office Space & supplies

Phone & Internet

INSURANCE $158,545.45

GENERAL EXPENSES $114,505.05

PUBLICITY $20,552.19

But Wait… $12 million is just planning and creating

Secondary agreements to distribute the film

“P&A” costs- Prints and Advertising

Negotiating with major movie house chains & independents

Price per film or for a block

Typically 30% of the cost of making the film

Commercial Theatre Broadway, Las Vegas, National Tours

Intended to make money for investors

Each show is it’s own business

About 30% recoup their investments on Broadway

REDUCING RISK- How do you do it?

Base it on a movie, Get a big star, Revive a popular show from the past

Theatre Costs

Indirect Costs (fixed)

Rent

Insurance

Administrative Expenses

Permanent Staff

Direct Costs (variable)

Design & Construction

Show Personnel

Marketing

Top 10 Most Expensive Shows SHOW COST RECOUP?

Aladdin $14 million Y

Phantom of the Opera $14.2 million Y

Dance of the Vampires $15.2 million N

Tarzan $16 million N

The Little Mermaid $16.6 million N

Wicked $16.9 million Y

Beauty and the Beast $17.4 million Y

The Lion King $27.5 million Y

Shrek the Musical $27.6 million Y

Spiderman: Turn Off the Dark $79 million N

Hamilton- $12.5 million YES it recouped- 25% in five weeks

Spiderman: Turn Off The Dark Item Cost

Fees- Creative 3,148,650

Fees-Production 2,525,905

Physical Production 16,161,855

Advertising & Publicity 3,146,597

Filming & Videography 303,595

Rehearsal Salaries 6,098,055

Preproduction & Tech expenses 13,657,362

Administrative 1,097,278

Development & Workshop 2,001,770

TOTAL EXPENSES 48,141,861

Extra Unexpected Costs by Opening 26,858,139

Running (Marginal) Costs

Spidey on the Run

January 2011

Box Office Income $1,881,870.00

Taxes (189,577.46)

Loan Repayment (100,457.00)

NET INCOME $1,591.835.44

How Much Profit?

Item Cost

Box Office Expenses 127,346.84

Salaries 315,130.85

Production Areas Expenses 23,700.00

Rentals 139,343.00

Advertising & Publicity 125,000

Administrative Costs 58,506

Theatre Rental Costs 357,908.06

Staff Fees 27,237.27

Royalties to Creators 64,114.14

TOTAL EXPENSES 1,238, 286.16

NET INCOME 1,591.835.44

WEEKLY NET PROFIT 353,549.38

Before closing, weekly

ticket sales dropped as low

as $600,000

The Spiderman Split

10%

26%

2% 11%

10%

5%

29%

2% 5%

Box Office Expenses

Salaries

Production Areas Expenses

Rentals

Advertising & Publicity

Administrative Costs

Theatre Rental Costs

Staff Fees

Royalties to Creators

Summary

Entertainment follows the general business model

Specific phases of activity

Each can have fixed & variable costs

Artists aren’t done when the product is made