The Hero’s Guide to Film Finance – Special AFM Teaser
You choose to try to catch up to Avi at the valet station.
As you walk towards the hotel exit, you see him hand the driver his ticket, walk around his car and get in, narrowly escaping a small mob of “Producers”.
Thoughtful, you choose to sulk back to your chair in the market lobby and walk in the direction of the foyer. You’re smart enough to know what you don’t know; which means you’re not quite sure who you need to meet: Sales agent? A buyer? Investor? Banker? Another producer? An entertainment attorney? Perhaps an agent or a manager? You throw chance to the wind and assume if these people are building blocks for the success of your picture, it’s won’t matter who you start with — just get started. You fantasize about how it would be awesome if the “right” kind of people had color-coded badges. Or, a Scarlet Letter, warning you who’s a waste of time.
Since AFM is a film market, finding the right sales agent is probably the most practical and most accessible place to start assembling your package. The good news is the hotels are filled with sales agents; the bad news is that they’re not all bankable.
The bankability of a sales agent indicates whether (or not) a bank will lend money against a sales agent’s:
- signed contracts with foreign distributors (for the “PreSales Loan”), and
- estimated valuation of unsold foreign territories (for the “Gap Loan”)
…and that bankability is predicated on the sales agent’s ability to do three things:
- On a territory by territory basis, can he or she accurately estimate the minimum amount that your film will sell for in the foreign marketplace?
- Can she actually close those deals in a manner that is acceptable to a bank?
- Is she able to collect the money from the foreign buyers after the movie is completed?
Selling a movie to a particular territory is not the hard part — collecting the money is what separates the bankable from the non-bankable agent. Up to two years can pass-by between when a film’s rights are “pre-sold” and when that film is finally completed and delivered to the sales agent. What if the movie is terrible? What if the foreign buyer is cash-strapped? What if the currency swings against your buyer and your film now costs them 20% more?
The best way to ensure that your sales agent can collect your money is if they have a steady pipeline of product that buyers do not want to jeopardize. When cash or credit becomes tight, buyers have to make tough choices for who they’re going to pay, who they’re going to renegotiate, and who they’re not going to pay. If your sales agent is a steady supplier of premium films, then you’ll probably get paid. Otherwise, you’ll be lucky to get 50 cents on the dollar, or nothing at all.
As you approach your chair in the lobby, a distracted sales agent (or is she a Buyer?…you can’t really tell) absently leans against it. She’s typing furiously on her PDA looking perturbed. You glimpse her badge. She IS a sales agent, but not just any sales agent. You’ve read about this sales company all over the trades. Having learned that fortune favors the bold, you walk up to her chair, indicating her PDA:
Not going so well?
The sales agent glances up, smiles.
It’s fine, could be better.
Isn’t that always the case?
The sales agent nods knowingly, still typing.
I have a project your buyers will really
sink their teeth into.
The sales agent stops typing, looks up.
You reply with your introduction:
Will you: Claim the title of “Producer”?
If so, turn to Page 8.