Companies that buy tax credits from producers are increasingly working with those producers directly, rather than going through a broker. That eliminates middleman fees and can remove an extra step in the financing process.
"We look for simplicity in a deal," says Michael Roban, exec VP of motion picture finance and operations at IM Global. "We're going to look for more efficient models, and the market has created more efficient models for us."
Tax incentives are among the sub-issues on the table at the Intl. Film Finance Forum presented by Winston Baker in association with Variety on May 17 at the Carlton Hotel in Cannes.
A different type of competition exists in the tax rebate states. More banks have entered the single-picture financing space in the past two years, meaning more competition among lenders. That's led some businesses, like Entertainment Partners and film finance company 120dB Films, to lend more actively against incentives.
"Some tax credit financiers are doing more than just tax credits," says Christopher Woodrow, chairman and CEO at Worldview Entertainment. "Money is cheaper than it was a few years ago â¦ tax credit lenders (have) to be more aggressive to secure deals."
Worldview shot two films this past year in Georgia: "Devil's Knot" and "The Sacrament," both of which used third parties to cash flow the state's tax credit.
Georgia is one of the more aggressive tax credit states, offering 20% incentive plus 10% for qualifying productions. New Mexico, too, is attracting attention for its program, a 30% tax credit for qualifying productions. The amount increased this year through the so-called "Breaking Bad" bill after facing some opposition last year from Gov. Susana Martinez. (The AMC hit show shoots in the state.)
"New Mexico's rebounding," says Joe Chianese, executive VP of Entertainment Partners. "Producers go to a location whether it's a country or a state where there's certainty â¦ When there's even a hint of uncertainty, you're going to see a ripple effect."
New Mexico benefited from uncertainty in Michigan two years ago, when Marvel's "The Avengers" pulled out of the state after proposed budget cuts threatened the then-generous program.
Some in Hollywood are paying close attention to Louisiana, which has attracted many productions with its partially refundable and fully transferable film tax credit of 30% for qualifying productions, plus 5% of resident payroll under $1 million.
But Louisiana's Gov. Bobby Jindal announced plans to cut some of its tax breaks at the beginning of the year and that could affect the state's successful film incentive program.
"We're all watching what's going on in Louisiana (and) we're hoping that nothing changes materially there," Roban says.
Competition Heats Up Between Trio of States