One of the UK filmindustry's nastiest open secrets - inflated sales estimates - was highlightedin Screen International's UK Film Finance Summit yesterday.
The murky area was a keydiscussion point on a panel about financing middlemen headed by IAC Film'sMichael Ryan, who said that "disreputable agents are paid fees by producers toprovide figures". UK tax funds typically require sales coverage on films theyinvest in to help reassure their investors.
Mark Vennis, co-founder ofsale house Moviehouse Entertainment, sparked the debate when he warned thatcompanies were also exaggerating estimates in order to fulfil the criteria oftax-based production funds, which are sometimes complicit.
"Using sales estimates as afinancing tool has put pressure on sales companies to predict ridiculous levelsof coverage, especially in the UK market," said Vennis. "We've never done this,but the temptation is there for sales companies to beef up figures in order toget the project."
But a panel includingRenaissance Films' Angus Finney and Priority Pictures' Marion Pilowsky wassceptical about whether the replacement to Section 48 would remove the need fortax funds - the so-called middle-men - when it comes into effect next year.Ryan argued that the need to cash-flow production under the new relief couldleave a role for financiers.
"It's a nice piece of paper, but it doesn't pay any salaries," hesaid. "It's a nice piece of paper because it's from the government. Will thegovernment give you cash' No. It certainly won't give it to you early enough tomake the movie."
Mo Yusef of financierInvicta agreed there "definitely is a role" under the new system. "There willstill be an equity market of one description or another, though it will be morein development or distribution," he said.
He also pointed toalternative tax-based models such as Venture Capital Trusts and the EnterpriseInvestment Scheme, which are expected to be compatible with the new support.However, with tight limits put on the amount individual investors can putthrough such schemes, he warned "the amount of money that can flood into theindustry is a lot less than people will lead you to believe."
Yusef did, however, rule outmoving into producing after his own experience of almost going bankrupt when hetried.