The Economics Of Filmmaking? David Poland Drops Some Knowledge

The ongoing saga involving Marvel Studios’ lowballing crucial participants in “Iron Man 2” continues. Mickey Rourke, suiting up for Wrestlemania instead of the metal suit sequel, remains unsigned for a villain role after an initial lowball offer, while the loquacious Samuel L. Jackson continues to feign ignorance at his lack of a contract to reprise his role of Nick Fury, the head of government organization S.H.I.E.L.D. Asked about the role at the premiere of his “Afro Samurai” video game (yes, a video game premiere), he at least sounded like it was a possibility he would return, stating “Contract negotiation… It’s like life. Nick Fury’s negotiating.” Knowing that this is probably a very difficult contract to negotiate- it would likely involve his appearances in “Iron Man 2,” “The First Avenger: Captain America,” “The Avengers” and a slew of other Marvel projects that haven’t been written yet- it wouldn’t be a surprise to see both sides far apart on an agreement. Then again, there are Jackson’s catty comments made a couple of days ago sarcastically musing that Marvel didn’t make much money off “Iron Man,” which generated almost $600 million worldwide.

We humored Jackson’s joke, however, taking the idea to box office pundit David Poland, and the results were eye-opening. Poland claims that independent producers Marvel Studios only kept $260 million, which was a profit of $25 million based on the studio’s released budget (sometimes inaccurate) and the leaked promotions budget (very unreliable). Adding “Iron Man”‘s DVD’s sales and ancillaries (studios usually don’t release these figures, either) and the prospective losses of Marvel’s “Incredible Hulk” (which did less than half of “Iron Man”‘s gross and, Poland estimates, lost $50 million) gets us to a $50 million or so profit on a theotrical $500 million expenditure.

Poland suggests this is commonplace, and that in a good year a studio will generate 12% off its investment. These numbers are also dependent on the long-accepted belief that studios take in 55-60% of the grosses, which is a number that also varies greatly, dangerous when you’re dealing with hundreds of millions. So, you may think, how is it that some studios keep from going under? We previously reported on “The Curious Case Of Benjamin Button”‘s p&a (prints and advertising) budget sending the film far past potential profitability, but given the film’s high profile and long incubation period, anyone could have guessed financially that was the case. That leak was, in all manner, intentional, as it was meant to drum up Oscar sympathy for the embattled former awards frontrunner now dealing with allegations of “coldness”- many in the Academy are well-connected people who understand just how nasty a hit Paramount would take from not winning an Oscar after such a lofty investment, so a leak like that reeks of “something’s at stake!” desperation, and a bit of extra press to keep the film in the public eye until the awards and, likely, a robust summer DVD release.

Surely Paramount doesn’t stand to lose that much face. After all, they just made the audacious effort to provide print fees on their “Monsters Vs. Aliens” in exchange for theaters adding digital 3D projection, a move that immediately puts the eight-ball behind that $150 million co-production but also benefits competitors with 3D pictures as well. Those aren’t the actions of a studio that’s bleeding, are they? And yet, who can tell? If David Poland is to be believed, and his math is always sound, studios are committing financial suicide every day, whether it’s with a three hour weepie like “Benjamin Button” or with a sure thing like “Iron Man.” Is that the truth? Without the concrete numbers, held under lock and key by cagey executives, we may never know.