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April 20, 2015

Do BFI backed films make a profit?

BFI backed filmsAs I get further down the rabbit hole of publicly-funded UK films, I’m finding curiouser and curiouser results.  Today’s research looks at the money that is returned to public organisations if a film they backed performs well. I have previously looked at How the BFI awarded £129 million in the past four years, Which public bodies are funding UK films and If publicly-backed films are any good so today I will not be addressing where the funding comes from. Instead, I’ve been going through the BFI’s financial reports over the past decade to look at how their investments fared.  It’s fascinating to get a window into how these BFI backed films performed for investors. Normally, we only get to see gross box office figures, which relate just to cinemas and are subject to a large number of deductions before the money flows back to investors, such as VAT, the cinema’s share, marketing costs, the distributor’s share, etc. In summary…

  • The BFI recouped £37,977,946 from its feature film investments, April 2008 to March 2014,
  • It received a further £2,828,018 from other film investments, such as slate funding and shorts.
  • The King’s Speech earned the BFI a 836% return on their £1million investment (up to March 2014)
  • Only nine feature films which returned money to the BFI in the past six years have repaid their original investment
  • Danny Boyle’s 2007 film Sunshine has so far only recouped 17% of its original £6.7 million funding

Does the BFI make a profit on its film investments?

Overall, no. But it’s worth emphasising that the BFI’s primary goal is not profit. The BFI is looking to promote filmmaking talent, support artistically-worthy films and broaden choice for cinema-goers. Therefore, it would be unfair to label an investment as a ‘failure’ purely on the metric of not having recouped. A small number of funding awards don’t need to be repaid but the vast majority take the form of an investment in the film.  The exact deal terms may differ between BFI backed films but the BFI’s Film Fund guidelines state “You will be required to provide the BFI with a net profit share”. The income generated by a film can take many years to be realised.  This is because of:

  • Release windows – A film needs to move down the list of formats from cinema right through to syndication on television.  The gap between cinema and DVD/VOD is shrinking but it will still be a few years between when it’s on the big screen and ITV3.
  • Global distribution – Films tend to open first in their home country and then aim to secure distribution in other countries. Many international distributors wait to see how a film performs at home before committing to a release.
  • Payment terms – As with any global business, it can take time to collect the money earned by a film, and for it to filter through all the myriad of middlemen before reaching the investors.

So, when we compare the amount spent and earned during each financial year we’re not comparing data on the same films.  However, to give you a sense of scale of the numbers, see below for the breakdown of new funding commitments and monies received over the past six financial years (running from 1 April to 31 March).

Spending on BFI backed films vs money returned from previous investmentsWhich BFI backed films have returned the most money in the past six years?

The King’s Speech is by far and away the best single film investment the UKFC / BFI have ever made, in monetary terms.  Their £1 million funding award has so far netted them over £8.5 million and this is sure to increase in the coming years. Older UKFC / BFI backed films, such as the 2006 Notes on a Scandal and the 2007 sci-fi horror film Sunshine continue to pay out. The chart below shows BFI backed films that returned the most amount of money to the BFI, in each financial year.

Film2008-92009-102010-112011-122012-132013-14Total
The King’s Speech£0£21,080£950,000£3,454,318£1,991,328£2,135,518£8,552,244
St Trinians£917,784£385,328£0£11,212£12,488£21,383£1,348,195
Salmon Fishing in the Yemen£0£0£30,000£0£1,168,962£135,569£1,334,531
Notes on a Scandal£699,218£102,917£339,418£0£0£0£1,141,553
Nowhere Boy£35,500£0£1,039,544£54,377£2,574£0£1,131,995
Sunshine£730,932£105,430£292,372£0£0£0£1,128,734
The Woman in Black£0£0£0£243,663£768,993£31,125£1,043,781
The Iron Lady£0£0£0£470,716£191,579£335,868£998,163
Centurion£0£83,361£542,140£150,988£142,818£61,038£980,345
Streetdance 3D£0£0£582,493£198,600£102,080£35,280£918,453
The Last King of Scotland£648,744£140,107£0£0£0£0£788,851
Made in Dagenham£0£0£732,613£59,729£165,946£1,091£627,487
Project Nim£0£49,900£0£511,900£1,565£0£560,235
Bright Star£0£386,958£69,535£66,761£11,496£1,788£536,538
Stormbreaker£490,588£0£0£0£0£0£490,588
28 Weeks Later£173,142£19,266£263,877£0£0£0£456,285
Adulthood£1£195,208£132,375£97,616£18,455£0£443,655
This Is England£212,195£132,450£60,567£4,924£3,080£5,737£418,953
Man on Wire£295,305£87,338£0£4,897£18,406£1,761£407,707
Submarine£0£0£0£242,570£43,673£104,448£390,691
Sex Lives Of The Potato Men£328,686£4,636£4,574£0£0£0£337,896
Becoming Jane£206,103£84,221£12,777£13,264£5,870£8,489£330,724
Girl With A Pearl Earring£187,820£29,586£2,317£5,529£37,251£43,652£306,155
28 Days Later£0£0£0£161,349£88,291£54,350£303,990
Bugs£115,601£42,758£25,392£107,208£12,923£0£303,882
WAZ£281,341£11,056£0£0£375£0£292,772
The Escapist£58,711£196,493£11,102£14,186£4,751£6,200£291,443
The Cottage£290,947£0£0£0£0£0£290,947
Triangle£84,732£149,728£29,822£23,096£2,227£462£290,067
Under the Skin£0£0£0£277,673£0£0£277,673

