Thoughts on film budgets

Budget breakdown for "Excursus"
A short film by the author—
with which he proposed to
his wife (who said yes).

One day, I was on the set of a corporate production and around lunchtime I was sitting with some of the crew members, talking shop. A newer member of the crew was asking one of the veterans about budgeting for a production. With appetites growing, catering and craft service was used as an example. Crafty can be budgeted by setting a dollar amount per day per person on the cast and crew. Allot $10 per person on a small 10-person production and your craft service budget will be $100/day. You’ll certainly want to be more generous and flexible when it comes to catering meals, especially if you opt to hire different caterers throughout the course of the shoot to add some variety to the menu. Productions—regardless of what they’re shooting—are often judged by the quality of their craft service and catering. In my budget template, “Comestibles” (Food) is the first item “Below-the-line” for that very reason.

Another question that was asked was, “Where in the budget can you most easily save money?”

Frugality, when budgeting for any film is always wise but I’m of the opinion that before one asks, “where can I save money?” One simply needs to become informed as to what the standard rates and fees are in order to properly estimate the required budget for a production. This is especially true if one is producing a project for a client. The client could be a business investing in a television commercial, or it can be an investor backing a feature film.

Knowing how much production services cost—and not forgetting that one needs to include their own fair wages—is essential to making a realistic budget estimate. When the client inevitably asks, “Can you do it for less?” the answer should never be “Yes.” It should be, “Only if you want to change the scope of the production and lower your expectations.”

Once production is rolling, and one has a defined budget for what they have been contracted to do, opportunities to save money may certainly present themselves. However, the way one saves money on a production and how one uses that savings should be informed by ethical business practices and the law.

Unfortunately, it is not uncommon for budgeted productions to request “volunteers” in front of and behind the camera, regardless of the fact that the practice is illegal. A producer may justify this practice—called “wage theft”—for any number of reasons, from saying that they’re “saving the client money” to trite appeals to artistic egos but it doesn’t change the fact that the practice opens up the production (and the client) to some severe legal ramifications that could cost much more than the savings envisioned by using unpaid labor.

In the case of productions that expect to take advantage of government-funded film incentives, the motivation to "save money" in the short-term negatively affects not only the people convinced to work for free but the bottom-line of the production itself.

If a project is approved for a film incentive rebate of 25% based on their commitment to spend at least $1 million dollars in the state, cutting corners through wage theft will directly impact the amount of money they would receive for their rebate.

For example: getting 100 people to be free extras for a simple crowd scene might save the production $10,000 for one day but NOT spending that money can, at best, shrink the production's rebate check by $2,500. Or worse. When all the receipts are counted, the budget has been properly audited and it turns out that not paying extras that one time was all it took to cut their in-state expenditures to less than $1 million dollars thus disqualifying them for the 25% rebate.

That $10,000 saved on one day of production would wind up costing $250,000. It's not uncommon for producers to count on incentive rebates to fund or at least supplement their post-production budget. And all it takes to screw it up is a short-sighted UPM or Line Producer to make an unethical and illegal decision because they think they're doing their employers a favor by "saving" them some money on a single day of production.

Bottom line, one should never try to save money at the expense of the people that are working for them. If one has given an accurate and fair budget estimate to a client and the client has agreed to it, there should be no excuse for asking—or requiring—anyone to work for less than a fair rate, especially if it means that a budget surplus is only going to be used to inflate one’s own reimbursement for their services as a producer. I can’t think of any producer that has used a budget surplus to refund their client/investor because they overestimated the cost of the production. Being able to make a reasonable profit for the work one does is an essential factor in making fair and accurate budget estimates.

When budget-saving opportunities present themselves, one needs to ask,

“Will any one person be negatively affected by this decision?”

For example: If one has allotted $2000 in their budget to secure the use of a location—based on typical rates for similar locations—and then learns that the owner/manager of said location only charges $1000 or its use. Before popping open the wrap party champaign, the question must be asked…

“Will any one person be negatively affected by this decision?”

