Archive for October, 2007

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Jeff Geoffray, Producer/CFO, Blue Rider Pictures

October 12, 2007

JEFF GEOFFRAY BUILDS THE FINANCIAL BRIDGE INTO HOLLYWOOD !!!!

Mychal: Hello Jeff. I hope you are well. Thanks for coming aboard! So, can you give us a little background about yourself and the formation of Blue Rider Pictures?

Jeff: Hello Mychal. Yes, over the past 25 years, Walter Josten and I have developed expertise in nearly every aspect of production and distribution, including U.S. Theatrical Distribution, International Sales, Production Services and in the more traditional roles of producers, executive producers and line producers. Since Blue Rider Picture’s inception in 1991, we have worked on over One Hundred (100) film and television projects which include the cutting edge of independent film financing, utilization of Pre-sales, Gap Financing, Tax Credits and other benefits to shoot pictures in nearly every region of the world. Recently, we just helped produce and finance the acclaimed and potential Oscar nominee “Rescue Dawn.” During the past year, we have financed Twenty Three (23) movies with budgets totaling more than $200 million.

Walter and I started off producing a string of genre pictures that became franchises. We then went on to work as producers or production executives on a number of projects including “Holes” and “The Call of the Wild.” Recently, Walter won an Emmy for his work on “The Incredible Mrs. Ritchie.” As of 2007, we have grown into the premier Bridge Financing resource for independent movies, providing more than $75 million in short-term funding to more than 70 movies with budgets ranging from $2 million to $42 million and representing more than $560 million in production.

As a result of successes in the Bridge Financing sector, we have begun expanding the parameters of our lending to include new types of financing, such as Gap and Super Gap loans in conjunction with banks and bond companies, Acquisition funding for international sales companies, Post-Production Finishing funds for producers, Working Capital for distributors and production companies, Collateral Shortfall Loans and P&A (prints and advertising) funding for U.S. theatrical releases. Our Company also continues to fund against receipts of future tax credits of all kinds and from numerous regions on an ongoing basis.

Mychal: Cool. Impressive! Now, what are some of your favorite projects that Blue Rider has participated in regarding financing and/or producing?

Jeff: Well, there are several projects. Actually, our first projects were a couple of genre specific films that became big franchises. And, the investors earned their money back and the projects were a commercial success. They are “Witchboard” and “Night of the Demons.” Then, there is the previously mentioned “Rescue Dawn”, and our first Gap Deal project titled “Then She Found Me.” This is Helen Hunt’s directorial debut and we are really proud of that film! ThinkFilm just picked it up in a bidding war at the 2007 Toronto Film Festival.

Mychal: As you know, before law school, I was a co-conceiver of the innovative United States Small Business Administration Film Finance Loan Program (SBA)? Is there a project that you found to be particularly innovating in its financing structure?

Jeff: Well, I would say that nearly every project we see comes with a unique and ingenious structure. Independent producers are indefatigable in their quest to find creative ways to finance their projects and I think it is a miracle when a movie gets made considering the complexity of project financing and the odds against the average filmmaker. Deciphering the financial structure, including the potential risks is a challenge that takes a lot of experience and hard work. It’s all very fascinating and that is why I love it!

Actually, I have one kind of crazy idea that would involve using the tax credits available to those who provide jobs by working in economic empowerment zones. The idea would be to create a sort-of film cooperative. So, out of work crew, including those in the union, and vendors with extra capacity, can provide project financing via deferments for producers who are willing to film in certain areas in exchange for a direct participation in the project. There would be a lot of work that would have to go into creating a structure that would work for both the financiers and the unions (SAG, DGA, WGA and IATSE), on the one hand, and the filmmakers on the other, but I believe it could work in Hollywood where there is so much talent and capacity at any given time. I think such an idea would have a high likelihood of success if Blue Rider applied its own experience to structure the co-op in a way that would be fair to all involved, but give those providing their valuable services in lieu of cash the kind of leverage that banks and other financial institutions have in deals where cash is being invested.

Mychal: Great concept! We’ll cover your legal! So, Blue Rider provides various financing options. Specifically, what are its strong areas, Bridge Financing?

Jeff: Yes, Bridge Financing is our bread and butter. We started out doing our own films. Then in 1998, we started our own sales company with a big splash. We took the cover of the 1998 AFM Hollywood Reporter issue. We successfully made and delivered our own films but we were desperate for cash because not a single film closed its financing until after production was completed. But, we got through that rough period and Bridge Financing became our own business. Then the Banks, Completion Bond Companies, and Producers came to us for the same kind of financing. Actually, we started working with Hedge Funds (Highbridge / Zwirn and HBK Capital) before Hedge Funds capital became the “in-thing” in Hollywood. And then, our clients started asking us about Gap, Super Gap and Post Production Finishing Funds.

Mychal: Cool. So, is Bridge Financing kind of like “Loan Sharking?” (LOL)

Jeff: (LOL) Well, I consider it to be more like the guy on the boat who is about to get eaten by sharks and Bridge financing his lifesaver. It is more like the lead physician in the Emergency Room. If a loan takes too long to close, and as often is the case, then the film suffers. Basically, Bridge Financing involves people paying money to rent money.

Mychal: Great Answer! Can you reveal you interest rate or is it on a case by case basis?

Jeff: Yes, it’s a case by case basis. We’re more expensive than a bank, but the price depends on the collateral. We try to work with the borrower to make the deal work.

