New York’s tax credit program, offering up to $3 million for new Broadway productions, aims to support the struggling theater industry. However, as Marc Hershberg highlights in his Forbes article, the significant delays in disbursement—ranging from 18 to 24 months—pose financial challenges for producers and investors. These delays often result in financial purgatory where productions appear profitable on paper but lack actual funds.

The Challenges of Tax Credit Disbursement

The program’s delay has forced many productions to file amended tax returns to access their credits, adding complexity and costs. For those operating under corporate subsidiaries, federal corporation tax payments further complicate the process, delaying the monetization of tax credits and causing confusion among investors who are left asking, “Where is the cash?”

Innovative Solutions: Loans Against Tax Credits

To address these delays, Runyonland Productions has partnered with Blue Fox Financing to offer loans against theater tax credits, similar to practices in film financing. As Blue Fox’s founder, Patrick Rizzotti, explains, these loans enable investors to recoup a significant portion of their investments more quickly, benefiting the entire theatrical ecosystem.

Cost-Benefit Analysis of Tax Credit Financing

Loans against theater tax credits come with finance fees, which vary based on the risk involved. However, securing a loan can be strategic. For instance, if a show has returned 90% of its initial costs and expects an additional 30% from tax credits, taking a loan could provide immediate liquidity, which is crucial in a rising interest rate environment.

A New Financial Model for Broadway

Thomas Laub of Runyonland Productions believes this model will become a template for Broadway financing. As the industry moves into the awards season, there is optimism that many deals will convert tax credits into immediate funds for investors, demonstrating the potential of this innovative approach.

Conclusion

The partnership between Runyonland Productions and Blue Fox Financing marks a significant shift in Broadway production financing. By providing a mechanism to expedite returns, this model not only addresses immediate financial needs but also strengthens the industry’s economic foundation. As Hershberg’s article illustrates, this approach could serve as a blueprint for similar financial solutions in the theatrical and broader entertainment industries.

Gareth Edwards’ sci-fi blockbuster “The Creator” challenges the traditional film budget and financing norms, offering a unique approach to keep costs under control while delivering stunning visuals. Despite its grand appearance, the film’s budget remained below $100 million. Here’s how they achieved this feat:

Set in a distant sci-fi future, the movie tells the story of a former special operative tasked with tracking down a child with the power to control technology, set against a backdrop of war against artificial intelligence.

“The Creator” stands out for its unconventional production methods. The filmmakers used prosumer cameras, embraced a spontaneous shooting style, and deferred visual effects work until after principal photography. This approach made the film, rumored to cost $80 million, look visually superior to some of this year’s highest-budget productions.

Key to this approach was the involvement of two cinematographers, with director Gareth Edwards himself operating the camera for much of the shoot. The team focused on creating an immersive and authentic experience for the audience while avoiding the need for a $300 million budget.

The filmmakers designed all visual effects during the post-production phase, breaking from the traditional practice of extensive pre-visualization. They shot the film as if it were all on-location with real actors, refining visual effects decisions in post-production.

While traditional films use concept art and storyboards, “The Creator” shot first and made visual effects decisions later, achieving a unique and authentic look.

The movie’s minimal use of green screen and spontaneous shooting style contributed to its distinctive feel. With an ultra-wide 2.76:1 aspect ratio and consumer-grade Sony cameras, the film’s visuals are eye-catching and different from the norm.

The film’s approach not only challenges the typical blockbuster formula but also showcases how unconventional methods can produce stunning results without a massive film budget. This could potentially influence the future of blockbuster filmmaking.

“The Creator” demonstrates that creativity and innovation in film financing and production can lead to exceptional outcomes while staying within budget constraints.

Gladiator 2, the highly-anticipated sequel to the iconic film, has secured an extraordinary film financing rebate of over $50 million. This record-setting refund is due to a generous incentive offered by the Malta Film Commission, where international film producers can receive up to 40% cashback for shooting on the island. With this incentive, Gladiator 2 is set to receive €46.7 million (about $50.5 million), more than double the previous EU record.

The film, directed by Ridley Scott and featuring a star-studded cast, is generating significant buzz. While this rebate provides crucial financial support for the film’s production, it also raises questions about its impact on Malta’s economy. The production mainly involved foreign crews, limiting direct benefits to the local industry and workforce. This refund highlights the ongoing importance of production rebates in the film industry and aligns with the EU’s strategy to attract major Hollywood productions to Europe. Gladiator 2 is scheduled for a U.S. release on November 22, 2024.

California Governor Gavin Newsom is poised to sign groundbreaking legislation addressing key issues in Hollywood, including tax credits, safety protocols, and diversity requirements. This comprehensive bill, publicly revealed on a tight schedule, represents a significant compromise between state lawmakers and the governor, resolving long-standing industry issues.

The legislation extends California’s film and television tax credit for five additional years, introducing a “refundable” element. This innovation allows studios to receive cash payments from the state when their credits exceed their tax liabilities. This move is in response to intense competition from other states and has been a priority for Hollywood studios.

Safety in film production is also a significant focus of the legislation. It mandates that productions receiving tax credits adhere to new safety regulations, such as hiring a safety advisor for risk assessment during filming. Additionally, it requires prop masters and armorers handling weapons to possess firearms training and state permits, addressing safety concerns that arose following the tragic “Rust” shooting.

Diversity is another core aspect of the legislation, with tax credits tied to meeting diversity targets. Furthermore, a portion of tax credits will be directed towards job training programs at community colleges, particularly benefiting students of color. A key inclusion is the requirement to add a member with expertise in diversity, equity, and inclusion to the state film commission.

This bill’s multifaceted approach aims to cater to the needs of both Hollywood studios, who seek tax credit benefits, and workers in the industry who prioritize safety and diversity. By expanding the tax credit program and increasing its accessibility, it is anticipated that more companies, beyond Disney and Universal Studios, will benefit, ultimately boosting the state’s film production industry and safeguarding jobs. The legislation is part of a package of budget-related bills as California legislators and Governor Newsom navigate a substantial budget deficit while addressing the film industry’s needs.

A new article posted at lexology.com discusses the proposed legislation in the UK to increase the current 25% tax rebate to a 34% expenditure credit on film and TV projects. If passed, the new tax credits would be available starting in 2024.

The article explains that film financing is necessary for film production and distribution and can be done through various methods. It lists some of the traditional methods, including bank loans, equity investment, and gap financing, as well as newer methods like crowdfunding and cryptocurrency.

The article also points out the importance of film festivals in securing financing, as they can provide exposure for a film and attract potential investors. In addition, the article emphasizes the importance of understanding tax incentives and credits available to filmmakers to help reduce production costs.

However, the article also cautions that film financing comes with risks, such as the fierce competition for funding and the unpredictability of box office success. The article advises filmmakers to develop a sound business plan and to work with experienced professionals to help mitigate these risks.

Overall, the article provides valuable information for filmmakers and anyone interested in the film industry, including the various methods of film financing, the role of film festivals, and the risks and challenges associated with film financing.