Wednesday, March 10, 2010

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

How to Choose (a sister wife) or a Foreign Sales Agent

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.)

If the relationship between a producer and a financier is like a marriage, than the sales agent fills the role of your sister wife #2.

PRODUCER: Hey Jeff, I’ve got a $12m thriller with attachments, but I have a problem.

JEFF: A problem, eh? How can I help?

PRODUCER: I need the best sales agent; who do you recommend?

JEFF: Easy, you will want to work with ***** *****.

One of the more difficult questions I receive on a weekly basis is who I recommend as a sales agent. There are a lot of good agents out there – in fact, I would say that there are more good agents out there then there have been for quite some time. A lot of key sales people from established sales institutions have struck out on their own in the past couple years: Nick Meyer, Stu Ford, Glen Basner, to name a few. In the past, the general rule-of-thumb was that AFM was just an endless cycle of “same names, different companies.” But now, those names (along with Nick Chartier) have setup their own shops and are doing things different, and I think…better.

So who do I recommend? If you need somebody to make presales that a bank will lend against (i.e. “bankable”), then I would recommend one of the above names, as well as some of the established players. However, bankability is more than just who is selling. It’s actually a combination of factors:

1) Who is selling?

  • Do they have a history of hitting their Take numbers?
  • Can they collect?
  • Do they have enough quality product to keep buyers from stiffing them, or renegotiating?

2) Who is buying?

  • How deep are their pockets?
  • Do they pay on time?
  • Do they pay in full, or do they renegotiate?
  • Is the buyer paying a 20% deposit? If not, then there’s no incentive for them to pay the MG (or not renegotiate).
  • Who is lending?

NOTE: Different sales companies have relationships with different lenders. Some are universally bankable, some may just be bankable by the one or two lenders with whom they’ve had a long relationship with.

All of these factors can positively or adversely affect the credit discounting applied to presales (e.g. will the bank lend at 100% of the value of the contract, or 80%, 50%, or zilch.) As you can see, there are more to sales estimates than just the Take amount. You need to look deeper.

Sometimes a film may need a more hands-on/nurturing touch in order to find its audience, wherein somebody like Robbie Little or Cedric Jeanson would be a good choice. Their backgrounds and their relationships are top notch, but they prefer a more hands-on pipeline of product.

If you have a completed film, then there are agents who are very capable. These agents have chosen not to actively pursue the bankability business and are very capable of getting your film out to the market.

Obviously, there is a lot more to know on this topic and each film may have different needs, so there is no best.

However to be nice, I will leave you with 3 last important notes:

1. If a foreign sales agent ask you to pay anything upfront, move on. 2. It’s a good idea to include a portion of the foreign sales agents marketing fee in the film’s budget. 3. if you squeeze them too hard on their commission, they won’t be incentivized to sell your film – so if it’s not a commercial film, then give them a higher commission – you’ll be better off for it…

Or in other words… your sister wife needs to feel special too.


James said...

Excellent interview altogether!

Unknown said...

I need to choose a sister wife too. Never thought of it that way. kinda cool analogy.

And I don't think that was an inerview. It was a cross post from the site.

Jane Kelly Kosek said...

Martin, you are right. It was a cross post - a way to introduce Jeff's thoughts to my readers.