Which BFI backed films have recouped their original investment?

The previous chart shows the raw figures for income but they don’t take into account how much the UKFC/BFI originally invested.  For example, despite the fact that Sunshine is the 6th highest paying film 2008-14, it has so far only recouped 17% of its original £6.7 million funding award. The chart below shows the percentage of BFI/UKFC funding which has been recouped for films awarded over £50,000 and which have recouped at least £1 between April 2006 and March 2014 inclusive

FilmRecoupedAwardedRepaid
The King’s Speech836%£1,021,080£8,531,164
The Two Faces of January144%£121,579£175,370
The Angels' Share113%£205,000£232,118
Man on Wire108%£385,000£415,064
The Woman in Black104%£1,000,000£1,043,781
St Trinians104%£1,432,000£1,485,083
28 Weeks Later100%£456,285£456,285
The Imposter100%£130,100£130,100
The Iron Lady100%£1,000,000£998,163
West is West99%£111,000£109,955
Becoming Jane99%£335,127£330,724
Project Nim95%£587,095£560,235
My Week With Marilyn91%£56,373£51,277
Bright Star89%£600,000£536,045
Nowhere Boy89%£1,235,500£1,096,951
Streetdance 3D88%£1,038,239£917,960
Salmon Fishing in the Yemen86%£1,557,000£1,334,531
Adulthood82%£570,000£470,071
Centurion82%£1,200,000£979,844
Made in Dagenham68%£921,119£627,874
The Story of Film66%£285,000£189,105
Self Made60%£310,000£185,687
The Last King of Scotland56%£1,396,791£788,851
This Is England55%£758,000£418,953
Submarine55%£707,500£390,691
The Guard53%£264,920£140,020
The Skin I Live In46%£250,000£115,033
The Duchess43%£59,925£25,941
The Cottage38%£770,000£291,000
A Dangerous Method37%£95,000£35,022

Other recoupment sources

As well as receiving a share of the profits on individual feature films, the BFI recoups money from other types of projects they’ve funded.  These include:

  • Slate funding, awarded to Capitol Films Productions, Domino Pictures, Ecosse Films, Fragile Films, Jupiter Projects, Number 9 Films, Pathé Productions, Qwerty Films, Recorded Picture Company and Shona Productions.  Other similar awards include development slates and comedy slates.
  • Production Vision Awards, awarded to 31 different companies and recouping £870,850 from a total of £3,410,000 funding awarded (25.5% recouped).
  • Short films – very few short films recoup money generally but the BFI did receive some short film related income.  Andrea Arnold’s 2003 short Wasp brought in £7,570 income from an £70,675 funding award (10.7% recouped).

These sources don’t account for very much of the overall BFI recoupment; only 6.9% of recoupment income between April 2008 and March 2014 inclusive.   Recoupment received by the BFI from BFI backed films

What does the BFI do with the money it recoups?

The majority of the money the BFI recoups goes back into their funding pool, but in recent years they have made efforts to allow producers to access some of this money.  The aim is to turn one film’s success into a sustainable career, by providing money for development of new projects, staff training, etc.  These include:

  • The lockbox – If you are an independent UK film producer and the BFI award you funds for development then you are obliged to repay the money on the first day of the shoot. The BFI will hold onto that money and allow you to access it again for development or production of future projects.  It’s capped at £100,000 per project and you have to access it within five years.
  • The producer corridor – Producers can be paid a 25% share of the BFI’s recouped investment (rising to 50% once the BFI has recouped 50% of its investment), provided that it’s spent by the producer on further development or production of film projects or on staff skills training.  This producer corridor entitlement is capped at the amount of the UK tax credit advance.

