{"id":753,"date":"2005-08-25T08:52:50","date_gmt":"2005-08-25T15:52:50","guid":{"rendered":"http:\/\/www.artsjournal.com\/artfulmanager\/wp\/2005\/08\/how_to_gross_100_million_and_s\/"},"modified":"2005-08-25T08:52:50","modified_gmt":"2005-08-25T15:52:50","slug":"how_to_gross_100_million_and_s","status":"publish","type":"post","link":"https:\/\/www.artsjournal.com\/artfulmanager\/main\/how_to_gross_100_million_and_s.php","title":{"rendered":"How to gross $100 million and still lose money"},"content":{"rendered":"

KCRW’s The Business<\/i> has a great interview<\/a> with Hollywood CPA\/Attorney Steven Sills on the ‘creative accounting’ of movie blockbusters (it’s about 3-1\/2 minutes in on the audio file). His clients come to him asking how a movie can gross $100 million at the box office and still show up as a loss on their profit participation statements. Says program host Claude Brodesser:<\/p>\n


\nYou think studio films are filled with special effects? You should see their balance sheets.
\n<\/i><\/p><\/blockquote>\n

It turns out that much of the time, the client doesn’t fully understand the complexities of movie income and expense streams, and the long list of players ahead of them in line to grab a chunk of the pie. In other cases, there’s true mischief going on at the studios — loading on costs to a successful film to be sure it doesn’t make any money on paper (a common complaint in the record industry, as well).<\/p>\n

Another interesting challenge is how to audit transactions between companies that are owned by the same conglomerate — for example, when Disney sells a television production to ABC (which is part of the same company), or resells it to the Disney Channel overseas. Who’s to say that transaction represents the fair market value of the production?<\/p>\n

It recalls the conversations between symphony musicians and symphony management about how the apparent riches of an institution still require pay cuts. It also mirrors the current struggles of regional performing arts centers, and their decreasing margin on blockbuster touring shows (most owned by a major media conglomerate). There, too, a community will ask: ”Didn’t you run two months of The Lion King<\/i> to sold-out houses? How could you possibly still need a donation from us?”<\/p>\n

While the scale of the discussion may be a few decimal places off ($100,000 vs. $100 million), it’s comforting to know that the nonprofit arts aren’t alone in their confusion and consternation in allocating costs and revenue to creative process. Come to think of it, if the movie studios really<\/i> want to learn how to book a loss on a major production, I know a few nonprofits that could show them the way.<\/p>\n


\nUPDATE: As an extension of my entry last week<\/a> — responding to an editorial<\/a> in our local newspaper about nonprofit financing — I wrote a letter to the editor<\/a>, which is now available on-line. Thought some would be interested.
\n<\/i><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"

KCRW’s The Business has a great interview with Hollywood CPA\/Attorney Steven Sills on the ‘creative accounting’ of movie blockbusters (it’s about 3-1\/2 minutes in on the audio file). His clients come to him asking how a movie can gross $100 million at the box office and still show up as a loss on their profit […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[4],"tags":[],"class_list":{"0":"post-753","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-main","7":"entry"},"_links":{"self":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts\/753","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/comments?post=753"}],"version-history":[{"count":0,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/posts\/753\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/media?parent=753"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/categories?post=753"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.artsjournal.com\/artfulmanager\/wp-json\/wp\/v2\/tags?post=753"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}