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Financial case study: ‘Laws of Attraction’

Brosnan, Moore pic helped along by tax subsidies

Ireland is a damp and cloudy place, but it remains such a warm tax haven that projects not intended to be set there are changing storylines to shoot in the green isles.

“Laws of Attraction,” a divorce comedy starring Pierce Brosnan and Julianne Moore, was originally set in Los Angeles and the Caribbean. But producers at Deep River (where Jon Turtletaub and David Friendly developed the pic), Intermedia and Stratus were looking for tax subsidies to flesh out a complicated financing puzzle.

On CAA agent John Ptak’s recommendation, the producers called on Arthur Lappin, helmer Jim Sheridan’s producing partner, for advice on Irish tax deals.

“I told them if it could be set in New York and an Irish castle and not damage the story, it would be possible,” Lappin says.

So they commissioned a re-write, and the production set out for six weeks to Ireland, with four days scheduled in New York. The rest of the deal fell into place, and then, as is often the case in the indie world, it fell apart.

“It was a bit hairy there for a few weeks,” says Lappin.

“The financing became very complicated,” adds Ptak.

The final deal is a mix of equity, pre-sales and tax subsidies, with the easiest chunk coming from New Line, which supplied 20% of the budget in exchange for domestic distribution rights. Another 32% is covered by foreign pre-sales, which are being handled by Initial Entertainment Group and Summit (Germany and Benelux).

The various tax subsidies from Ireland, the United Kingdom and Germany cover nearly 40% of the budget. And although the $45 million budget of “Laws” (that number includes deferrals) pushed it past the cap of Irish tax incentive 481 (normally $20 million), the pic still was able to recoup about 8% of its budget by filming in Ireland, Lappin says.

Euro-set pic, which is helmed by British helmer Peter Howitt (“Sliding Doors”) also qualified for U.K. tax shelter incentives (sale and lease-backs), which accounted for roughly 15% of the budget.

The final 10% was pieced together from equity, and this is where it got complicated during filming. Originally, the investors were Intermedia and Stratus, but they stepped back and R2D2, a production company run by financiers Ron Tudor and David Bergstein, took over the financial responsibility on the pic. And it’s through R2D2, which has relationships with German banks (via its 45% ownership of Franchise Pictures), that the production was able to tap Teutonic tax incentives as well.

“Not every project will not fit into this matrix,” says Lappin, whose Hell’s Kitchen Intl. shingle specializes in setting up Irish coproductions. “It’s not in our interest to encourage people to come here and not make the project work.”