In the already tortuous world of specialty film financing, some U.S. filmmakers trying to fund projects with Oscar-worthy potential in various categories are contorting themselves even further — by turning more frequently to foreign sources for finance.
“There are basically three sources of funding,” says Nicolas Chartier, prexy of L.A.-based foreign sales company Voltage Pictures and a producer on “The Hurt Locker.” “You have foreign pre-sales, equity and tax credits — and equity just isn’t there like it used to be, so you have to be creative.”
Lawrence Inglee, producer of the war drama “The Messenger,” found Bahrain-based Sherezade Films and Aussie company Omnilab Media to jump aboard.
“I’d really call it being nimble, because film financing is always changing and it’s just harder now because of the world economy,” Inglee says.
However you label it, producers have been hit by a shrinking pool of equity, says entertainment attorney Robert A. Darwell, who focuses on specialty film deals.
“Producers on these films definitely need to be well-connected in the marketplace on an international level, and they need to have investigated whether an investor can really come through for them,” he says.
“The pictures that we’ve worked on tend to have backers coming out of France, Germany or Spain, and I would say a lot of arthouse pictures find financing in Europe because they’re open to unusual subjects.”
This proved true for “The Men Who Stare At Goats.”
“BBC Films took a leap of faith on us based on the fact that our story was based on a great book,” says Paul Lister, a producer on the film. “And the story was strong and fresh enough that it attracted a talented director and stars like George Clooney and Ewan McGregor.”
And though this was always trueto an extent, filmmakers increasingly find that the more creative control they want to retain, the tighter they have to keep the purse strings and the greater the number of financial partners they need.
“We had to make our film as an Australian/U.K. co-production,” says “Bright Star” producer Jan Chapman. “The budget was always a strain, and we had to keep it in line so that our investors thought they’ll make something back and because we weren’t looking at A-list actors, since we wanted to have the freedom to cast who we wanted for the roles.”
Voltage’s Chartier found that making foreign pre-sales for a drama meant framing “The Hurt Locker” in a different way for buyers.
“I was pitching it as ‘Backdraft’ meets a classic war movie like ‘Platoon,’ so that people would see it as a film about heroes going into danger when everyone else is walking away,” he says. “I had to make people see it as a suspenseful action film from one of the top directors in the world, because if it’s just a war movie no one is interested in that.”
Even excellent foreign pre-sales don’t mean what they once did, though.
“Banks are very cautious about pre-sales now,” says Darwell. “Some pre-sales are being discounted more heavily, which tremendously impacts your ability to borrow against those funds.”
While many films now in the marketplace secured their funding before the economic downturn in late 2008, those currently coming together face a different financial climate.
“A movie that cost $20 million to make now has to cost $16 million because the market has gone down 20% to 25%,” says Don Starr, chairman of Grosvenor Park Prods. “So investors are holding back and waiting for prices to come down more, because they know it needs to cost less for them to make money, and crutches like DVD sales are gone.”
Those budget cuts are likely to take a great toll on above-the-line salaries, says Darwell.
“A star who would have reduced his or her price to say $500,000 to do a quality small film is now agreeing to do a specialty film for between $150,000 and $200,000,” says Darwell.
In the end, Starr thinks there’s one element that makes a film a great investment.
“Quality is the paramount thing,” he says. “Specialty film is even more quality-focused and review-sensitive than other films. You need a great script and name director or something that tells people they should take a risk in financing you.”