Sales Estimates & Pre-Sales To Finance Your Film
Part One of my AFM Webinar Take-Away's + Actionable Items
Last month AFM put out a webinar on best practices of using debt as part of your finance plan and I discussed a few of my take-aways in this accompanying newsletter.
I’ve since had several conversations around debt with other producers, sales agents, lenders, and investors and how to best engage with debt on my slate of projects. I’m coining this as ‘money multiplication’ and applying it to finance plans where it makes sense.
I’m going to shout out AFM/IFTA once again as yesterday they released the replay to the next webinar in their series - this one on How to Use International Film Estimates and Pre-Sales As Part of Your Financing.
Seriously, there’s a multitude of gems in here! They’ve done a phenomenal job of unpacking this complex topic at a time when many of us are looking at pre-sales, and trusted sales estimates as collateral, to help close our financing gap. I jotted so many things down that I’m going to parse out my take-away’s into two parts - let’s jump in!
Part One: Pre-Sales Webinar Take-Away’s
• A Pre-Sale doesn’t always mean an offer with an MG. When a distributor is evaluating whether a risky pre-sale makes sense over waiting till the film is completed to make an acquriing decision, sometimes what they will offer is a theatrical P&A or marketing commitment versus a minimum guarantee. Admittedly as a Producer trying to cobble together financing to get into production, it’s hard to argue with money in the bank now, but it’s important to look at the full picture of what a distributor can offer you which can possibly be leveraged to draw in more equity to plug the hole where that MG would have been.
• When distributors are assessing whether to engage in a Pre-Sale for your film, they are considering whether they think your film/package/project/team has the ability to actually get into production, since many buyers have been burned by tying up funds in pre-sales for projects that fail to make it over the finish line with financing. As a result, they are assessing risk with things like - who is on the Producing team and do they have a track record of getting things done? Are they trustworthy? Is there enough Equity already committed to the project to propel the finance plan? Since almost every finance plan requires a 30%-60% minimum equity piece buyers want to see that some money has already been raised because without that, the project stands a great chance of stagnating. It’s why I’ve adapted an equity-first approach with the projects I take on lately because with an equity commitment, you can move quickly towards production and utilizing the ‘scaling up your equity’ concepts I’ve discussed in the previous newsletter. Without any equity commitment, you’re basically swimming upstream for potentially long periods of time, your project losing momentum with every passing month or year.
• Commercial viability matters. Distributors will also assess what the potential audience is for your film - whether it’s attached to IP with existing fandom, or about a popular subject or even sport that has a large built in audience to release and market to. This is sadly why original ideas and concepts can flounder for years while trying to convince a distributor to take a bet on your project in the form of a pre-sale. It’s not that original ideas can’t get made anymore but when it comes to Pre-Sales, it’s almost always correlated to IP, based on true stories, sports or music subjects with large fandoms, etc.
• Don’t build a package in a vacuum. I’ve preached this for years and why I finally started a Submissions Service to help solve this problem, but getting a trusted sales agent on board early on in the packaging process to help ideate and strategize cast with you can be invaluable. It also makes them invested in your project and helps when trying to attach that all-important piece of Equity. Admittedly this is oftentimes easier said than done as I’ve seen many filmmakers try in vain to get sales agent interest with just a script and maybe a director. But keep trying …. and trying new angles…. and working on other creative packaging and presentation twists to get them to want to be a part of your crusade. Can you bring on a Producer or Director with an existing or up and coming body of work for example. How about an out of the box idea like an influencer, sports figure, or musician with a large following to help along your package. We’re engaging in some of these creative packaging approaches right now with a few FS Pro members who are looking to get a leg-up with sales agents.
OK I’m going to leave you with that for today and we’ll pick up Part Two in my next newsletter. If you’ve listened to the webinar yourself, what did you think of my take-away’s and what other questions do you have that we can troubleshoot in the comments?
As always, you can email me at stacey@filmspecific.com too.
Have a great day everyone and speak to you again soon!
Stacey
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