Notes and Caveats

There are a number of things to consider when reading or using this research:

  • A tale of two organisations – The UK Film Council (UKFC) was established in 2000 and closed in 2011. From April 2011, the British Film Institute (BFI) took over the UKFC’s role in managing old rights and awarding new funds. From what I can see from the data, the two organisations use the same accounting methods, but it’s possible that their reporting differs in minor ways.
  • Being brief with abbreviations – In this article when I mention the BFI, I am including the work of the UKFC, pre April 2011.
  • Data verification – I am using data reported from the BFI / UKFC and I have no way of externally verifying it. That said, nothing in the numbers has led me to believe that their reporting processes are false.
  • Discrepancies – The data today comes from a number of sources and some have ever-so-slightly different figures for the same data point, even when they come from two sources published by the same organisation. I am researching this point further and will likely write another article in the future explaining more. Stay tuned.
  • Rounding – Each of my data sources have rounded to differing amounts. The BFI data is rounded to the nearest pound, whereas the Guardian recoupment data was rounded to the nearest £’000. The Guardian data was only used in a handful of cases for recoupment data on films that have not recouped any additional money since 31 March 2008.
  • Differing deal terms – the exact terms of the awards can differ between BFI backed films, meaning that just because the BFI put in, say 10% of the film’s cost, it does not always follow that they will receive 10% of the profits. Therefore, if a film has negotiated better than average terms from the BFI then it will show up here as under-performing.
  • Period studied – I haven’t yet been able to pull in all the data right from the start of the UK Film Council in 2000.  Each new year’s data I add increases the complexity of the dataset, as I need to match up BFI backed films across their lifetime.  I do intend to do this in the fullness of time, if only to complete the dataset.
  • Future income – Many of these BFI backed films will continue to recoup money in the coming years.
  • Inflation and interest – I did not try to account for either inflation nor the loss of interest on money invested.  Therefore, if the UKFC invested £1 million in a film in 2006 and it has returned £1 million by 2014, then a typical investor may not regard this as ‘100% recouped’.
  • Excluding slates – I have focused on individual BFI backed films, rather than slates or awards given to production companies on a more general basis.  Had I included slates, then the mysterious “Optimum / Studio Canal remakes” would have ranked 19th on my recouping chart as it was awarded £275,000, repaid £226,100 and has therefore repaid 82% of its award. Another interesting general company award was the £1,023,264 paid to DNA Films by the UKFC under the heading “DNA (general overheads)”.

Data Sources

The vast majority of the data for today’s research came from the appendices of the BFI / UKFC’s financial accounts. Each year they are required to provide a breakdown of their financial assets, which includes the rights they hold in BFI backed films. This is an obscure part of an oft-forgotten data source but is wonderfully useful as it provides film-by-film breakdowns. Unfortunately, it is presented in a mildly unhelpful format, i.e. PDFs which differ in layout year by year. I therefore rebuilt the data in Excel. It took a rather long time so I would be happy to share it with other film data researchers, if only to save them the same pain! In addition, films changed titles and so matching up the data across years was tricky. If anyone works with Mike Leigh please can they tell him to stop calling his films “Untitled” when in development. Thank you. I cross-referenced the film rights data with the BFI awards database, which is complete since April 2011. Award data prior to April 2011 was purely from film rights data. Due to the volume of data, I focused on the recoupment stats between 1st April 2008 and 31st March 2014. Therefore, to add recoupment data going back to 1st April 2006 I used data from Adam Dawtrey’s 2011 research. He credits the UK Film Council, Variety and Hansard, although I don’t know which data points originated from which source.

Epilogue

This has been something I’ve wanted to tackle for a long time, and one of the perennial themes in questions from readers. I’m not finished in my delve into UK public funding as I want to increase this dataset and parse some other angles on the data.  Stay tuned for more. Feel free to suggest questions on the topic by contacting me.

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3 Responses

  1. Andy Paterson April 26, 2018 at 2:51 pm #

    HI Stephen
    Your research if fabulous and fascinating. As a long-standing thorn in the flesh of the UKFC and, I can reasonably claim, the creator of the equity share of recoupment for producers from BFI, BBC Films and Film4, the one piece of data I do not have is the total recouped by UKFC/BFI from my film Girl With A Pearl Earring. You reflect that it has repaid more than £300k between 2008 and 2014 but the main recoupment period would precede that. Do you have that data and would you share it? And if I can be of use to you on or off the record I’m at your disposal.
    Very best
    Andy Paterson

    • Stephen Follows April 29, 2018 at 3:19 pm #

      Hi Andy, thanks for the kind words.

      Yup…

      2003 £774,607
      2004 £148,588
      2005 £751,759
      2006 £379,443
      2007 £97,186
      2008 £71,842
      2009 £187,820
      2010 £29,586
      2011 £2,317
      2012 £5,529
      2013 £37,251
      2014 £43,652
      Total £2,529,580

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