| Structured Film finance using tax credits and | | | | Preservation Credits and other incentives. |
| section 181 writeoffs offers many innovative | | | | That's why so many dot comers, billionaires, and |
| structured finance deals that offers a potentially | | | | real estate guys are financing films. The structure |
| high yield investment, tax credits, an immediate | | | | is almost like developing a large commercial real |
| ROI. It follows a disciplined and strategic risk | | | | estate project. Except in this case they can earn |
| minimization strategy and multiple exit scenarios | | | | an instant ROI of 100-125% before profits, a |
| catering towards high net worth investors, | | | | hedge of revenues from several films, additional |
| including recent sellers and ex-CEO's of multi-billion | | | | liquidity if we do an exit IPO, and see their names |
| dollar corporations, real estate developers, hedge | | | | as credited producers in movie theatres, tv, |
| fund managers, private equity funds, and | | | | DVD's, etc. And if a film gets into the Cannes Film |
| alternative investors. | | | | Festival, Sundance, Toronto, etc, the international |
| There is a lot of international private equity right | | | | travel perks are also in the mix. |
| now that's chasing entertainment and film | | | | In a typical film finance situation an investor puts |
| Investments. But smart money can become | | | | up anywhere between 50-100% of the financing |
| dumb money very quickly if they don't | | | | on a film's budget depending on his tax credit |
| understand the risk modeling and hedging | | | | needs as well as the size of the film. Most films |
| techniques that are mandatory to insure success. | | | | under 4 million are 100% financed as is the case |
| A whose who of prolific billionaires and other | | | | of successful movies like "SAW", "NAPOLEAN |
| Hollywood investors include Fred Smith, the CEO | | | | DYNAMITE", "WOLF CREEK", and numerous |
| of Federal Express, Norman Waitt, the | | | | others. |
| Co-Founder of Gateway Computers, Jeff Skoll Of | | | | For his investment, and depending on where a film |
| Ebay, Todd Wagner and Marc Cuban. Marc | | | | is shot, he is eligible for a tax credit on the entire |
| Turtletaub of The Money Store, Roger Marino Of | | | | amount as well as a Section 181 writeoff. If he is |
| EMC Corp, former Chicago bulls co-owner Jim | | | | putting up 100% of the budget on a $5 million |
| Stern, Sidney Kimmel Of Jones Apparel Group, | | | | dollar film, he is getting an immediate return of |
| Minnesota Twins owner Bill Pohlad; Real Estate | | | | approximately $6 million dollars in tax credits and |
| Developers Tom Rosenberg, Bob Yari, and Steve | | | | tax write offs if its shot in Illinois (20%). Some |
| Samuels ; and, financiers Robert Sturm, Sheikh | | | | states offer 30%, Puerto Rico offers 40% that's |
| Waleed Al Ibrahim, Michel Litvak, Zeid Masri of | | | | tradable back to U.S residents. |
| SilverHaze Partners, Michael Singer, Mark Esses, | | | | A model can be based on 100% financed films |
| David Larcher, Michael Goguen, Richard Landry, | | | | under 4 million, and 50%-60% financed films over |
| Michael Reilly, Rafael Fogel, Philip Anschutz , and | | | | that, with the deficit being covered by distribution |
| others, | | | | advances. In some instances, a $5 million dollar film |
| The capital investments and appetite for films are | | | | is set up, investors put in $3 million, pre-sales are |
| coming from Dubai, Bahrain, Chicago, Wall Street, | | | | $2 million, and an investor still gets tax credits on |
| Silicon Valley, Russia, Hong Kong, and even China. | | | | the $5 million, plus a Section 181 write off on his |
| Everyone wants to bankroll a successful movie or | | | | entire investment, plus international profits, plus an |
| ten movies. | | | | option to convert his investment into public liquidity |
| Investors are able to realize immediate returns on | | | | through a reverse merger or an IPO on the |
| their investment between 100-120% before | | | | London AIM. Multiply this by 5 or ten films in |
| profits from Section 181 Federal tax writeoffs | | | | different budgets, genres, and tradable tax |
| allowing 100% deductions, and, tradable tax credit | | | | credits, and the potential for varying returns, |
| incentives similar to what real estate syndicators | | | | distribution channels, markets, and long term |
| and investors utilize from Federal Historic | | | | library potential is enormous. |