Exploiting Hollywood 1980

"How much money do I have now?"

"If we don't calculate the future earnings curve of your several films, it's probably like this. Your assets are mainly stocks and two properties in Manhattan and Staten Island, New York.

Your income is mainly the director's salary for movies and commercials. And the share of participating in film investment."

With the idea of ​​investing and producing and distributing "Dirty Dancing" by himself, Ronald quickly called accountant Lawrence Wang from New York to Los Angeles.

Lawrence spread out the accounting book and introduced Ronald's income in the past two years.

"After Night of the Comet, your income started to increase year by year.

The director's fee for Breakdance in the early stage plus the first period of box office share was 1.15 million US dollars. After that, Cannonball took over the domestic distribution, and your share ratio was reduced a lot, and finally it was close to 750,000 US dollars.

You took a total of 1.9 million US dollars from this movie, which is the most profitable one of all your projects.

The first part of The Karate Kid, the director's fee was 400,000. Because you did not participate in the investment of the project, the director's share ratio was not high. One year after the release, plus you were going to shoot the second part of The Karate Kid, the share entered your account one after another, and now there is more than 300,000 US dollars.

The director's fee for Top Gun and The Karate Kid II was 500,000 and 600,000 respectively, one A total of $1.1 million. The box office should exceed the first film of The Karate Kid. Starting next year, you will also get more share of the income. It is expected that the total share in the future will not exceed one million.

In addition, with the several videos, commercials, and Debbie Reynolds's aerobics for the elderly, these scattered director incomes are not low, more than half a million.

In addition, nearly 80% of the income from the sale of your leg warmer company belongs to you. Add the remaining dividends from books and old films over the years, and the dividends from songwriters, etc., and add up the scattered income.

From 1984 to now, in more than two years, your total income is... about 6.5 million US dollars. "Lawrence pointed to the last column of total income and showed it to Ronald.

"Each hit movie earns about one million US dollars, except for the low-cost movie Breakdance that I participated in investing in, which is more. "Ronald is very satisfied with his directorial achievements.

In fact, Ronald has made great contributions to several movies. If Weintraub had not filmed The Karate Kid for him, he would not have become a well-known talent in the industry and would not have gone to MGM to manage things.

This is even more true for Minahan. If it weren't for the Breakdance movie that cost less than one million dollars to make, Cannonball might have declined. Not to mention the $300 million junk bonds issued on Wall Street.

In addition, the box office figures are amazing, and the two producers have little motivation to secretly increase costs, wipe out profits, and give less to Ronald. With hundreds of millions of box office, about half of the income will be slowly returned to the distribution company after a year.

Then the producer will get half of it, which is also a gross profit of 20 to 30 million. The false cost of 5 million and 10 million will not have much impact on the profit points distributed to Ronald. In addition, they still need Ronald to shoot a sequel, so the two simply don't do anything big.

"It's just that the tax is too high." Ronald looked at the figures in the income column. After the tax deduction, it instantly shrank to less than 5 million.

"This is only after the current president passed the tax cut bill in 1981, you can enjoy a relatively low tiered tax rate. He raised the threshold of the highest federal income tax and significantly reduced the highest tax rate, so you can keep so much."

Lawrence pointed to the tax rate table before the tax cut, roughly calculated the following, and showed it to Ronald. The highest income tax rate of the previous president was 70%, which was reduced to 50% by the current president in 1981.

If the income tax income of the previous president is still implemented, and Ronald pays taxes according to the law, these incomes will probably only be around 3 million.

"No wonder no one in Hollywood wanted to make movies in the 1970s." Ronald saw this number and immediately understood why few people made commercial films in the 1970s. The salary for making commercial films is 1 million, and the salary for making art films is 500,000. After paying taxes, the money that the stars get is about the same, so who would make commercial films?

"Then my stock dividends are not bad, right?" Ronald's daily expenses are mainly drawn from the stock dividend account. There has never been any problem.

"Of course, after deducting the taxes of previous years, your income has been mainly invested in Coca-Cola stocks since 1984.

While the stock price is slowly increasing while the dividends are paid four times a year, the first two dividends this year are particularly generous. In March, you can get a dividend of 26 cents per share, and the dividend in June is also announced to be more than 20 cents."

"This dividend is really generous. It is indeed correct for me to buy this kind of blue chip stock." Ronald was very happy.

"Not only is the dividend generous, but the stock price is also very good. At the beginning of 1984, it was 53 US dollars per share, and it rose to 62 at the end of the year. It rose to 84 at the end of 1985, and it has risen to 105 in the second quarter just passed."

"Not bad, not bad," Ronald was very satisfied with the stock he chose.

