Okay, so one day you woke up, checked your bank account in Switzerland, called your family office planner, had breakfast with your private customer service wealth manager, phoned your tax accountant, and between the three of you decided to invest. Your proceeds from your latest company’s M&A are going not to some dubious hedge fund or biotech start-up, but to financing Hollywood movies because you think you need the State Tax Credits, tax write-offs federal, as well as a good coverage of income from some films.

Now, this may not initially sound great with your hedge fund manager neighbors in Connecticut or your oil and gas investor friends in Bahrain or Dubai, but aren’t these the same guys who bankroll Hollywood blockbusters? And the only question for you, how do you get into the game without feeling like the uncle of the film school student who wrote his nephew a $1,000,000 check for a movie starring his drama department classmates and ended up as a free download on youtube? as?

So, after you’ve done your share of homework, here’s what you discover may be your chance to spice up your rich but dull life:

*Sergey Brin and Larry Page of Google, Fred Smith, CEO of Federal Express, Norman Waitt, co-founder of Gateway Computers, Jeff Skoll of Ebay, Todd Wagner and Marc Cuban (formerly of broadcast.com), Max Levchin and David Grodnick of PAYPAL, Marc Turtletaub of The Money Store, Roger Marino of EMC Corp, former Chicago Bulls co-owner Jim Stern, Sidney Kimmel of Jones Apparel Group, Minnesota Twins owner Bill Pohlad; Real Estate Developers Tom Rosenberg, Bob Yari; and financiers Robert Sturm, Sheikh Waleed Al Ibrahim, Zeid Masri of SilverHaze Partners, Michael Singer, Mark Esses, David Larcher, Michael Goguen, Richard Landry, Michael Reilly, Rafael Fogel and Philip Anschutz are just a few of the high net worth entrepreneurs . who entered the film production and financing business with successful results.

*There are various tradable state, federal and international tax credit incentives that would offer a premium based on equity position. Assuming there is a movie with a budget of 10 million dollars, where 50% is in capital and 50% through international distribution guarantees before the release. Now suppose there is a 20-25% tax credit on the total amount of $10 million, which will immediately translate to a tax credit of $2-2.5 million for an investor.

* Numerous hedge funds including Reed, Conner & Birdwell (DISNEY), Legendary Fund (Warner Brothers), Melrose Fund (Paramount Pictures), Ingenious Media’s $700 million Float on London’s AIM, Benjamin Waisbren Investments, and many other funds and the Fund managers are entering the field of film financing.

*The international explosion of DVD, pay-per-view, home video, cable, megaplex theaters, the future of Internet video-on-demand downloads in multiple languages, and cross-market digital distribution, including low-cost cinematic digital projection , the movie industry is accelerating at an unprecedented rate of growth.

*The Creating America’s Jobs Act of 2004, which amends the Internal Revenue Code of 1986, was signed into law. The Act creates three tax incentives expressly applicable to motion pictures, one of which – § 181 of the Internal Revenue Code – is especially significant for independent film producers and their passive investors in qualified motion pictures with budgets of less than $20 million dollars.

*The motion pictures and other entertainment sectors are consistently outperforming and exceeding analysts’ expectations for growth, and are the only industries resilient to untimely global events and adverse economic conditions.

*Movie Investor returns may be more favorable and more liquid than holding direct equity positions in most public entertainment and other public companies, investment real estate and other alternative investments.

*There is a high demand, audience and a growing distribution structure for independent, crime, horror and other low-budget specialty films, as evidenced by the success of films such as “Brokeback Mountain”, “Sideways”, “Capote”, ” Garden State”, “Napolean Dynamite”, “Y Tu Mama Tambien”, “My Big Fat Greek Wedding”, “Memento”, “Crash”, “Saw 1 & 2”, Friday The 13th, “Halloween”, “Texas Chain Saw Massacre,” “Hostel,” and “WOLF CREEK,” which was made for $800,000, was bought for almost $4 million before Dimension released it, as well as “Hustle and Flow,” which was made for $2 million. and was purchased for $16 million by Paramount Pictures.

* Apart from blockbusters like “King Kong”, “Harry Potter” and other large-scale studio films, most studio-produced films have performed poorly at the box office. All of the films that have been successful for the studios were financed externally or co-financed with the studios, sold for 2-3 times their costs, and most retained foreign rights to maximize revenue.

So after seeing all the great benefits, how do you go about finding a deal or movie project where you’re sure a Hollywood producer won’t use half your money as a down payment on a new mansion in the Pacific? ? palisades?

The key that separates the successful financiers of the cinema vs. The fledgling oil tycoons who come to Los Angeles with a pocket full of money and end up leaving with a pocket full of money go by various names: structured finance, leverage, risk minimization, multiple exit strategies, tax credits, and ethical awareness. of the filmmaker/producer.

What does that mean to you in a real world setting? Let’s say you want to finance 100% of a $1.5 million low-budget genre film whose worst-case scenario is a DVD release and profit from international sales and maybe some other capital sweeteners in converting the securities you subscribe to as part of the deal. Well, if you write a check for $1.5 million and the movie is shot in a state that has 30% in tax credits, you get $450,000 in tax credits + under Section 181, you can write off that amount under Federal. Therefore, you are already getting good results before the profits appear. So you figure you sell the movie to 50 countries, and if you’re really lucky, you sell the movie for 3 or 4 times what it costs a studio at a fancy festival like Sundance, Toronto, Cannes, etc. Do this in 5-10 movies and you could make a very profitable name among the Hollywood elite.

But let’s really take this one step further and see how the bigger guys take advantage of film investment because they can get a bigger star which can translate into bigger sales abroad. Let’s say a filmmaker/producer has a $10 million movie and you want to get in on the action. I’d park $5 million in equity, get a 20-30% tax credit on $10 million, which will be $2-$3 million, producer get the biggest star he can, get a studio to kick the other $5 million dollars, you don’t worry about seeing a penny from the theatrical release because you know your DVD earnings and international sales will cover your equity position. Make sense?

Now take advantage of this with different budgets, genres, stars, distribution, places where you can get high tax credits (for example, Puerto Rico is 40%), other exit strategies where you can find your shares in the London AIM, and you are in his new career path as a sophisticated and educated financial film. Of course, if you want to go even further and guarantee 100% of your capital, there are tricks for that too.