If $1000 is the standard fee, determined to be fair and worthwhile by the owner/manager, then the answer to the above question is, “No.”

Congratulations! That’s a $1000 budget surplus—assuming, of course, that the rest of the budget balances out at the end of the shoot.

So, what do you do with that savings?

One option of what to do with any budget surplus during production is to simply allot it to the contingency fund. Every production should include a “Contingency” line-item equal to at least 10% of the entire production budget. These funds are set aside from the beginning in order to cover unexpected expenses, and any minor differences between estimates and actual rates and fees for the production.

If a piece of equipment is damaged and needs to be repaired or replaced immediately, so the pace of production isn’t hindered, contingency funds can be used to cover those costs and those receipts provided to the production’s insurance company for reimbursement.

If one has fairly estimated the cost of a crew member’s rate and kit fee and the actual cost is slightly more than the estimate, don’t ask the crew member to give you a discount or to waive their kit fee just to match the estimate. Pay them what their knowledge and experience have determined is fair. Contingency funds exist to make up that difference.

If a new contractor has offered the production a valuable service for considerably less than what has been budgeted only because they’re new to the industry and have not yet grasped the value of their work, before just agreeing to their lower fee, ask the question:

“Will any one person be negatively affected by this decision?”

The new contractor would certainly be affected, even if they don’t realize it. One must also consider that agreeing to that lower fee may result in a budget surplus but it would be unethical and potentially detrimental to the segment of the industry that the contractor represents. Undervalued services often result in more knowledgable and experienced contractors having to lower their rates in order to be competitive while hurting their ability to make a living at what they do. So, it isn’t just one person being negatively affected, it has the potential to affect an entire segment of the industry. So, the answer to the above question is “Yes!”

It’s also important to remember that, in this scenario, we’re working within an approved budget. The funds are there to compensate cast and crew fairly so there is no excuse to exploit someone’s naïveté in the interest of “saving money” that's already been earmarked for necessary expenditures. The client has already agreed to the amount, fully understanding the inherent risks involved in such an investment. Worrying about the risk that a client is taking is not part of the producer's job description.

There are already too many established filmmakers that approach budgets with a “scarcity” mentality. Being knowledgable about the value of the work that goes into a production and standing firm with clients/investors about having realistic expectations when it comes to appropriate budget estimates will help ensure that the work is valued and respected.

The contract may still go to the lowest bidder, but at least the difference in cost will be based on reasonable variables in an estimate and not a deliberate effort to undercut the competition and devaluing the work.

Joe Puente
Founder/Administrator
Utah Filmmakers™
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Utah Filmmaker(s)™ and UFA™ are trademarks registered with the Utah Department of Commerce Division of Corporations and Commercial Code, Registration Numbers 10706542-0190 , 11025542-0190 and 10502093-0190 respectively.

Tell your state reps how the film incentive benefits you

(This post has been updated with the inclusion of a letter† sent to Senator Luz Escamilla and Representative Angela Romero from the Utah Filmmakers™ Association)

This article in the Salt Lake Tribune has been making the rounds in the Utah film community. It does a terrific job of illustrating how much government incentives benefit local film industries and professionals but—regardless of the amount of money being discussed—one can only read so much about “tax credits,” “rebates” and “GDP” impact before one’s eyes start to glaze over.

As important and informative as this article is, there's one section that I think should resonate with filmmakers on a personal level. It starts with Virginia Pearce, Director of the Utah Film Commission, talking about “the crew member who gets paid, who takes his wife out to dinner, who buys a new car, who is able to live and work here instead of living and working in L.A….”

It quotes Taylor Sheridan, the filmmaker behind the Utah-based production “Wind River,” who said of his Paramount Network series “Yellowstone” that it “…employs hundreds of people, and the vast majority of them are local… And the ones who are coming in, they’re renting properties, they’re standing in line at the grocery store. They’re staying here. They’re moving in… We show up and spend an extreme amount of money, employ a workforce... And showcase the state.”

It’s one thing to read about the film incentive’s benefits to the local economy in abstract terms but I think what was missing from this article was a more personal perspective.

