Interior Studios Tax Credit deal for VFX driven shows

The Province of BC just announced a new tax incentive for people who wish to come to our region in beautiful wine country to shoot films. If the film is a VFX driven show it is even sweeter. i want to outline what a deal looks like for you people to come here and shoot, especially if you are a Canadian producer with your own content.

Assumptions

budget - 1.5MCAD

VFX budget - 500K

VFX labour - 400K

Labour on the film - 1.1MCAD

I'm assuming you are shooting an practical set with green screen environments. 

Here is what it looks like:

Provincial Credit is 53.5%  eligible labour = 588,500

Eligible labour minus this amount and multiplied by 25% gives you the federal = 127,875

The VFX labour is additionally multiplied by 15% = 60,000

Your budget is now 776,375 funded by soft money. 

PEOPLE WITH MATCH FUNDS PLEASE CALL....

I'M TAKING ORDERS FOR VFX FILMS!

Off Shore Service Deals

When deciding to send some of your post production work offshore one should really look at the value v control and see if this scenario fits for you. My example is an 8ooK low budget thriller starring really no one but has some value already as there has been a commitment from a broadcaster for pay and free TV rights. From this I was able to secure 220K of my budget putting me in a good position to shoot the film in Canada in a new tax zone and get about 32% of the overall budget in Tax Credit rebates that I can also interim finance at about 85% LTV. That puts me at about 400K. 

The interesting part is that I was approached by a VFX company in India that does great work and they are interested in partnering on the film with us. I looked at my VFX budget and found that 300K is based in VFX if it were to be shot here and posted here in Canada. The budget I received from them was considerably lower and I was unsure if I wanted a partner in the film. 

Then I did some research on the market in India for this film and it was basically 10-12K for all rights for India if I were to sell it traditionally. So I called them back and made them a deal that they could have all of India, Pakistan, and few other small territories for them doing the VFX to a level of production value we all agreed upon. 

That got me thinking more about certain places that I don't really like selling to (or trying to monitor pay schedules) and thought.... what if the music was done in Bulgaria or Ukraine, and what if the Foley was done in Columbia? Am i really going to miss those territories? 

Stay tuned as I explore the piece mealing of entire film for rights. 

assumed fee - realistic fee = equity

On our next project I am going to implement this negotiation practice as I am also going to self distribute the film and this may actually help the film have legs on the web from a viral sense.

I'm going to use the equation AF-RF= E. This basically means I am going to get rate card quotes on the work from my crew and then subtract the rate I'm actually going to pay them to come to an equity ownership number that will be based on 1 dollar equaling 1 unit of equity. All of these equity units added up will equal up to a maximum of 30% of the films value. I am then going to keep 20% for myself and give 50% away to the funders of the project on a straight pari pasu agreement on every dollar coming in.

By having your crew truly involved in the upside I do think you will benefit in viral campaigns. My crew on this film will be around 50 people. That's not a lot but it is enough to begin a successful campaign on a low budget film.

This technique will be used for all expenditures, not just labour. If someone quotes me 200/night for a hotel room...i'll request 75/night and give them 125 shares of the project. If they say no...i'll take my business elsewhere until I can meet my budget and find the right partners in production.

This is not a new idea, but one has not been successful in the past due to restrictive distribution methods. With online and non exclusive deals being signed with hundreds of marketers per project this method may lead the way to increased interest and involvement in independent film making

So I'm looking for a VFX house....any takers?

pseudo metcalfe experiment

Ok...lets assume that we all know a bit about http://en.wikipedia.org/wiki/Metcalfe's_law.

In the world of film piracy where most of the complaints come from people who feel:

1. They are being gouged on ticket and DVD prices from studios and that they are not getting value for their money, and

2. Overseas economies are having to pay up to a days or sometimes a weeks wages to have access to quality cinema....

there is a need to offer incentives to go to the cinema again, all the while creating the funding for the movie so that it can get made with the best available skilled people.

If one person was able to own a fractional piece of a film by pre-buying this film at a set price of say 10 dollars, and then as a result of that was given the right to market the finished film at a reduced price to the audience at fair market value as the film would essentially be debt free at delivery....and lets say that person was rewarded an affiliate coupon for doing this work at say 10% of the purchase price...lets do the math.

Tom is one of 500,000 people who pre-buy the next Philip Seymour Hoffman movie at 10 bucks thus making the film funded to the amount of 5MUSD.

Tom knows, and his friends know that they can buy the finished film off Tom for 5 bucks once the movies is finished and Tom receives .50 cents for his effort. If Tom attracts 20 friends he can now take that 10 dollars and put it back into the system or use it to purchase other goods in the media cycle.

If enough people play this game then most people can have access to films they want to see and are also fractional owners...which makes them aware of piracy and how destructive it can be as they will be affected by it albeit at a micro level.

This is part of the Biracy Movement and is what we are building online. We are not visible as of yet but if this interests you...reach out and tell me your thoughts.

thanks

WOW...I have a stalker!

I'm flattered that in this day and age I can actually say that I have a STALKER! I don't know if two days in a row counts as actually being stalked perse, but it sure is exciting!

What's really interesting about this person is that they actually spent a whole bunch of time to try and dig up information on me and one of my business associates. I hope they didn't waste too much time as the information they sent me was laughable...I was gutting myself thinking that this person who obviously knows nothing about due diligence OR the law for that matter, went to great lengths to try and hurt my reputation, and my business associates reputation. What's better is that they submitted it to a moderated blog which requires me to accept the information for publishing.

