Financial Plan | American Soldier 2018

Financial Plan

Financial Requirements

* American Soldier, LLC intends to raise $5,000,000 to produce and market American Soldier.
The major budget categories are presented in the top sheet below.

American Soldier
PREPARRED BY BUFFALO 8
Acct# Category Description Total
1100 STORY & RIGHTS 142,360
1200 PRODUCER'S UNIT 646,890
1300 DIRECTION 235,145
1400 CAST 550,084
1500 ATL TRAVEL 137,480
Total Above-The-Line 1,711,959
2000 PRODUCTION STAFF 252,441
2100 EXTRA TALENT 87,293
2200 EXTRA TALENT 102,473
2300 SET CONSTRUCTION 185,518
2500 SET OPERATIONS 88,247
2600 SPECIAL EFFECTS 80,000
2700 SET DRESSING 67,412
2800 PROPERTY 30,194
2900 WARDROBE 150,579
3000 PICTURE VEHIC & ANIMALS 248,220
3100 MAKEUP & HAIRDRESSING 69,809
3200 SET LIGHTING 80,401
3300 CAMERA 122,540
3400 PRODUCTION SOUND 55,055
3500 TRANSPORTATION 190,514
3600 LOCATION EXPENSES 218,261
3800 DRIVES 10,000
3900 BTL TRAVEL & LIVING 90,780
Total Below-The-Line Production 2,129,737
4400 EDITORIAL 227,208
4500 VISUAL EFFECTS 50,000
4600 POST PRODUCTION SOUND 69,400
4700 MUSIC 115,000
4800 POST PRODUCTION COLOR 20,000
4900 TITLES 5,000
5100 DELIVERY REQUIREMENTS 15,000
Total Below-The-Line Post 501,608
6800 OTHER MISC COSTS 9,000
LAWYER FEES : 0.75% 32,642
INSURANCE & MEDICAL EXAMS : 1.0% 43,523
6900 CONTINGENCY : 10.0% 435,230
6900 COMPLETION BOND : 3.0% 130,569
Total Above-The-Line 1,711,959
Total Below-The-Line 2,631,345
Total Above and Below-The-Line 4,343,304
Grand Total 4,994,269

Investment Strategy

ROI

Investors will recoup 120% of their investment before any profits are distributed. After that point all of the net profits will be split on a 50/50 basis with 50 percent being distributed to the investors on a pro rata basis and the other 50 going to the producing entity.

For example if this film makes $20 million, with our ROI structure: $6 million will be returned to investors, leaving $14 million in net profits. Net profits are split 50/50: $7M is put into an equity pool paid on a pro rata basis All profit participation comes from production entities profit participation.

100% hard-equity
Investors will be able to buy 50 of 100 available shares in the film LLC. Each share will be valued at $100,000 and will give an investor a 1% profit share of the full gross stake in the film.

  • Investors can then at the end of the investment year use the 181 tax code and deduct 100% of their investment in to the film in order to protect their risk. Depending on the investors tax bracket they can get back upwards of 50% of their investment.

Equity & Legislation
Similar to the hard-equity strategy, the legislation strategy allows for production to shoot in a state high in tax-incentives. As an example Utah offers a 20-25% tax-credit on all in state spending.

Equity, Legislation & Pre-Sales
Combining with the two strategies above, a pre-sales agreement takes advantage of a films potential sales results and leverages that against mezzanine debt to finance a portion of the production.

  • The same fundraising structure will still be implemented with 100 shares total and 50 for sale to investors.
  • The difference is that once the sales agent is able to pre-sell some of the 150 territories, that money (minus the sales commission) will be handed back to the investors. This way the investors can see a partial return before the film is even in production.
  • The number one thing to allow for a successful pre-sale run is the attached key elements. Great talent and a strong director are key for a successful pre-sale

The Return

Predicting Returns

Predicting the return on any film investment is speculative.