Mychal: So, has a client ever refused to pay you back your money where you had to pursue them through the arbitration or judicial system?

Jeff: I would say that out of the One Hundred (100) deals we have been involved in since 1998, we have only had to use the judicial system twice. We provide great client servicing and we really do try to be user friendly with our Bridge deals. And, we usually do not really deal with the backend because once the loan closes, then we get our money.

Mychal: Sounds like a great hedge to me! Speaking of arbitration and jurisdiction, Blue Rider is an Independent Film & Television Alliance (I.F.T.A.) member, correct? Any predictions on the success of the upcoming American Film Market (AFM)?

Jeff: Well, Walter and I used to be I.F.T.A. members as producers. We respect the IFTA and intend to join under Blue Rider. Lew Horwitz, who is on the Board of the IFTA is a key advisor to Blue Rider. I am seeing a huge disparity between the value of good films with good cast and so-so films with average talent. The films made by producers who know their audience and their product well will sell. For example, an Art House film that has a specific niche and gets a good review by the press will sell and do well. But, the in between genre films are and will be suffering. There is a fragmentation of the markets and mediums. The greater amount of markets and mediums requires a greater focus. So, a good Indie film that lacks good reviews and is in between genres will generally not get picked up by a distributor unless there is a good word of mouth about the film.

Mychal: Interesting…now, generally, during the pre-AFM build up there is much discussion on new financing ventures. Personally, and maybe because we represented a client who managed a hedge fund with over $1.8 billion in assets, I think it is about time for investors to start calling in. (LOL) Do you agree or disagree?

Jeff: Yeah, I would say that the Hedge Funds are definitely tightening up. It a good thing that projects are only getting made if their financial structures are fundamentally sound. The same thing occurred with the German Tax Funds and the Gap deals. The Hedge Funds are getting smarter. The Buyers are still paying for product but it is more fragmented.

Mychal: Any predictions on the next film financing vehicle?

Jeff: Well, there are many out there. But, I will say that it is only a matter of time before some of our products will be applicable to financing Television, Gaming, and Music projects. Those are the areas that we are looking to expand and grow.

Mychal: Have you been able to effectively use the various State Tax Incentive Programs? What about the Federal Tax Incentive Program known as Section 181?

Jeff: Yes, we have used various Tax Incentive Programs everywhere from Canada and Puerto Rico to Louisiana and New Mexico. Regarding Section 181, we have effectively used it once and we know there is another company who have financed a number of deals in this area. So, it is a viable option and finance resource, but more on a case by basis.

Mychal: Anything to look out for when utilizing those programs?

Jeff: Yes. Let the Buyer Beware of anyone who says they control the key to the kingdom! Either they are not telling the truth or it’s a State incentive program to stay away from.

Mychal: (LOL) No doubt! What are the key components that you look for when loaning money for a motion picture?

Jeff: Well, I would say that the quality of the other money in the deal is a key element. This includes the identity of the bank, equity, foreign sales agent, presale estimates, etc. Also, we want to know how much does the other money really want to do the deal. We do not like chasing deals!

Mychal: Well Said. What about investing in a motion picture?

Jeff: When Bridging a deal, we are dispassionate about the projects creative elements. However, when investing in a deal as Gap or Finishing Funds then we would look at the Script and the Director along with other creative elements. You cannot de-minimize the importance of the script and the Director! That is why time and time again you see the same Directors making good pictures.

Mychal: Have you ever had to refuse and/or call a loan or investment in a motion picture because of production was affected by alcohol or drug abuse on set?

Jeff: Ohhhhh man!!!!….that is an interesting question. We have been involved in several of those circumstances and when we commit, we commit to the end. Unfortunately, it is a very common problem in our society and I think no less so in the film business.

Mychal: I know, blame it on Reality TV? (LOL)…OK…can you please give us a great anonymous Hollywood incident that you witnesses or participated in?

Jeff: (LOL) Mychal, there are so many stories that I hesitate to even go there! That is a whole other interview! I will say this….It is very rare that there isn’t more drama behind the camera than in front of it….it can be a real “Peyton Place.”

Mychal: (LOL) Any advice to both aspiring and established filmmakers out there?

Jeff: Yes. For the aspiring filmmaker, I would say forget about the deal making process and concentrate on the script, story and the audience that you want to relate to. I am a U.S.C. grad, so I learned there is that hook, the story and, ultimately the script which are the keys to success. And for the established filmmaker, I don’t see ageism as a problem as much as the demands of the business create a high level of stress and fatigue that can wear people out over time. Take care of yourself!!!!

Mychal: Great advice!….OK…now, last question. What separates Blue Rider Pictures from its competitors?

Jeff: One of our strengths is recognizing the unique and complex nature of each borrower’s financial needs and resources. We try not to get caught up in rigid guidelines or parameters. We strive to be flexible when determining the viability of a project. We view each transaction individually and as carefully as possible, knowing that the elements that lead to success are hard to generalize. More importantly, we are willing to take extraordinary risks partly because, as producers and distributors, we have lived through many of the horrors that our borrowers have, or will, experience. It helps that our longevity extends to our inner circle where we get a lot of support from our attorneys, former clients, friends and family. We try never to give up on a deal and we strive never to let down the people involved.

 

For more information: www.blueriderpictures.com

The End

 

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