The Runaway Argument Stumbles
I am always frustrated by feeling an issue is crystal clear… yet talking about it makes me sound like a bad guy.
But such is the nature of arguing that runaway production is, to a great extent, a non-issue when you look at the big picture.
Philosophically, this kind of reminds me of the Democratic primary fight. Clinton started as a prohibitive favorite. Then she became a prohibitive underdog. Then Clinton used the leverage of being the underdog to both propel herself and to bring the leader down to earth, while the frontrunner was unable to respond with similar tactics without looking like an ingrate.
Southern California is The Home Team… The Prohibitive Favorite… The Standard Bearer. It’s hard to maintain that position when the world wants to compete with you. There is no question that there is a benefit to other cities when the Hollywood circus comes to town. A movie is, in principle, a retail buyer.
Yes, they will make a deal with a hotel to pay less than the rack rate and get a discount at the hotel restaurant. But they will spend in ways that tourists and business travelers do not. And, obviously, when a movie shoots in a non-industry town, the entire cast & crew is renting housing for week after week, eating and drinking out for week after week, and spending on life’s needs for week after week. That is a lot difference in how a town is helped by a movie spending as opposed to the crew driving home to their houses in the Valley to have dinner with the wife and kids. A movie cast & crew out of town works its ass off… and is, in some ways, on a very long vacation.
This was all pushed to the forefront today because of a segment on KCRW’s The Business. (Note: I think Claude Brodesser-Akner is probably a funny guy in real life… but what may be funny off-the-cuff is painful to listen to when he smirkily does the jokes when he thinks they are funny on the show. Please… stop.)
The first guest was Ugly Betty EP Silvio Horta, who made – without apparently trying to – the case for what is good about production in other places than Los Angeles. The show, which has become a point of focus as they decided to move from Raleigh Studios in Hollywood to New York for their next season of production, was, Horta says, always meant to be shot in New York…. but it was simply too expensive for the studio that owns the show. Asked whether a tax break in Los Angeles would bring them “home,” Horta offered that the show’s producers think of New York as “home,” so no,
But the most important point, which was undersold, was that the New York tax break is about 35%... and the cost of production in New York is so much more that the show will do slightly better than breaking even on the move.
Think about that. Even if there is a 10% cut in hard costs by way of this tax break – and this is overly generous – the bottom line is that shooting in New York costs 25% more than shooting in Los Angeles.
This is why NY has to pay people to shoot in New York.
The same situation was true in Toronto and Vancouver. Not only was there a tax break from the Canadian government and not only was there infrastructure created to support a significant amount of production in and near those cities, but for a long time, there was an additional 10% or so bonus because of the strength of the U.S. Dollar vs the Looney. As the Dollar has fallen, so has American-based production in Canada.
What I don’t buy is the anti-CA tax incentive argument that says that it is welfare for the studios. It would be, on some level. But the benefit sought here is not for the studios, but for the employees who work for the studios and indies on production.
The industry is not going to up and leave Southern California because of tax incentives in other places. That’s obvious. We are the home team here. And I would argue that physical production is only one part of the overall local industry and should actually be done in other places when appropriate. The health of the industry should supersede many of the details of physical production. Yes, I understand that a “detail” may be a human person and that thinking in the abstract may keep someone from paying their mortgage or paying for their kids schooling. That is the cruel reality of any political or economic discussion. Sorry.
The studios that are funding the majority of dollars that are going into big production of TV and movies have a vested interest in keeping some part of production here in Southern California. Besides the more conceptual reality that having one city as the major center of production makes sense - the same way that having unions actually makes sense in this industry once you accept that there will be unions at all - there is the simple reality of real estate. I guess Universal and Warner Bros and Paramount and Columbia and Disney and Fox could all get out of the backlot business and sell their lots as they move to the cheaper environs of… uh, uh… Montana… Sacramento… North Carolina… Eastern Europe?
The reality of runaway production – which presumes that production somehow belongs at “home” – is well illustrated in this chart that I culled from State of California studies on the issue. It only goes through the first half of 2003, but it pretty much tells you what you need to know. The percentage of American film releases in the early 90s made in full or in part in California dipped under 50%... but since then, it’s been consistently over 50% of product. What you don’t see is a progression of movement away from “home.”
The question, while emotional, is simple. Does California, as the dominant “home” of TV and film production, have a financial interest in trying to keep people from shooting movies elsewhere? As much as other cities have motive for trying to bring in movie dollars – which for them are much like tourist dollars, a single film like bringing in a half dozen good sized conventions – I would argue that the “home town” paying people to stay where they are already staying – for the most part – and where at least 20% will always leave for location reasons, is simply unnecessary.
The reason so much of the film and television world stays in California is because the crews are better and more plentiful, the machinery is here in large numbers, as are actors and the rest of the “talent,” and it is financially sensible to be here for so many. There’s nothing wrong with a little competition. But this is not like manufacturing, which can go to other countries for cheap labor, easily making up for lack of quality with massive savings. There is no reason to think that the industry will leave California… until there really is a financial penalty for shooting here that is big enough to make the hard parts of being away just too unworkable.
And in the meanwhile, even the films that shoot elsewhere are tethered to this community by the studios. And there’s no running away from that.