Sure enough, while Pepsi Cola was desperately advertising, it was still able to steadily not expand the scale of advertising, not reduce prices for promotions, and its market share was still firmly on par with Pepsi. This kind of stock is really stable.

This increase has recovered all the federal income tax and state income tax paid, and even a little more.

“How much tax will I have to pay if I sell them all?”

"The stocks you have held in Coca-Cola, McDonald's and other stocks for more than one year are classified as long-term securities investments. This part of the income enjoys the long-term capital gains tax rate, which is much lower than the maximum tax rate of 50% for general income. So you can probably get to about seven million in cash.”

"This money is still not enough." Ronald scratched his head.

The production cost of "Dirty Dancing" has been kept as low as possible, requiring at least 4.5 million US dollars. Plus almost as much issuance costs.

This is the result of repeated cuts in the distribution budget. Ronald was counting on the word-of-mouth of the film to play a role. In addition to using the connections of a few old friends to get some free publicity, there was almost no media expenses in advance.

Except for the cost of copying and printing, almost all other money is listed on the marketing materials at the cinema.

"You still have to find Douglas Jr. for sponsorship." Ronald scratched his head.

"If you need more production fees, I can follow up on a one-to-one basis."

A high school classmate and a rich third-generation best friend on the wrestling team was really awesome. Douglas Jr. came to Los Angeles. When he heard that Ronald was short of money, he immediately offered to fill the gap.

"Aren't you going to ask me what movie I want to make?"

"Isn't it a musical?" Little Douglas picked up the script and read it, "Oh, Dirty Dancing. I like the name. I want to go to the cinema when I see it. How spicy is this dance?"

Ronald said to himself that you know the goods, the title of this movie is indeed very good, and it is very valuable. "The production budget is about 4.5 million, and it is best to spend 5 to 6 million on distribution. We also have a reserve fund of one to two million, and I can probably spend 6 million..."

"Six million? I can't afford it." Little Douglas was surprised when he heard this number. This was much higher than the amount he expected to invest. It turned out that he thought that investing three million in production costs would be enough.

"Why can't you come up with it? Didn't you say that you can match my investment amount? I thought what you said was true..." Ronald thought to himself whether Douglas Jr. had lied in front of him before.

"I used to be able to withdraw 500,000 yuan from the family fund every year, and I also had an investment quota of 500,000 yuan. After investing in Breakdancing with you, my returns were very good. Grandpa also upgraded my authority, and now I can use 500,000 yuan. An investment amount of one million.

But I have invested in other projects before, and now I only have about 3 million left. After adding my own investment return, I can reach 5 million. If you go to a bank for a mortgage loan for the rest, you should be able to get it together no problem. "

"Is that so..." Ronald said, "The Hansen family has a great business, but they also have many descendants." A few years later, I have more cash at my disposal than Doug, a genuine old money boy.

"Why do you want to publish it yourself? If you can find a publisher, we can take the distribution contract and go to the bank for a mortgage loan. In this way, we can spend more money on production without taking such risks."

Douglas Jr. was puzzled as to why he had to spend all the money himself to make a movie. Finding a distribution company could save him the expensive distribution costs and the trouble of repayment. You can also take the issuance contract and go to the bank for a loan. In an instant, the cash flow pressure of the project will be only one-third of the original.

"Hey, you don't know. Today's Hollywood is very subtle about Jewish stories, and there's nothing I can do about it." Ronald told Douglas Jr. the problems he encountered.

"Ronald, although you are a genius, I still want to advise you that such an investment is too risky. It is difficult to predict the box office of the movie accurately. You also said that there are plots in the script that Jews do not like. What about unexplained boycotts? Are you at great risk?

Think of your Aunt Karen, think of your cousin Donna. If you really like this movie so much, you can also think long term and continue to look for a major studio willing to distribute it.

Business is always like this, sometimes it works and sometimes it doesn't. Don't push it too hard.

Of course, if you must make this movie and make it now, I will also invest in it. "

"Thank you," Ronald patted the younger one on the shoulder, and the two embraced like they were on the high school wrestling team.

"Why?" Ronald asked, looking at little Douglas.

"I'm optimistic about you, Ronnie. What if this movie loses money? You will remember me, and you will take me with you when there are profitable projects in the future." Little Doug knew that he was asking why he still did it even though he knew there were risks. To follow up.

"I will consider it carefully, but I won't let you lose money anyway." Ronald was moved.

He put the script away and put it in a drawer.

Indeed, was it too risky for me to invest all my worth and drag my good friends’ money with me?

－－－－－－Digression－－－－－

There was a small problem with the computer today, and a lot of time was wasted in solving it. The second update will be very late. You can check it out tomorrow.