There are very reputable and knowledgeable producers who fully endorse the position that predicting revenue return is, at best, a sketchy business practice. They clearly argue that return predictions should not be included in business planning documents for a variety of very practical and ethical reasons. Variables that include a producer’s budget (production and marketing), industry know-how, industry connections, and market accessibility (among many others) will greatly influence revenue potential. However, even well situated producers have difficulty predicting how the general public will receive a film. Therefore, it is nearly impossible to predict with accuracy a potential return.

On the other hand, there are those who argue return estimations must be included in a business plan, as the Return on Investment (ROI) calculation is necessary for any serious lender. These producers argue that it is possible to make “potential” revenue predictions based on historical performances of films of similar genre and budget.

The Production Team has spent much time exploring both positions and has determined one thing is certain: There is extremely little available data on the world's average ROI for film, statistical risk analysis for independent film projects, or even success to failure ratios for independent productions. What information is available is usually incomplete, based on out-of-date assumptions, and not proven in practice.

Therefore the Production Team is hesitant to attempt a prediction of future revenue, and instead has developed a specific strategy for maximizing earnings over the life of the film. This strategy will follow the following guidelines:

Budget the project appropriately to the market
At Cannes 2012 it was widely observed and reported that buyers were specifically looking for projects with negative production costs between 3 and 5 million dollars. Projects with larger budgets, say in the 10 to 15 million-dollar ranges, were widely ignored, regardless of attached talent. Minimizing overhead and maximizing results.

Collect project specific data from industry
Although some general information regarding current deals being made for dramatic features will be useful to our sales strategy, getting project specific data is critical. Not only will there be knowledgeable information available on “realistic” pricing for the film, but foreign sales agents will also have input on potential talent choices that will work well overseas to maximize revenue. Data gathered will be based on this film, not guesses based on other films.

Explore all possible revenue streams
As mentioned Theatrical, Video on Demand (VOD) for internet and cable, DVD/Blu-Ray, Broadcast and Foreign distribution outlets will be pursued. Specific strategies will be explored for all revenue streams.

Invest in the right places
A recent analysis of spending indicated that a 10% increase in talent spending is currently yielding approximately a 2% increase in return. A 10% increase in marketing spending, on the other hand, is yielding a 10% increase in return. Adding marketing dollars makes the most sense to a film’s bottom line and is good investing.


Assumptions that Effect the Bottom Line

In evaluating the financial potential for American MIA, the Production

  1. Domestic Box Office reflects gross dollars of ticket sales BEFORE the exhibitor splits the total with distributor.
  2. All funds flow from each revenue source (exhibitor) to distributor, who deducts his print and advertising expense before distributing revenue to the production company.
  3. Distribution fees are generally based on 25% of all distributor gross revenue, both domestic and foreign. This is a generally accepted estimate method used by industry analysts and trade publications. Distribution deals are based on negotiation and vary greatly.
  4. A period of at least one year from start of principal photography to delivery of finished film should be anticipated for this, or any other feature film. This period can vary, but accommodates most circumstances that can affect delivery.
  5. The film’s release date depends on finalization of distribution arrangements, which may occur either before or after the film has been completed, and is an unknown variable at this time. The budget, also known as the film’s “negative cost," covers only the expenses that are needed to create the master print of the film with a relatively modest publicity budget. All marketing costs, or “distribution expenses,” which include copies of the master print, digital distribution conversions, and major advertising costs, are distributor costs and are normally recouped by the distribution company before monies are dispersed to the producers.
  6. Production costs are projected to fall on the high side of estimates. This is done to minimize the likelihood of financial shortfall. If there are overages in funds available, these funds will be assessed to determine if best spent on marketing or if they will be returned to the investors.
  7. The majority of revenues are traditionally realized within three years of the release date. Although the earning life of a film can be much longer (an accepted average is seven years), the Production Team is assuming this trend will hold true for American MIA.
  8. The producers will seek an advance from distributors to cover the initial loan, allowing for an earlier payout. However, such a payment is not guaranteed.

Design by aura Concepts