The Fund is structured so that it will only cost the funding agency around $30 million (net) to do this - even though it will be creating $255 million worth of product.
It was based on a model where a film would be around :
* Average film budget: $15 million
* P&A Spend: 10% of production cost
The investment is generated from 4 sources:
* Australian Distributer: Contributes 8% of the budget
* Rest of the World Distributer: Contributes 25% of the budget
* Film Fund: 33% of the budget
* Producer Offset: 33% of the Budget (The 40% drops down to about 33% after cash flow costs. Even if it drops to 29% it doesn't change too much)
This means that the films can be made without any outside investment ! Instead the investment is largely based on those who are in control of how it can be recouped - the distributors.
The modelled outcome (on average) is:
* Distributor gets 79% of their advance + their commission.
* Rest of the world distributor get 65% of their advance + their commission
* Fund is likely to get 73% of it's investment back .. 68% is loan recovery. 5% is interest
* Production company: 30% of the producer offset investment back (ie: Average income of $1.4 million per film)
Naturally the distributors will choose their commissions to get > 100% of their advance back.
The recoupment is the same for all projects - nothing is negotiable.
The order that the recoupment is made is:
1. Distributor recoups all release costs first
2. Distributor recoups 50% of their commission
3. Distributor & Fund recoup their advances
4. Distributor recoups the rest of their commission
5. Fund recoups the interest on its advance
6. Then the other investors get their money (including the producer!)
The modelling was conservative ... assuming that 80% of films wouldn't recoup the production cost and the remainder weren't massive hits - getting no more than double the production cost.
It's a fascinating proposal - it will be interesting to see how it develops.
The Q&A (Part 1) :
The SPAA Slides: PDFF-Briefing.pptx
Thanks to Encore who filmed the Q&A.
The rest of the presentation is on the Encore website: http://www.encoremagazine.com.au/pdff-8065