America's subsidies for filmmaking ** The money shot

Hello everyone!

A friend and associate sent this article to me which I found interesting. The Article has most of the information we collectively know from all the ongoing incentive reports we receive. From a laypersons perspective all the incentive deals out there make for a rosy ROI but producers have to do their diligence to find out the status on the day/week/month your project is funded. I recommend that you present potential investors with the states incentive program highlights but know that anything can change "when" you are funded!

Have a wonderful day!

Jean-Luc Martin
Producer, Line-Producer, UPM


From The Economist print edition
Why government handouts to Hollywood are growing

WITH its deserts and its slight air of decay, New Mexico is a good place to shoot a post-apocalyptic action film. But the state’s natural charms alone would probably not have been enough to lure the makers of “The Book of Eli”. Broderick Johnson and Andrew Kosove, who are producing the Warner Bros film, say they were particularly enticed by New Mexico’s generous production subsidies and interest-free loans.

All but seven of America’s 50 states now offer incentives to lure filmmakers. Some states refund a portion of in-state production costs, which may include actors’ salaries. Others issue rebates against state taxes that can be sold to local residents. The club is growing quickly. California, which resisted subsidies for years, recently approved its first clutch of recipients. Kentucky is considering its first application. With banks and hedge funds virtually out of the game, state governments are now the most important external source of funding in the film business.

Public largesse has led to some odd artistic decisions. “Gran Torino”, a story that originally revolved around Minnesota’s distinctive community of Hmong immigrants, was transplanted to Michigan to take advantage of that state’s subsidies, which can amount to 42% of production costs. The forthcoming “Battle: Los Angeles” will be filmed mostly in Baton Rouge, Louisiana—a reversal of the tradition by which southern California stands in for everywhere else.

Studies commissioned by the states tend to show a healthy return on investment. Filmmakers have certainly learned to follow the money: California’s share of big-studio productions dropped from two-thirds in 2003 to less than one-third in 2008 as its politicians dithered over subsidies. It is also likely that subsidies have helped America compete with Europe and Canada, although the weak dollar has probably done more to restrain what is known as “flyaway production”.

The continuing bidding war is likely to result in diminished returns for the states. Michigan’s subsidies, once considered improbably lavish, may soon be matched by Washington, DC. Alaska has approved a 44% rebate, although production companies must film in rural areas during the state’s gruelling winter to qualify for the full sum. Whatever the benefit to the states, however, the subsidies are becoming ever more important to Hollywood.

But as state budgets tighten, a backlash is gathering. This summer Indiana and Wisconsin reduced their rebates. A bill to do the same is before the Michigan legislature. In the Midwest the surge in foreclosures and the collapse of traditional industries has hardened hearts. Jud Gilbert, a Michigan state senator who opposes film subsidies, points out that if he could offer a 42% rebate on car production, that industry would not be in crisis.

Yet a broad retreat from film subsidies is unlikely. Some of the first places to offer rebates, such as New Mexico and Louisiana, now have impressive sound stages and a deep pool of production workers. States that want to compete with them will have to be extremely generous. And big studios and independent outfits are sharply trimming their film output in response to the credit crunch and a faltering DVD market. As the supply of work shrinks, the squabbling will only intensify.