We rarely know how much Hollywood studio movies actually cost to make. Case in point, Sony reported that it’s 2014 Annie remake carried a production budget of $65 million. Try again. According to the documents released in the Sony hack, Annie‘s total budget was more like $77.7m, but since it was shot entirely in New York it received $11.4m in tax incentives meaning its adjusted direct budget was $66.3 million. Huh. Sony was actually pretty spot-on; they just didn’t see the need to mention anything about those tax incentives.
Wow. Bad example. Or is it? The truth is that film financing is incredibly complicated, and the budgets that we see never include the additional costs devoted to prints & advertising. That’s why the rule-of-thumb about a movie needing to double its production budget in worldwide gross to split even is misleading. There’s more money at play than just a production budget.
Ultimately, we’re not accountants nor do most of us own stock in the companies responsible for releasing these movies. Worrying about film profitability isn’t supposed to be our concern. We just know that when a movie costs a lot to make it will need to make that much more worldwide to be considered a success, and sometimes those movies with runaway budgets are screwed straight out of the gate.
Well, like Superman Returns before it Batman v Superman might already be screwed before it’s even released its final trailer let alone come out in theaters. According to LatinoReview, rumor has it that:
Right now, “Batman V. Superman: Dawn of Justice”s budget has ballooned to $410 million dollars. That means it is in the running for being the most expensive movie ever shot. The current record holder is “Pirates of the Caribbean: On Stranger Tides,” according to financial statements obtained by Forbes.
On Stranger Tides‘ officially reported budget is $250 million, and the referenced Forbes article is more about the booming success of the UK’s tax rebate in attracting foreign productions to film at places like Pinewood Studios than it is a line-by-line breakdown of Tides‘ financials. True, the author does repeatedly state that the true budget ended up being $410 million, but he also points out that Disney’s official profit statements do not indicate the company felt it overspent on Tides considering its $1.045 billion worldwide gross.
Moreover, it’s LatinoReview. That’s a name which should conjure up a healthy dose of skepticism followed by a nagging thought, “Yeah, but sometimes they’re right. The description of the first quarter of Avengers: Age of Ultron they leaked while the movie was still filming was almost 100% spot-on.” Maybe you can’t completely dismiss this or their follow-up about the Justice League‘s budget:
My sources are now telling me that the two-part “Justice League” movie–which is set to be released in 2017 and 2019, respectively–is going to be relatively reasonably budgeted at $500 million for the production of both films.
That’s what they’ve heard, but they have no explanation to go along with it, completely in the dark on why Batman V Superman might ultimately cost over $400 million but WB will somehow manage to keep each individual Justice League movie to $250 million. The ballooning cost on Batman V Superman might be related to those reports that after viewing the completed film WB was so blown away by Affleck’s Batman that they threw more money at Zack Snyder to go shoot more footage to up Affleck’s screentime. Then again, those reports might have been total bullshit. The same goes for this LR story about the Dawn of Justice and Justice League budgets.
If true, though, WB is probably setting Batman V Superman up to fail. Sure, Disney is publicly happy with spending that much to make the last Pirates of the Caribbean movie, but you can tell what they really thought about it based upon the fact that it’s 4 years later and there still hasn’t been another Pirates movie. The sequel has been delayed multiple times after Disney ended its longstanding exclusive relationship with producer Jerry Bruckheimer due to his continued inability to keep his budgets under control. They forced his team to rewrite the next Pirates script to make it something more cost-efficient, and what they have now is a sequel (Dead Men Tell No Tales) which won’t come until the summer of 2017.
When you spend that much money on a movie you are setting the profitability bar way too high. But didn’t they film most of Batman V Superman on a friendly tax-rebate program in Detroit? How much of that rumored $410 million budget might be called out by tax incentives? And weren’t we worried about those rumors of X-Men: Days of Future Past turning into the second most expensive movie in 20th Century Fox’s history? That seemed to work out fairly well. There’s a sequel due out next year. Isn’t this just what studios do with big movies now? They spend more and more money on the belief that you have to spend money to make money?
Harvard Business School professor Anita Elberse has talked about that blockbuster mentality in Hollywood:
The sheer act of spending more on a film can sometimes lead to higher revenues. Production and marketing budgets are important signals to the marketplace. Audiences aren’t the only ones falling for this; everyone in the “value chain” for films takes it as a cue. Theaters, for instance, will often commit to dedicating more screens to big-budget films, and will also give them more favorable weekends. Their decisions can have a huge influence on potential revenues; we know from research that the number of screens given to a film is the single best predictor of its box office success.
Sure, but at a certain point the amount of money you spend on a movie enters into financially irresponsible territory that only James Cameron can pull off. If LR is anywhere close with its budget figures, Batman V Superman could very well make a ton of money (more than Man of Steel’s $668 million) and still be a giant failure. So, um, Batman V Superman, whatever you do – please don’t suck.
Source: LatinoReview