No name....no email....and a bunch of garbage that if I knew who they were would more than likely stand up in court as slanderous as none of the allegations were in any way true.

I more than likely won't hear from this person again. They've probably moved into their mom's basement and started building re-enactments of Gettysburg with plastic soldiers on a piece of plywood. If you are reading this blog you could email me and at least get out in the open about your bizarre issue with me.

Jealousy will get you nowhere.

As for you film finance fans out there. I'm going to follow up this post with some news about whats happening in a separate entry.

Happy Valentines Day
XO

my first negative post

Somebody slagged my project today on my blog today making it the first real "negative" comment i have received since we began the project over 18 months ago. They left the comment anonymous and put in specific info that based on specific variables, I think I was able to figure out who it was. Words like "loser", and "retard" were thrown around and it made me feel angry for about 3 seconds...then I trashed the message and thought about it for a minute more and am now responding to the comment.

My guess is that the comment came from someone I know who claimed they could do the work we were setting out to do and this person, when push came to shove was unable to act in a professional manner and deal with issues in a team setting. Above all that is was later discovered that this person not only talked a lot of trash, but was nothing but a mere waste of everyone's time when it came to abilities and credentials.

Overall the lesson was learned by me and the time and money spent was lost but in the end I realized that going forward with this individual would have been a nightmare.

I'm glad I made the decision I did and hope that this individual will make it one day in a career that best suits his abilities. I heard Subway was hiring sandwich artists.

For the rest of you following our campaign....thanks for being patient. Today was a good testing day in the studio, and on the sponsorship side.

Stay Tuned.

My wine project

Here is an overview of our wine investment offering. Please contact me or Murray Swales to to discuss if you are interested in investing.

SKAHA CELLARS & RESORT LIMITED PARTNERSHIP

THE PROJECT

Skaha Cellars & Resort Limited Partnership (the “LP”) has been formed for the purpose of developing a very unique 103 Acre environmental gem parcel of land in Okanagan Falls B.C. The Limited Partnership expects to develop the property in a phased manner. At the completion of each phase of development a review of alternatives and their potential returns will be made to ensure maximum return to the partners while limiting financial exposure. The complete plan includes the following stages:

1. Plant approximately 28 acres of vineyard;

2. Develop an international wine brand with our own grapes, together with grape suppliers from South America, Europe, Australia and the United States;

3. Develop an environmental best practices hotel/spa/condo complex, of approximately 80 rooms / units; and

4. Develop a unique wine sales facility.

EQUITY FUNDING REQUIREMENT

Up to $10,000,000 (Minimum $5,000,000) for acquisition, planting of vineyard, development of wine brand, planning and infrastructure development for hotel/spa/condo complex.

THE PROPERTY

The property is comprised of three distinct areas, with separate zoning potential:

1. Approximately 28 acres of Agricultural Land Reserve, Class 1 grape land, which requires some contouring to eliminate frost pockets and ensure maximum potential for the land;

2. Approximately 15 acres of flat valley bottom. The valley is suitable for planting grapes or development as residential (requires rezoning), commercial (currently zoned specialized commercial) or vineyard (an allowed used under current zoning); and

3. Approximately 60 acres of rocky hillside, surrounding the 15 acre parcel on three sides, which should be a protected area for mountain sheep habitat and lambing area. This parcel is also zoned specialized commercial.

Subdivision of the property into three lots, to segregate the 28 acres of agricultural land (two lots - zoned agricultural) and the remaining upland and valley areas zoned specialized commercial, has been approved by the regional district. Rezoning is only subject to approval of a restrictive covenant preventing building on the sheep habitat on the upper portion of the property.

VALUATION UPSIDE

Land Discussions are underway with the Province of BC about “swapping” the upland portion of the property for adjacent level crown land. The land acquired by such a swap must be used for commercial development, such as an addition to the hotel / spa.

Brand As Okanagan wines become more mature and available on the global market, their limited availability compared to other regions makes them more desirable as demand increases and supply is limited. Additionally, having the Brand represent the concerns of the planet and be supported by media people with reach, will drive the brand equity component of the Project making it desirable for travelers and investors alike to visit the Project once completed.

USE OF FUNDS

Phase I – Acquisition and Planning

Land acquisition and related costs $ 2,565,000

Contouring of agricultural land 250,000

Planting 28 acres 700,000

Subdivision / rezoning (no residential or crown land acquisition) 100,000

Contingency 385,000

Total Phase I $ 4,000,000

Phase IIA – No Residential or Commercial Development

Phase I Costs $ 4,000,000

Plant 14 acres 350,000

Contingency 150,000

Total Costs – Phase IIA $ 4,500,000

Phase IIB – Residential / Commercial Development (will require additional funds)

Phase I Costs $ 4,000,000

Infrastructure (roads, water, sewer, hydro, telephone) 3,500,000

Construction (portion of first 50 Units) 2,500,000

Total Costs – Phase IIB $ 10,000,000

EXIT STRATEGY

Sell at Phase IIA

42 acres of planted vineyard $ 7,350,000

Total Costs to Phase IIA 4,500,000

Estimated profit - 3 to 4 year time frame $ 2,850,000

Sell at Phase IIB

Approximately 50 Units $ 33,500,000

28 acres of planted vineyard 4,900,000

38,400,000

Total Costs to Phase IIB 28,000,000

Estimated Profit – 3 to 4 year time frame $ 10,400,000

CONTACT

Murray Swales, CA; 604-209-5994; swales@telus.net