Saturday, March 6, 2010

Guest Blog: 3 Part Series from Jeff Steele, Expert on Film Finance, Part 2

70% Gospel for Foreign Sales Estimates

by Jeff Steele ( Film Closings Inc. will review only projects over $3m, and Magnet will only consider projects over $10m, but please no unsolicited materials.)

PRODUCER: Hey Jeff, I’ve got an awesome $10m sci-fi project.

JEFF STEELE: How much is foreign?

PRODUCER: $6m, but it’s really more of a domestic play anyway.

JEFF STEELE: Yeah well, they all seem to be domestic plays when they're made for the wrong price.

PRODUCER: What!? Really!? Explain.

In the beginning, there were foreign sale estimates, and they were good…

These estimates are such a fundamental truth of goodness that it’s worth bolding: 70% of your budget should be covered by the gross-take-value (gtv) of your foreign sales estimates. And if you don’t, your film budget will be adjusted downward. And, you can’t fool me, I know what your thinking, “Jeff, don’t worry, I’ll just shop around for a sales agent that will give me my magical numbers.” Problem is your magicians won’t be able to deliver. So, to be smart about it! I prefer to recommend 75%-80% (gtv), due to the steep discounting lenders apply to presale contracts today. But 70% should be all film projects’ gospel. Why? Because, to mitigate your domestic risk to an acceptable one, you’ll need :

1. Elevated foreign values


2. Tax credit benefits and pre-sales

Don’t delude yourself, the domestic market is saturated with product right now (I’m sure you’ve heard of the $20m direct-to-videos) — the less reliance on the United States the better.

The 70% gospel has spoken; the gospel is good.


Samantha said...

Another good one!

Anonymous said...

Is it correct to assume that you're going off the high foreign estimates (not middle or low) when determining gross-take-value?

Unknown said...

@razor films. It's just the opposite actually, you want to go off the low foreign estimate. High and Middle are meaningless. I asked Jeff Steele for you off his blog at

Jane Kelly Kosek said...

Yes, always work from the lowest as they may be all you will ever see -- if that. Good luck!