Investing in a film?

V

Vanilla

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A friend of mine has asked me if I want to invest in a film- an overseas film. The general premise is that if the film sells X number of cinema tickets, it breaks even, anything after that is profit. The last film sold as an investment by the same company paid on the investment at 8 times the original investment with continuing royalties.

Normally I believe you have to invest a hefty sum but he ( my friend) is selling a certain small percentage in smaller lots. I've been shown the film plot and the names of the actors, some of which are fairly well known.Obviously there is no guarantee whatsoever and I'd imagine this is one of the most risky businesses, so I would only invest what I can afford to lose.


Anyone any knowledge of this sort of thing?
 
In my eyes it would be no different from putting the money on the favourite in the 3.30 at Kempton.

It's a gamble and you should be prepared to win or lose.

*** Past performance is no guarantee etc. etc. ***
 
Yep, totally agree. Is it anymore glamourous to lose one's investment in a film or on the 3.30 as you say?

Thinking about doing it though. Life is more interesting with the odd gamble.
 
Go for it! So long as you can afford to lose.

It's better value with the film as you will get longer to see your money multiplying, or ...
 
I have heard of this before , it was all good except for the last one. Check the contract carefully as if the film goes 'belly up' would you be liable for costs , this could turn out to be very expensive....
 
Hi Vanilla

An advance fee scam is where you pay a fee in advance for some great payoff. The payoff never comes. They just keep asking you for more money.

You would really need to know the background of the people involved to know whether or not it was a scam.

I assume that most films flop but an occasional one makes a profit and an even rarer one makes huge profits.

Is the tax relief on investing in Irish films gone?
 
Thanks.

It is not an advance fee scam. And it is only an investment with no possibility of being liable for costs etc.

It is a French/Canadian production and qualifies for tax relief in France but not here. The film is being produced by Canal + among others.

I don't know the background of the people setting up the investment but I do know my friend who is dealing with them, he is an accountant and I trust him. He says it's a gamble, but the risk being only that I lose the initial investment.
 
Ask whether the film has been presold, as this can have a big bearing on the risk profile.
 
Given that very few films make a profit, it's a risky investment. How risky, it's difficult to say. I think that the big studios reckon that 1 film in 10 is a hit and pays for the 9 flops.

It also appears that it is very difficult to gauge whether a film will be a hit in advance - sometimes sure fire films flop and then some unknown director turns out a big hit.

The French tax relief investments in films are similar to a BES scheme here and are bona fide - Canal Plus has to invest in French films as part of it's licence to broadcast agreement. There is always a race to close the investment before the tax year ends on 31st dec - hence the urgency.

If it's money you can afford to lose, then it's like putting your money on a horse in the 3:30 at Chantilly at 10 to one - it might come in, but chances are it won't.

Ask him how the previous verions of these investments have done ?

This site (in French) seems to have some information http://www.best-sofica.com/
 
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