The Motion Picture Association of Utah exists to inform the Utah state legislature about how important the film industry is to Utah’s economy and how integral the Motion Picture Incentive Program is to bringing productions into the state and employing local filmmakers.

It’s imperative that state legislators also hear from the people who benefit directly from a thriving local film industry: their filmmaking constituents.

Utah Filmmakers* can support their industry and the efforts of the MPAU by contacting their legislative representatives by phone, fax, letter, and e-mail and letting them know how the film incentives directly impact their lives.

Don’t know who your legislative representatives are? That’s okay. I voted and I still had to double check—I guess state legislators are more camera shy than those in federal office. Just visit https://le.utah.gov/GIS/findDistrict.jsp, plug in your address/zip code to find out who your representatives are and tell them how important the film incentives are to you personally.

As individuals, Utah filmmakers do not need to talk about GDP growth or the return on the state’s investments. Talk about how much you love your job and being able to make a living doing it in Utah. Better yet, how a more active industry would enable you to work full time—if you don’t already.

Talk about how landing that gig on a film or series that made use of the incentive is what kept a roof over your head in Utah, enabled you to support your family, buy locally and to take a more active part in your community.

Who among us doesn’t have a story of how a job came through at just the right time to take care of the bills or an unforeseen expense. If that job wouldn’t have been possible without the incentive, you need to let your representatives know about it.

The Utah legislative session starts on January 28, 2019. Contact your representatives TODAY!

—Joe Puente
Founder/Administrator
Utah Filmmakers™ Association

*As loosely defined by the Utah Filmmakers™ Association, “A ‘Utah filmmaker’ can be anyone based in Utah who’s involved in filmmaking including—but not limited to—Producers, Writers, Directors, Cinematographers, Animators, Actors, Sound Engineers, SFX/VFX Artists, Composers and many other technical and creative people.”

†

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Utah Filmmaker(s)™ and UFA™ are trademarks registered with the Utah Department of Commerce Division of Corporations and Commercial Code, Registration Numbers 10706542-0190, 11025542-0190 and 10502093-0190 respectively.

The value of time and talent

The Utah Filmmakers Association does much of its online engagement on Facebook, primarily through the Utah Filmmakers and Actors group. Originally started by Ben Hawker in 2007, the group has grown over the years into the largest online forum for filmmakers in Utah with over 13,280 members (at the time of this post). While The UFA™ has existed separately since 2002, with it’s own unique Facebook page and web presence, it does not have a formal membership structure. Instead it promotes the Facebook group as the de facto online forum for collaboration and promotion and is very grateful for the service that it provides to the filmmaking community in bringing Utah Filmmakers and Actors together on projects.

Image courtesy of "Vectorolie"
at FreeDigitalPhotos.net

The group consists of both professional and novice filmmakers and is open to new members based in Utah.

With this mix of both people in the film industry and those who aspire to be a part of it, it’s become a valuable resource for professionals seeking paying work, productions looking to hire seasoned and new talent, and novices seeking experience and advice.

Over the years, the group’s administrators have tried to make the user experience in the forum as pleasant and productive as it can be. With so many members—and the number growing steadily—this can be challenging but, thankfully, the group is largely self-managed. There are a few policies and some guidelines—even a suggested template for members to use when posting cast and crew calls for upcoming projects. The most important element of the casting and crew-call template is the placement of the payment offered at the very top of the post. This placement is a courtesy to the professionals in the group that are there specifically to find paying work.

It is generally understood that the only projects that should ever be listed as unpaid are student films and filmmaking competitions that require all participants to be volunteers.

Nevertheless, this does not prevent people in the group from posting “unpaid” projects. As long as the lack of compensation is clearly indicated at the top of the post, the professionals in the group can more easily ignore them.

From time to time, someone starts a discussion in the group about an overabundance of these “unpaid” projects. This almost always sparks a lively discussion that soon devolves into a debate that requires the intervention of an admin to end the exchange, usually by turning off comments on the post. Full disclosure: the admins can be lively participants in these discussions as much as anyone else.

