INDIE LEGEND: THE BOND COMPANY IS COMING!!!!
Mychal: Hello Marion. I hope you are well. So, you are the Senior Vice President of Business Affairs at Film Finances, Inc. As a completion guarantor, you provide guarantees of completion to motion picture financiers right? What about other forms of media?
Marion: That is correct. Film Finances originated the concept of completion guarantees for motion pictures in 1950 and is a world leader in completion guarantee services. All motion pictures guaranteed by Film Finances are re-insured through Lloyds of London. Our budgets have ranged from $1 million to $75 million dollars. Our services include bonding feature films, documentaries, television, animated features, and most recently interactive and digital productions including computer game productions. Our computer game bonding services covers budgets that range between $10 million and $40 million dollars.
Mychal: What type of fee do you charge to guarantee the completion of the project? Is there a “rebate” for the producer who brings the film in under or on budget?
Marion: Our normal fee is three percent (3%) of the budget, but that fee varies depending on the production. Rebates are very rare and I have not seen a rebate deal in about ten (10) years. Generally, rebates are implemented when a film project is deemed risky. If this occurs, then we may charge a completion bond fee of five percent (5%) with a possible two percent (2%) rebate if the film is completed without a claim.
Mychal: Can you please explain the term “Strike Price”?
Marion: The “Strike Price” is the actual dollar amount that a financier needs to make available to the production in order for the film to be completed and delivered. This figure usually includes the bond fee and the contingency but does not include any financing charges.
Mychal: What is the effect of a “Stop Date” in an actor’s agreement? Generally, how should the actor’s service term be written?
Marion: A “Stop Date” could be a problem if it occurs within 1- 2 days at the end of Principal Photography. A true “stop date” date is stipulated for a prior engagement such as a television series or another film job not merely to go on vacation. In the event the production has to shut down because of an illness or a force majeure event, with a very close “stop date”, the actor may not be able to continue working after production started up again. Therefore, we usually require a seven-day to two-week cushion from the end of Principal Photography to the actual Stop Date.
Mychal: Now, at what point do you begin the guarantor process and what type of elements does the producer have to provide you with?
Marion: Well, the most important element is that the financing must be in place. So, we usually become involved during the pre-production process. The necessary elements for us to begin our review and approval process include the budget, script, shooting schedule and list of the principal personnel.
Mychal: Speaking of personnel has a project ever been red flagged because of a team members past work history?
Marion: Yes! – in such a case we may suggest replacing such a person or if the person can’t be replaced because of a specific attachment to the project, then we might suggest an appropriate person that could possibly oversee or have control over such red-flagged person.
Mychal: Who and what causes the bond company to step in?
Marion: It is a very rare instance that this would occur. But, bond companies may step in to replace key personnel or to trim down a shooting schedule. Or the bond company could choose to become a signer on the production bank account or place a bond company rep on the set. You know our bond company reps may just show up on set one day Mafioso style and wearing black suits (LOL)! Seriously, a bond company would step in to minimize any excess costs. This, of course, is done in a joint effort with the production team. The most important job for the bond company is to prevent the production from running out of control and to be able to fix any problems that may cause over budget costs.
Mychal: How often does a completion bond company such as Film Finances take over a production?
Marion: Generally, taking over a film production only occurs in extreme circumstances. Again, it is a very rare occurrence and one we do not relish making. But, it could happen if the producer has no ability to rein in the production costs. In my twenty (20) years at Film Finances, I can think of only five (5) instances where we have completely taken over the production of a film. And we guaranty at least 200 films a year.
Mychal: Can you offer a short anonymous scenario where the behavior of an A-List Director or Actor caused bond company had to step in?
Marion: Oh, yes! There was one instance when a certain actor entered rehab in the San Fernando Valley. Yet, he was shooting a picture in Utah and he had a major role in the film. So, he had to be on set in Utah at 8:00 am and be back in the Valley for rehab at 7:00 pm. So, we questioned the producer’s ability to complete this task. The producer said he had everything worked out where he had the actor booked on 5:00 am flights out of Burbank with return flights in the early evening. The producer stated ‘everything was great!’ Then we asked the question of ‘well, what happens if the flight is cancelled?’ Needless to say, we required that the producer hire a private jet for the actor and include it in the budget. And you know what? It worked out perfectly! That actor was great! The production was flawless! But, the producer did not think about this “if” scenario, so, we had to step in. No black suits though! (LOL)
Mychal: Have you ever had to travel to Siberia to take over a film production? (LOL) And if not Siberia, then a comparable place?
Marion: As a matter of fact we did. There was a film being shut in Siberia in the middle of winter because the production needed lots of snow. Well, for some reason, there was no snow. So we had to step in, shut down the production and re-locate the entire cast and crew to a snowy location.
Mychal: In foreign productions, are there ever any jurisdiction issues that limits the bond company from asserting its rights? And if so, can you please give an example?
Marion: Great question! There are certain places which are very risky such as Iran or Iraq due to the political climate there. More notably, there are “Droit Moral” rights in France that gives the director total creative control over the project and it can make it quite difficult to fire a French director should he become out of control.
Mychal: Is this a black suit situation? (LOL)
Marion: We might have to think about sending those suits in!
Mychal: OK…Last Question. What separates Film Finances from bond companies? Why should a producer choose Film Finances?
Marion: I really think that we are producer friendly. Clients around the world say that we are understanding of the producers needs, that we really try to work with them and see their point of view. That is why it is very rare that we step in or take over a production. We are here to support the creative process.