Keys to Film Financing: Packaging Your Project for the Market

In the second installment of our film finance series we’ll review the necessity to package a project with the strongest elements possible, both creatively, financially and strategically. While blow-up films may seem like mistakes -- they simply are not.

Agency

Agents and agencies are the lifeblood of the business. They structure the deals, they hold the keys to each and every gate and often make or break projects. Having strong relationships in this space is as important as having a strong story on which to base your project.

Oftentimes, getting in the door at agencies is an uphill battle, but that’s a good thing, really. Once you’ve established yourself as a legitimate producer/writer/director/financier (remember the amount of smoke and mirrors in this business) the door will remain open as long as you continue operating with solid practices.

The underlying principle to remember is that agents are looking at each opportunity as a business transaction.

The reason the uphill battle is actually a good thing is that stronger content will surface when the bar is raised for admittance through the front door. Stay focused and understand the value of utilizing your network to gain direct introduction to the agency -- once that introduction is made be sure to make a great impression and lead with the strongest projects possible.

When it comes to agency packaging -- the term typically means that the agency will assist in one/all of the following: talent packaging, financing, sales and international representation. Keep in mind that agencies earn their revenue based on a 10% take of their client’s fees (not only talent, but also writers, producers, directors, etc.) and therefore having an agency package an entire project as opposed to having them simply have a single member of their roster involved will go a long way.

The underlying principle to remember is that agents are looking at each opportunity as a business transaction; regardless of the project, it still boils down to a decision based on the bottom line. As such, finding the right agency (the big agencies are not always the right fit for smaller projects) and incentivizing them by offering full packaging capacities will yield the best results both financially and strategically.

Distribution

Distributors are fickle in many senses. The business has changed, the flux has yet to situate (if it ever will) and international versus domestic deals are becoming challenging. We’ve written entire pieces on the difficulties and changes in this space.

Finding the right distributor takes time. We like to think of it as a “kissing many frogs before finding the prince” type of situation. Again, this shouldn't be viewed as a necessarily bad thing; the process will give you practice pitching your project, as well as the ability to review many different sellers to gauge style, ability and creative fit.

Just as the agencies are self-motivated, so, too, are the sales agents (international film brokers) and distributors (buyers and exhibitors) motivated by the bottom line economics of the deal. Yes, there are buyers and sellers who specialize in content focused for the art-house driven markets, but they are becoming fewer and fewer.

As you build your package (cast, distribution, production and finance), remember that the agencies often have exceptional sales teams in-house that can handle many of the needs domestically. The film sales world is split up as the DOMESTIC MARKET (North America) and INTERNATIONAL MARKET (non-North American territories) and there are specific sales companies for both specific markets.

Producers tend to work without sales assistance on the domestic deals as it is in the best interest of the producer to form these relationships and close the deal personally to have an open door for future projects that will need similar distribution.

For international territories there are a plethora of reasons why a sales agent is the right plan of attack (language barriers, costs of traveling to international markets, the difficulty of forming relationships in this space, etc.). Again “kissing frogs” will be a part of the practice to find the right fit, but try to view this process as value building.

In the end, handle your own domestic sales (perhaps in tandem with packaging agency) and search for the best international sales agency for your specific needs (research similar comparable projects to your own budget, genre, cast, release assumptions) and track down the sales team; chances are they will be the right fit.

Preparations for smaller projects will make or break the outcome of the film. Tight shooting schedules and limited budgets don’t matter to the audience; they just care about seeing a great story told well.

Production

Less about financial knowledge and more about relationships and logical decision-making, the production elements of your project are crucial building blocks (obviously).

Practice eceptional hiring for key department heads (don’t micro-manage -- find individuals who are much better at what they do than you are) and allow for ample prep time. 

Preparations for smaller projects will make or break the outcome of the film. Tight shooting schedules and limited budgets don’t matter to the audience; they just care about seeing a great story told well. Find the balance between the ambitions you have for your project and the financial realities that will come in to play.

I’ve never worked on a project where everyone felt “we have ample financing for this film” and I don’t believe, outside perhaps the highest of the studio pictures, that this sentiment is felt.

When packaging has been completed, your project fleshed out and the financing structured for your project, hire the strongest team possible and begin to manage the expectations and fires that will undoubtably arise.

Finance

In the last article we published for this series we discussed the need to keep the economics in mind while developing, writing and spit-balling projects. This holds true here again in the packaging phase.

Keep your projects as simple as possible unless you have access to major funding. Simple doesn't have to mean bad, boring or action-less filmmaking; it just means taking a realistic approach.

Finding the right debt (pre-sales, MG's tax incentives), equity (hard cash raised) and other financing structures (gap, mezzo, post-deferment/in-kind services, etc.) is critical and deserves a more lengthy discussion in and of itself.

Next time we'll dig deeper into capital structuring to discuss best practices going forward. In the meantime, review our financing overview as a refresher before we jump into our full fledged financing overview.