Financial crisis hurts film festivals

As sponsorship shrinks, small festivals struggle

Film festivals have traditionally been an oasis, a heady escape for artists and dealmakers removed from real-world concerns.

No longer.

The financial crisis is hitting some U.S. film festivals — and hard. Local cash and in-kind sponsorship are drying up quickly. 

One casualty so far is the Jackson Hole Film Festival. The 5-year-old event hit a high point when U.N. secretary-general Ban Ki-Moon inaugurated the fest’s Global Insight Summit at this year’s June 5-9 edition. But the fest’s ambitious reach may have been ill-timed. Jackson Hole relied on local patrons more than it did national sponsors. As the market nosedived, pocketbooks shut.  Having only raised a fraction of its $1.5 million budget this year, the board chose to cut its losses and shutter.

“I truly believed in this,” says artistic director Melanie Miller, “And for it to be over is very difficult to accept.”

The Santa Barbara film fest was also hit, as a major corporate sponsor exited two weeks ago, citing the downturn. Director Roger Durling is now faced with a $75,000 hole in the fest’s $2 million budget.

For other fests, cuts will come in travel and parties — a major expense used to entice filmmakers, celebs, and industry execs.

Yet for acquisition execs, whom fests rely on for street cred, one less fest trip won’t be missed.

“There’s just too many of them,” says one specialty studio exec. “Outside of Cannes, Berlin, Sundance, and Toronto we’ve never acquired a film at another festival. And in terms of tracking talent, anything that generates heat comes back to L.A. anyway.”

Without those flashy press clips of execs and celebs drinking sponsored wine at galas, fests may have a harder time attracting corporate money next year.

“Fest financing is hand-to-mouth,” says fest vet Christian Gaines, now director of festivals for the web resource Withoutabox. “While you have to appear optimistic and forward-thinking, the thought of raising money keeps you up at night.  It’s completely unpredictable.”

Gaines warns that the financial crisis could shake other smaller events out of the crowded fest calendar entirely, a notion echoed by event overseers.

“This year has been tough. We had to tighten our belt,” says Britta Erickson, director of the Starz Denver Film Festival. “We’ll have fewer official receptions, which were dependent on support from Denver businesses.”

Rose Kuo, artistic director of the AFI Fest, says problems popped up ahead of the current crises, when the cost of gas skyrocketed. 

“Airfares and print shipping got more expensive and support from our transportation sponsor dropped,” says Kuo, who is also cutting back on the parties.

Erickson and Kuo remain optimistic that their principal sponsors — Starz and Audi, respectively — are solid for next year. But prior to the financial downturn Sundance lost Volkswagen as a presenting sponsor. Emily Laskin, who heads development for Sundance, is optimistic the fest will lock up another car company in the next few weeks, but since VW also owns Audi, the Beetle maker’s cold feet could signal trouble for AFI Fest down the road.

Privately, many U.S. fest directors are worried, remarking that as companies pare down their marketing dollars, event sponsorships are usually the first to go.

Yet overseas, fest directors may be wondering what all the fuss is about.

Sponsors continue to see film fests as a great value for their money across Eastern Europe, where there is little sign of an economic downturn so far. And a slew of upcoming fests in Europe and the Mideast actually boast, in some cases, stronger-than-usual commercial support.

The corporate-funded Rome Film Festival, opening Oct. 22, will maintain its $24 million budget. Arch rival Venice, which unspooled in September, is 70% funded by the state and seems well secured for next year’s event with a more modest $16 million budget.

While the U.K. Film Council, the government-backed film-funding org, decided to hold back on any increase for the London Film Fest until 2009, sponsorships have covered the shortfall to fill in the event’s $8 million cost.

“Even though the economic climate isn’t positive, we’ve been able to sign some major new sponsors,” says London fest artistic director Sandra Hebron. “There seems to be a prevailing view that festivals are a positive, attractive investment.”

The healthy prognosis is shared elsewhere abroad as well.

Through a multiyear agreement, the Warsaw Film Fest collects coin from the city and RWE, one of Europe’s biggest energy companies. San Sebastian has inked new deals this year with L’Oreal, Renault, and Moet & Chandon.

If anything, it’s political rather than economic concerns that are the biggest worry for some fest directors.

Last year’s Beirut Intl. Film Fest was canceled due to the political situation in Lebanon, and the 2006 edition, which occurred only weeks after the 33-day war with Israel, was a low-key affair.

This year, fest director Colette Naufal tapped coin from French bank Societe Generale as well as a clutch of Arab media orgs for the event’s Oct. 1-8 run. She even found an unlikely private backer in Saudi businessman Yeslan bin Laden, one of Osama Bin Laden‘s half-brothers.

“He’s one of the 50-something Bin Laden brothers,” she says. “The family is so big not everyone even knows everybody. Yeslan has been completely cleared of having anything to do with his half-brother.”

John Hopewell, Nick Holdsworth and Ed Meza all contributed to this story.