I am always frustrated by feeling an issue is crystal clear… yet talking about it makes me sound like a bad guy.
But such is the nature of arguing that runaway production is, to a great extent, a non-issue when you look at the big picture.
Philosophically, this kind of reminds me of the Democratic primary fight. Clinton started as a prohibitive favorite. Then she became a prohibitive underdog. Then Clinton used the leverage of being the underdog to both propel herself and to bring the leader down to earth, while the frontrunner was unable to respond with similar tactics without looking like an ingrate.
Southern California is The Home Team… The Prohibitive Favorite… The Standard Bearer. It’s hard to maintain that position when the world wants to compete with you. There is no question that there is a benefit to other cities when the Hollywood circus comes to town. A movie is, in principle, a retail buyer.
Yes, they will make a deal with a hotel to pay less than the rack rate and get a discount at the hotel restaurant. But they will spend in ways that tourists and business travelers do not. And, obviously, when a movie shoots in a non-industry town, the entire cast & crew is renting housing for week after week, eating and drinking out for week after week, and spending on life’s needs for week after week. That is a lot difference in how a town is helped by a movie spending as opposed to the crew driving home to their houses in the Valley to have dinner with the wife and kids. A movie cast & crew out of town works its ass off… and is, in some ways, on a very long vacation.
This was all pushed to the forefront today because of a segment on KCRW’s The Business. (Note: I think Claude Brodesser-Akner is probably a funny guy in real life… but what may be funny off-the-cuff is painful to listen to when he smirkily does the jokes when he thinks they are funny on the show. Please… stop.)
The first guest was Ugly Betty EP Silvio Horta, who made – without apparently trying to – the case for what is good about production in other places than Los Angeles. The show, which has become a point of focus as they decided to move from Raleigh Studios in Hollywood to New York for their next season of production, was, Horta says, always meant to be shot in New York…. but it was simply too expensive for the studio that owns the show. Asked whether a tax break in Los Angeles would bring them “home,” Horta offered that the show’s producers think of New York as “home,” so no,
But the most important point, which was undersold, was that the New York tax break is about 35%... and the cost of production in New York is so much more that the show will do slightly better than breaking even on the move.
Think about that. Even if there is a 10% cut in hard costs by way of this tax break – and this is overly generous – the bottom line is that shooting in New York costs 25% more than shooting in Los Angeles.
This is why NY has to pay people to shoot in New York.
The same situation was true in Toronto and Vancouver. Not only was there a tax break from the Canadian government and not only was there infrastructure created to support a significant amount of production in and near those cities, but for a long time, there was an additional 10% or so bonus because of the strength of the U.S. Dollar vs the Looney. As the Dollar has fallen, so has American-based production in Canada.
What I don’t buy is the anti-CA tax incentive argument that says that it is welfare for the studios. It would be, on some level. But the benefit sought here is not for the studios, but for the employees who work for the studios and indies on production.
The industry is not going to up and leave Southern California because of tax incentives in other places. That’s obvious. We are the home team here. And I would argue that physical production is only one part of the overall local industry and should actually be done in other places when appropriate. The health of the industry should supersede many of the details of physical production. Yes, I understand that a “detail” may be a human person and that thinking in the abstract may keep someone from paying their mortgage or paying for their kids schooling. That is the cruel reality of any political or economic discussion. Sorry.
The studios that are funding the majority of dollars that are going into big production of TV and movies have a vested interest in keeping some part of production here in Southern California. Besides the more conceptual reality that having one city as the major center of production makes sense - the same way that having unions actually makes sense in this industry once you accept that there will be unions at all - there is the simple reality of real estate. I guess Universal and Warner Bros and Paramount and Columbia and Disney and Fox could all get out of the backlot business and sell their lots as they move to the cheaper environs of… uh, uh… Montana… Sacramento… North Carolina… Eastern Europe?
The reality of runaway production – which presumes that production somehow belongs at “home” – is well illustrated in this chart that I culled from State of California studies on the issue. It only goes through the first half of 2003, but it pretty much tells you what you need to know. The percentage of American film releases in the early 90s made in full or in part in California dipped under 50%... but since then, it’s been consistently over 50% of product. What you don’t see is a progression of movement away from “home.”
The question, while emotional, is simple. Does California, as the dominant “home” of TV and film production, have a financial interest in trying to keep people from shooting movies elsewhere? As much as other cities have motive for trying to bring in movie dollars – which for them are much like tourist dollars, a single film like bringing in a half dozen good sized conventions – I would argue that the “home town” paying people to stay where they are already staying – for the most part – and where at least 20% will always leave for location reasons, is simply unnecessary.
The reason so much of the film and television world stays in California is because the crews are better and more plentiful, the machinery is here in large numbers, as are actors and the rest of the “talent,” and it is financially sensible to be here for so many. There’s nothing wrong with a little competition. But this is not like manufacturing, which can go to other countries for cheap labor, easily making up for lack of quality with massive savings. There is no reason to think that the industry will leave California… until there really is a financial penalty for shooting here that is big enough to make the hard parts of being away just too unworkable.
And in the meanwhile, even the films that shoot elsewhere are tethered to this community by the studios. And there’s no running away from that.