The default position of the Utah Filmmakers Association (which serves as one of the group’s administrators) is that apart from the aforementioned student and competition projects, all cast and crew calls should offer some form of compensation when seeking the time and talent of others in the group. A few examples, as referenced in the group description, include: “Rate / Negotiable / In Kind / Stipend / Deferred.”

“Rate” refers to either an hourly wage or a typical day-rate as indicated by federal law and industry standards. 

“Negotiable” simply means that there’s room to negotiate what the rate will be. 

“In Kind” means that the producers are seeking a trade in services or are offering another commodity with an equivalent or greater retail value to the standard rate indicated by the position. 

“Stipend” indicates that a flat fee, at least enough to cover travel costs, is being offered. This sort of compensation should be limited to very small projects and limited time obligations of those being sought for otherwise low-rate positions. 

“Deferred” refers to “deferred payment” which indicates that the participants will be paid only when—and if—the project recoups its investment costs. Anyone being offered deferred payment should consult an attorney—if possible—and/or read their contract carefully. A general understanding of the difference between gross and net profits might prove helpful as well.

There are myriad other ways of compensating people and all forms of compensation have their pros and cons but those listed above tend to be fairly common. Regardless of how individuals are paid for their efforts, all agreements should be in writing with a legally-binding contract and/or deal memo.

Also included in the group description is the following caveat:

“…state and federal laws prohibit the use of unpaid labor for for-profit entities... Which means…: No, you can’t use volunteer labor to make your film.” -G.R.Kanaan [Cinema Law: Why Using Volunteers is a Risky Way to Keep Costs Down on Your Film, MovieMaker.com, 2013]

Regarding the aforementioned non-student/non-competition projects that ask for unpaid labor, while group policy discourages the practice, administrators tend to ignore such posts, as do the professional members of the group. The reason being, simply, such posts are primarily made by novice filmmakers and are mostly answered by other beginners.

It’s not uncommon for these “unpaid” posts to try and entice responses with cliche promises of “food,” “fun times,” “experience,” “footage for their reels,” “IMDb credit” or all of the above, conveniently forgetting that paid projects can offer the exact same things—as a matter of course—in addition to a paycheck.

Whenever novice filmmakers—and sometimes experienced filmmakers who should know better—are reminded of the legal obligations associated with hiring talent, i.e. the lawful requirement to pay at least the Federal Minimum Wage, they often respond with a ready list of excuses—none of which carry any legal weight—for why they don’t have to pay anyone. Such excuses range from appealing to the artistic nature of filmmaking, claiming that because theirs is a “passion project” and they are foregoing a salary then everyone else involved should as well and be grateful for the "opportunity," to claims that they don’t expect to make a profit so that makes them exempt from the obligations of for-profit entities—n.b. making a profit is not what defines a for-profit entity. Even Utah Filmmakers™—a tax-exempt, nonprofit organization—is required by the same federal labor laws to pay participants in its productions under the Section One Entertainment moniker, business entity known as a DBA (Doing Business As). There are a litany of other excuses that novices fall back on but eventually, they’ll resort to making personal insults and accusing anyone criticizing or attempting to educate them of “not caring about the art” and only being “in it for the money.”

There are lots of movies that are “passion projects.” Most of them, no one ever hears about. The ones that do get press are the ones that secured funding before going into production and paid their cast and crew—including the person whose passion was behind the project to begin with. Those participants may have felt inspired—or compelled—to agree to a lower rate than they’re used to for the sake of the production; most likely making up the difference in other ways, like profit sharing, but they certainly didn’t agree to do the job for free.

There are a number of legitimate reasons for insisting that participants in any project should be paid. The aforementioned legal obligations, fairly standard and ethical business practices, the reassurance that compensated labor will result in a higher quality end-product and a significantly smaller chance of facing litigation from disgruntled participants seeking unpaid wages—just to name a few—and for every one of those reasons, the willfully uninformed novice and the experienced-but-unethical producer has an excuse to counter it, usually rooted in the one excuse that they’re both ashamed and proud to admit: “I don’t have the money to pay anyone.”

The argument that they should wait, get more experience, save their money and go into production later is met with a counterpoint that can be very difficult to defeat: “But I want to make my movie now.” It’s also at this stage that, with a little prodding, they might even confess that they haven’t finished the first draft of their screenplay.

It can be very frustrating to see someone with such obvious enthusiasm for filmmaking fall into this trap of impatience. For these naive individuals, no appeal to the law, ethics, sound business advice, industry standards or fiduciary responsibility can convince them that what they’re doing is wrong. Having accomplished little themselves, they will rest on the laurels of other notable filmmakers that self-funded their own projects—without acknowledging that those funds were used to pay cast and crew. They will vehemently deny that their practices undermine the wages and bargaining power of film industry professionals and claim that the experience they will gain—at the expense of a fair wage even for themselves—will help the industry later on, when they will have to settle for a lower rate that they’ll be partly responsible for while the cost of living continues to go up unabated.

It was following one of these discussions about paid vs. unpaid projects that this writer realized what those novices, hobbyists and ethically challenged filmmakers were actually saying.

The entire conversation can be boiled down to the following simple exchange:

Professional: Everyone has value that's worth being paid fairly… even you. 

Novice: No, they don't... and neither do I.

A general query was made afterward, asking, “Why is it that the more I try to tell someone that they have value, the harder they argue that they don’t?”

It prompted some interesting responses, including the following:

“If you [have] to tell them, then they didn’t believe it to begin with. Which is sad, because… a lot of the people that think they don’t have any value have more than most, but that truth was beaten out of them at some point, by someone who truly doesn’t have any value.”—Ryan Pederson, Producer/Director

To be clear, this is not a judgment call, just a speculative response to a generalized question. Though, to apply it directly to the context of this treatise, the practice of recruiting people to work without pay can be rooted in a few different places. One is the expectation in film school that people will help a student filmmaker because it's for their education—though there is nothing stopping a student filmmaker from compensating talent, especially non-student participants. The writer of this essay has been paid for student projects with both gas money and liquor (even though he doesn't drink... sometimes it's the thought that counts).

Unfortunately, some filmmakers take this "unpaid student-film" budget model and try to apply it outside of school. The results often speak for themselves in the form of barely watchable content that's celebrated by an overly-enthusiastic group of filmmaking hobbyists who think that just because they have a film degree and/or managed to cobble together a short film without a budget or doing any due diligence that they're somehow in the film industry now and on their way to being the next Harvey Weinstein (insert name of notable film producer without a sex scandal here).

In reality, they're not actually in the film industry but the way that they conduct themselves when making movies does have an effect on the industry. As much as they might want to wear the "strugging artist" badge to justify not paying their cast and crew to realize their vision—even if their current "passion project" is a commercial they agreed to produce for a friend of a friend's new business that "can't afford advertising," just so they can build up their reel and continue to convince themselves that they're "really doin' it!"—the reality is that whenever two or more people agree to participate in a venture that results in the creation of a finished product they are in fact engaged in a business activity. They're certainly not following the rules of business, they may or may not be aware of the legal requirements needed to even be in business or to market their services (even if it's only by word-of-mouth) to others. In their desperate need to build that reel and get noticed, they undercut the prices of experienced professionals just for the sake of getting their toe onto an actual film set or television production, where they hope to network with other filmmakers "just like them." The professionals know to ignore them, other novices, beginniers and naive young dreamers who don't know any better will get vcaught up in the excitement and enthusiasm and justify working for nothing as just "paying their dues."

This is not to say that professionals don't "pay their dues." It just needs to be understood that in the actual film industry, "Paying one's dues" means giving a friend a discount on one's standard day-rate, so they can afford to hire enough people to do a job right instead of recruiting a bunch of hobbyists that are just going to half-ass it for that ever ellusive deal called "Copy & Credit."
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Utah Filmmakers™ and UFA™ are trademarks registered with the Utah Department of Commerce Division of Corporations and Commercial Code, Registration Numbers 10706542-0190 and 10502093-0190 respectively.